SANUSI LAMIDO VS THE NIGERIAN ECONOMY: So the rescued banks are making profit again?
Jun 21st, 2010 | By Victor Shodipo | (Renaissance Professionals)[/b]

Sanusi Lamido Sanusi was at Aso Rock on Tuesday June 15, 2010 with members of the CBN Board to visit President Goodluck Jonathan after failing to secure a one-on-one appointment with the President who he reports to, since he became the President. The interesting aspect of the visit as reported in Thisday of June 16, 2010 was the revelation by Sanusi that the eight banks he took over are making profits once again.

We were not at the meeting but we find the revelation by Sanusi very interesting. In less than a year, the same banks that Sanusi declared as being in grave situation are now making profits again. In less than a year, the banks have moved from being in grave situation into great situation. Perhaps, Sanusi may have gone ahead to tell the President that his cronies who he replaced the former bank CEOs with had done the magic that transformed these gravely ill banks into great banks in less than a year of taking over these institutions.

But the question discerning minds should be asking Lamido Sanusi is:

Which activities are these banks, which were forced to declare multibillion naira losses in November 2009, suddenly making multibillion naira profits from? This question arises against the background that:

1.It is general knowledge that all the taken over banks have not been able to create new loans since they were taken over by the CBN

2.A minimum of 70% of their total loan books have been declared as non-performing and fully provided for

3. Income from interbank trading activities and international trade has dried up. Inter-bank rates and treasury yields are at historical lows while international trade is at its lowest ebb especially for the taken over banks

4.Fee based income is also at historical lows for the taken over banks due to decreased business activities at these banks

5.All the taken over banks have had different forms of third parties – EFCC, External Auditors, CBN appointed financial advisers, Various groups claiming to be investors wanting to buy the taken over banks doing due diligence, the CBN inspectors and NDIC inspectors, all of them asking for one document after the other, distracting the banks to focus on their business.

Is it not interesting that in spite of all these, the taken over banks are announcing mega profits? Union Bank just announced a profit of N3.5 billion for the first quarter of 2010, and making a song and dance of it; Bank PHB is forecasting to make a profit after tax of N45 billion in the second quarter. Sanusi boasts that all the other banks are now making profits. We challenge Lamido Sanusi and the management of the hijacked banks to disclose to the banking public the income lines from which these ‘profits’ are being made.

We should get something clear. These banks were making profits until Sanusi came. Then Sanusi said they were sick and forced them to declare losses. He then put his cronies and now the same banks, without doing any form of serious business – no loans and advances; no improvement in customer deposits, etc – are making mega profits again. Fela of blessed memory would have called this “Sanusi Magic”

Nigerians should also ask Sanusi Lamido to explain how possible it is for the banks he hijacked to be making profits when companies and businesses in virtually all sectors of the economy are still retrenching staff for reasons ranging from decreased demand and the drying up of credit from banks?
But behind these Sanusi Magic lays the truth about these banks that Sanusi took over. Their situation was never as grave as Sanusi made them look. Yes, they were not perfect but no financial institution in Nigeria or globally is perfect either. There was nothing wrong with these institutions that could not have been corrected without bringing the economy to a grandstanding standstill. Nigerians should not be deceived.

It is interesting to note that in the last two weeks, KPMG has been publishing the result of its 2010 KPMG Banking Industry Customer Satisfaction Survey, now in its 4th edition. According to the firm, the survey is “focused on how the banks are faring in delighting their customers inspite of the recent upheavals in the industry.” Amongst the TOP 10 customer focused banks in retail, and corporate/commercial segments are Intercontinental, Oceanic, and Bank PHB. The three leading reasons for customers in maintaining banking relationship are financial stability; excellent customer service and; image and reputation. Nearly one year after hijacking these banks; hauling abuses on their former CEOs; demonising them and detaining them in EFCC cells; and charging them to court, customers still have utmost confidence in these banks, in their reputation and financial stability, well-above those cleared by Sanusi Lamido Sanusi.

Will Nigerians allow this injustice to stand?

Sanusi’s cronies running these taken over banks have not done any magic. What they are simply doing is writing back into the banks’ books all the unnecessary provisions that these financial institutions were forced to make during Sanusi Lamido’s audit last year. It is a simple case of subtraction, when it suited Sanusi’s purpose to make the former management look bad and incompetent and, addition when it suits Sanusi’s purpose to make the new management look good and competent.

Another interesting question that Nigerians should be asking Sanusi is that if he says these banks are now making profit, why is he still threatening to liquidate them if shareholders refuse to authorize that they be sold to his group of selected foreign investors? If the banks are back in good health, is it not normal to request that shareholders recapitalize their banks? Why must shareholders be forced to sell their holdings to foreign investors?

Sanusi Lamido Sanusi’s so called banking reforms has been so controversial because it has never stood up to critical scrutiny. It has been sustained with blackmail, propaganda and outright coercion. It is time it is reviewed. It is killing Nigeria and Nigerians.