mama-gee:

I think it's time you change your username to MrCrackles cause you both behave the same.

Are you by any means related to him?

Sagamite:

Over my dead body would my blood line be contaminated with that kind of person that possesses inferior intellect.

A human so daft, he can post from now till the cows come home and you would not be able to extract a single insightful analysis of a single topic from his posts, can not be blessed with the same blood.

Okay, I feel you!

Let me run and call him, he's in the bathroom.

mama-gee:

I think it's time you change your username to MrCrackles cause you both behave the same.

Are you by any means related to him?

PapaBrowne:

So U noticed they act alike. . They are brothers!!

Oh my gosh!

I have been watching him for quite some time now and I see no difference between them.

It's just that he tries forcing it more unlike MrCrackles.

Nothing else!. . .Anyway, nothing is more entertaining than reading replies that call for lots of abusive jokes.

Bigvilla:

the cbn gov is so confused. or do i say foncused. nonesense

babaogun:

http://www.proshareng.com/news/singleNews.php?id=8940

@Sagamite,
Kindly see link above. Is there any reason why First Bank should be allowed to provide an asset to a customer which is circa 30% of its shareholders funds which is way beyond the single obligor limit of 10% of un-impaired capital?

This brings to air some sort of favouritism in dealing with the financial crisis in Nigeria.
I believe the same Sanusi has his roots with First Bank.

babaogun:

@Sagamite,
Kindly see link above. Is there any reason why First Bank should be allowed to provide an asset to a customer which is circa 30% of its shareholders funds which is way beyond the single obligor limit of 10% of un-impaired capital?

Sagamite:

Mate, this is jargons to me.

Explain things in simple terms. I am not an accountant.

supereagle:

He acted on a script with Northern Agenda that is why he sacked the CEOs op the affected bank. Yar dua that could protect is no more.

babaogun:

   


I will free you with your logical opinion.

I wasn't talking about a loan approval process , i was talking about the procedure to classify a non performing loan, what you have to do to a non performing loan or how to turn a non performing loan back to a performing loan.

I implore you to read my earlier posts, I have not defended the 5 banks,
“I think Sanusi could have handled the job in a sleeker way, although at the same time i recognise he had to do a bulldozer job, or else the Naija factor might have crept in.”

Sanusi’s double talk and body language in recent interviews show he wasn’t very prepared for the consequences of his actions / inactions.
There is at least 1 CEO that falls under this category and still has his job till at least 2mrw evening.

babaogun:

Apologies if you got caught there, I am not an accountant either.

It simply means FBN Plc provided a loan to one of its customers. The loan amount was approximately 30% of its shareholder's funds (share capital, revenue reserves, other reserves, retained profit etc). Ideally, you would expect this to be no more than 10%, although some banks use 20% as a maximum single amount loaned out to a single borrower.

They somehow got a waiver from CBN, but this waiver should have been requested for even before loan is disbursed to the beneficiary.

Anyhow, I personally understand why no one went punished in this case but as a regulator you need to deal with issues in a cautious and consistent way. Most important is to protect stakeholders and shareholders.

The banking reform was quite abrupt, didn't seem well thought through (or maybe it was), the consequences of his action is still being dealt with in a reactionary way atimes instead of on a step by step basis that would have been expected if their was a proper plan. He has flinched a lot, we haven't heard much about the list of debtors published. don't you think they should have followed up with this aggressiveness.

They set up AMCON (Asset Management Companies) which are still not fully operational after approximately a year after reviewing the activities of the 24 banks. Eventually govt might have to take up these debts.

Sagamite:

Now, I don't see the relevance of this story and why you brought it as evidence.

Sagamite:

Is the loan a non-performing one?

Sagamite:

Has it put FBN in a position where they can not continue performing their operations on a daily basis for a long length of time without CBN intervention?

Sagamite:

So how has Sanusi not been consistent?

babaogun:

"The fragility of the economy dictates that offenders be interdicted without damaging the sector." – Gen. Gusau

babaogun:

"If you are in a system prone to panics, the last thing you want is to advertise that an institution is in trouble". - Tim Congdom

babaogun:

You don’t need to get too emotional about this.
We are talking about “CBN Reverses Itself, Clears Sacked Bank Executives For New Jobs” here and how the financial crisis was handled and you are picking up on non-performing loans as your area of interest!!!
I think you need to consider the topic yourself next time. You decide to respond to only the part of that suits you or you think you have ammunition to battle with. 

babaogun:

A non performing loan is better than an illegal loan in my own opinion. Even the greatest businessmen have put banks in a situation of having non performing loans in their books.
A non performing loan can be a legal loan approved within the limits of a bank which later goes awry by whatever means, while a loan (whether collaterised or not) beyond your single obligor limit without a waiver in the first place is an illegal loan.

babaogun:

There is no where I have stated it is a non performing loan. What I meant is that it was beyond the allowed limit and could put the bank in a detrimental position if it ever becomes non performing. The same reason it was restructured from a bridge loan to a mid term loan might be the same reason it could be restructured to a long term loan (oil price fundamentals)!.

babaogun:

Were the 5 banks not continuously operational as at the time Sanusi waded in? Were they not open and meeting customer demand for their deposits? Are you confirming that the 19 other banks are not currently benefiting from CBN intervention?

babaogun:

No matter how bad the CEOs have acted, He could have tackled the problem aggressively, but with caution not to erode investor confidence. That is where the CONSISTENCY comes in. There’s nothing like a big or small thief, a thief is a thief. You should never make one thief look more attractive than the other.

tkb417:

I dont know which to respond to, your response to me or Saga

First thing first

The single obligor limit directive for banks is not always cast in stones- It is just a means to check the excesses of banks

so many deals go on with CBNs backing that you'll probably wont get to know about such deals. The waivers are there to make sure compelling biz cases dont get killed in the name of CBN regulation

An illegal loan is a loan that you get through the back door so i dont know what you mean by seawolf transaction is an illegal loan. The board knows about it, the apex bank knows about it, the deal is fully collaterarised and even if the fundamentals go wrong like oil prices dropping to sub 50, the bank will not be in any danger. i say again, FBN will not be moved cos all they need to do is instruct First trustees to take over all the assets pledged as securities valued at over a billion dollars.

The essence of a loan in the first place is to create wealth for both the offeror and the offeree and whenever that objective is satisfied and all parties laugh at the end of the tenor, then the apex bank will not worry (This is not condoning any malpractices tho)

my point is, the apex bank is here to make sure the shareholders fund are not eroded and in this instance, their is no way the seawlf deal will go bad- (at least for FBN)

freezy:



Excuse me sir, Just a lil' point of correction there.

The single obligor limit is to protect shareholders. It follows the rule of not putting ALL eggs in one basket.
The same thing applies to policies and procedures of any organization that states 'this is how it should be done here" and for every deviation from that requires an approval before and not after the aforementioned deviation.

My two cents, sirs.

babaogun:

I have defined ILLEGAL in my previous post. Illegal to me is anything unauthorised by law.

babaogun:

I am not sure where you got the impression giving loans to family and friends is seen as legal to me.

babaogun:

A non performing loan is better than an illegal loan in my own opinion. Even the greatest businessmen have put banks in a situation of having non performing loans in their books.
A non performing loan can be a legal loan approved within the limits of a bank which later goes awry by whatever means, while a loan (whether collaterised or not) beyond your single obligor limit without a waiver in the first place is an illegal loan.

I should learn to make comparisons? I am shocked at your lack of logical reasoning here. I am not comparing lending above single obligor limits to lending to friends and family.

babaogun:

My argument is that you should take stakeholders interest into cognisance when you attempt to clamp down on irregularities or criminal actions.
Consistency (Uniformity) in putting adequate measures in place to address issues. He did very well in the FBN transaction, but i mark him a lot lower in how he managed the  5banks without a proper plan. He has back pedalled lately and seems to have lacked the venom to fast track his reforms.

You have stayed silent on how ineffective some of the post CEO sack plans have been. Could he have done a lot better? Yes.

Sagamite:

A guidance is not a law. At least most are not.

A guidance is an advice that you has different levels of enforcement. A law is non-negotiable.

Breaking a guidance is seen as questionable/risky/misdemeanor in most cases, breaking a law is illegal.

And I am pretty sure guidance on how much to lend would not be in Nigeria's statute books, so I am struggling to understand how you see such as "illegal".

Do you understand the meaning of illegal now?

Sagamite:

You said:

I am pretty sure the non-performing loans you referred to are the ones of the 5 banks since that is what we were discussing here.

So based on the highlighted, mate, you did give statements that it was legal, whilst loaning money above a limit guidance by CBN is illegal.

That logic baffles me.