Sagamite:

If you hired someone to guard a set of 100 high-security vaults with valuable contents. The guard lives in the premise of the vaults and is the only one with access to the vaults. It is common knowledge that the guards are usually complicit in stealing contents from the vaults. You have periodical times you come to check if everything is secure and on one occasion of these checks you find that 4 of the most expensive vaults have been looted but there is no evidence of a break-in and the guard has no explanation of how anything went missing.

Do you leave him to continue guarding the vaults whilst you investigate how the 4 vaults content got missing or do you replace him before the investigation to safeguard the remaining 96 vaults?

Sagamite:

If you hired someone to guard a set of 100 high-security vaults with valuable contents. The guard lives in the premise of the vaults and is the only one with access to the vaults. It is common knowledge that the guards are usually complicit in stealing contents from the vaults. You have periodical times you come to check if everything is secure and on one occasion of these checks you find that 4 of the most expensive vaults have been looted but there is no evidence of a break-in and the guard has no explanation of how anything went missing.

Do you leave him to continue guarding the vaults whilst you investigate how the 4 vaults content got missing or do you replace him before the investigation to safeguard the remaining 96 vaults?

babaogun:

I am not aware the Bank CEOs were given the opportunity to defend or incriminate themselves further. The rational thing in my own opinion was to suspend these CEOs and Directors pending investigations, court cases and convictions/acquittals. If after court cases spanning over 10 years, the CEOs are vindicated, the shareholders will bear the burden of having to pay the CEOs salary's for that period, compensation, etc


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.

Sagamite:

The CEOs had non-performing loans that they could not show they followed due risk management processes in approving.

These loans were to themselves or friends (mostly bigmen and board members) without any collateral. Without collateral means, if the borrowers are unable to repay the loans, there is no assets of theirs in your custody you can sell. This means their is a high chance the money would be lost with minimal chance of recovery of any fractions.

Risk management processes within a sane bank would not allow one to give such huge sums without collateral.

The fact that these banks were running to the CBN to get money to remain in operations due to lack of cash flows mostly due to the non-performing loans is incriminating enough to show the Executive team of the banks are incompetent and very due for a sack.

The investigation afterwards is just to find who and who's actions has not only been incompetent but criminal so as to present it to a court so their arse is jailed for risking people's pensions and savings.

babaogun:

I believe all the universal banks (24 of them I think) were all operating under flawed risk management practices. If you study their annual accounts most of them made losses because they had to make PROVISIONS for their non performing loans they had been rolling over for ages.

babaogun:

Even some banks i am personally aware of came out of thiese investigations unscathed even though there was evidence int heir books and records showing they committed same offences as the CEOs that were ousted, maybe not as bad though.

babaogun:

Just a point I noted, I do not believe the banks borrowed money from CBN, rather it was from other banks and part of what escalated the problem was banks not wanting to lend to each other. CBN gave loans to ease the operations of the banks that were found wanting after CEOs were relieved of their duties.

james1:

This is Nigeria,sanusi should have thought it through before wielding the big stick.soludo was quietly working on restructuring things before he left office.sanusi came and saw to it that people lost their jobs,when other goverments in same situations or worse were doing their best to keep their citizens at their jobs,they were being thrown out here with wicked intent.

james1:

As regards to the MD's,no one will start a business,build it up to its zenith and then run it down!no one!!
The bank MDs had their short comings alright, but it is not to kill the very business they built,with their sweat and blood.there is huge agenda to tear some people down.why is it that the whole show fizzled out with Yar'adua's passing?sanusi and co have suddenly started avoiding the limelight,press confrences,BBC interviews et'al,haba!
The once tough talking and wantonly arrogant sanusi now sending out remedial letters and speaking in hushed tones.he had made for himself, enemies of 20 lifetimes!!!
I certainly don't envy him.

james1:

This is Nigeria,sanusi should have thought it through before wielding the big stick.soludo was quietly working on restructuring things before he left office.sanusi came and saw to it that people lost their jobs,when other goverments in same situations or worse were doing their best to keep their citizens at their jobs,they were being thrown out here with wicked intent.
As regards to the MD's,no one will start a business,build it up to its zenith and then run it down!no one!!
The bank MDs had their short comings alright, but it is not to kill the very business they built,with their sweat and blood.there is huge agenda to tear some people down.why is it that the whole show fizzled out with Yar'adua's passing?sanusi and co have suddenly started avoiding the limelight,press confrences,BBC interviews et'al,haba!
The once tough talking and wantonly arrogant sanusi now sending out remedial letters and speaking in hushed tones.he had made for himself, enemies of 20 lifetimes!!!
I certainly don't envy him.

Sagamite:

You got it all wrong!!!

The fact that banks made losses on debts does not mean they have flawed risk management process. ALL banks across the WORLD make provisions for non-performing loans and make a loss.

It is a Risk MANAGEMENT process, not a Risk ELIMINATING process.

No bank operates without some non-performing loan. Giving loans is a risk, not a guaranteed return.

Which banks are you aware CEOs committed offences and what evidence do you have?

After some of the banks got into trouble, they were utilising a CBN borrowing facility to remain in business. A facility, that if not available means they would have had to close down. 5 banks were found to be consistently responsible for utilising 90% of these facility. A grossly disproportionate percentage.

The facility was created for short term and infrequent use, but it became a frequent lifeline for these banks, hence triggered the red flag in CBN.

james1:

And who said that the published banks are the only ones in trouble?some people are custordian of truth in our great country;they decide what must be heard.
MAY GOD HELP US,

babaogun:

You decided not to read the part that stated make PROVISIONS for their non performing loans they had been rolling over for ages

babaogun:

Do you have any evidence against the bank CEOs sacked? Its just stuff you read on national dailies!!! My point is that CBN investigators decided not to use the evidence against certain banks that were politically correct.

I will like to insist that interbank lending stalled hence financial crisis in Naija emanated. There was also a rumour that CBN was going to close some banks, hence banks became scared to lend to each other.

BTW, does the facility which was created for short term and infrequent use have a name? Maybe I could learn from this.

Sagamite:

My friend, I repeat, ALL BANKS MAKE PROVISIONS for non-performing loans.

Do you comprehend?

Are you saying it was a lie that the banks were utilising the CBN EDW?

Are you saying it is a manufactured story?

What utter gibberish when you have no logic to present. You come up with mere conjectures.

babaogun:

All banks make provisions, but these provisions should be made immediately and not years later.


I will rather make conjectures than bear false witness.

Sagamite:

Explain what you mean by making years later.

james1:

@shagamite.
You will not and obviously can not understand.this whole bank drama had political undertones,you have not asked yourself why all the troubled banks had no affiliation with the PDP.those banks that were thought to be in trouble but had danced with the PDP before just scaled through,neatly.are you so politically.incorrect to not notice that?
@balogun.abeg put him through.

babaogun:

A bank should provide for its loans if they become substandard, doubtful or bad within 360days and not renew a non performing loan without it becoming a performing loan in the first instance. Hence, the huge rush to provide for loans reaching unprecedented levels in all banks in Nigeria. it's just in vogue now.

All banks usually renew, reschedule or roll-over non-performing loans without necessarily checking the ability or capability of the customer to repay. The CBN prudential guidelines need you to pay back most of the loan if not all the loan / interest payment before the banks can reclassify the loans as performing again.

Non-performing loans should be classified into 3:
Sub standard
If principal and/or interest is not paid between 90 to 180 days.

Doubtful
If principal and/or interest is not paid between 90 to 180 days and are not secured by legal title to leased assets or perfected realisable collateral in the process of collection or realisation.

Bad
If principal and/or interest is not paid after over 360days

james1:

Sanusi could have righted the wrongs without creating so much tension,he had his chance,am waiting for his upcoming achievements.
He came,noticed the wrongs,yes and there were other ways to curb the trend,but no,it had to be drastic and destructive;he first threw a spanner in the wheels of banks interlending then ordered them to close their books same time(tactics that were designed to install maximum confusion in the nations banking system)so as to make himself very worthy.
Come to think of it,this guy was a former bank MD and we heard no advise from him then.
How can one be sure that he is not on personal vendetta?
MAY GOD SAVE US.

Sagamite:

I must say, first of all, that what you just stated has nothing to do with provisions. It is more a loan approval process that sounds reasonable.

Now what is the penalty for breaking those guidelines?

Sack of the management? I doubt, if the loans do not put the bank at serious risk.

I don't know what evidence you have about other banks. Do you?

The 5 banks whose management where sacked had brought their banks to its knees. Evident from the incapacity to continue operations without the EDW. They had put their banks at serious risk, not just participated in rules breaking.

Sagamite:

Loaning money to themselves, buying personal jets, awarding themselves unjust bonuses all at the risk of others (with less social powers) financial collapse?

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.

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.

Sagamite:

I will never understand conjectural, moronic, fallacious hogwash.

I am not capable of of such understanding. I deal only with facts and logic.

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?