Extrate from The Guardian Newspaper
[url=http://guardiannewsngr.com/news/article04//indexn2_html?pdate=111008&ptitle=CBN May Lose Control Of Banks]guardiannewsngr.com/news/article04//indexn2_html?pdate=111008&ptitle=CBN May Lose Control Of Banks[/url]

ANOTHER restructuring exercise looms in the banking and financial sector. In the forthcoming change, the Central Bank of Nigeria (CBN) may not be spared.

Going by feelers from the Senate Committee on Banking, Insurance and Other Financial Institutions, the CBN may cease to be a regulator of the industry.

A new umpire that will even oversee the activities of the apex bank is being considered by the Upper House. In fact, the Senate plans to strip the CBN of its regulatory powers to enable it concentrate on other key functions. The proposed regulatory body, The Guardian learned will be similar to the United Kingdom's Financial Standard Authority (FSA).

In an interview with The Guardian in London, the chairperson of the committee, Senator Nkechi Nwaogu, said the panel was unhappy with the apex bank's dual roles as an accuser and a judge. She quickly added that the CBN would not be weakened, but strengthened to provide "efficient services."

To prepare the ground for the take off of reforms, the committee will consult with the chief executive officers (CEOs) of the 24 banks to get their input into the amendment of the CBN Act.

The lawmaker stated that the apex bank as now constituted is "overburdened with functions," such that the payment of depositors of failed banks had dragged for too long.

Nwaogu said it was also becoming evident that the CBN was not providing efficient supervision to the industry operators because "it has too much on its plate. For instance, the apex bank is the one supervising the over 800 microfinance banks in the country. I mean, it is not feasible for the apex bank to discharge its duties well. We still have the Bureau de Change and you also have other investment banks being supervised and licensed by the same CBN. We just think this is not right," Nwaogu said.

On the amendment of the CBN Act (2007), she said there are other areas "where we need the legislature to exact control. In fact, the CBN itself needs to be supervised, (because) we do not want a judge and a jury in one place. At present, the CBN serves as judge and jury and we think it's not right. "

The senator decried some unethical practices in the banking sector, especially the setting of unrealistic targets for members of staff, which she described as a "nightmare."

"The existing banks have missed the mark. Instead of developing products that will bring in fresh deposits and other new business activities, they have made life miserable for their personnel. They give them unreasonable and unattainable targets and consequently, in our committee, we have more than 20 petitions from bankers who are frightened to their teeth because of these."

Some banks, she added, "have capitalised on the high unemployment rate in the country to abuse their workers. Some of these bank officials just roam the streets, looking for deposits. The situation is even worse for women bankers, who are subjected to unspeakable activities. And worst of all, these banks do not even want to care about what they did before the deposits came in. So, we in the committee are saying, it is wrong. It is wrong! "

The panel is also unimpressed with the high figures quoted by some banks on their balance sheets, capital and asset bases, and profits, which it described as unrealistic.

Nwaogu accused the banks of not being transparent. "We know they're not transparent and neither are the figures being quoted realistic. If they have such figures, why then is the interest rate on credits so high and where are the economies of large scale? If everybody claims to have hit the trillion base, who are they lending it to?"

According to her, what the banks are claiming to be in their balance sheets does not correspond with the level of activities in the productive sector. "Since we do know that the level of activities in these banks is not commensurate with activities in the manufacturing and productive sectors, they're supposed to be servicing, and if they're not, what are the banks doing with these deposits and why is our credit so high? Why are people paying much as 30 per cent interest rate and why are they dwelling only on short-term monies? These are the sort of things we want to table at the forum with the banks' chief executives and perhaps, they might have answers or know what we don't know."

On casualisation in the industry, she said it is "inhuman."

"Our banks are copying what they do in the developed world by 'outsourcing' most of their activities," she noted. "Nigeria is not at that level , This should be done when the activities in Nigeria have reached saturation level, The percentage of labour employed is very small compared to the profits being declared by these banks and I think it's inhuman. We're an emerging market and I don't think the banks should engage in these practice."