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Nairaland Forum / Nairaland / General / Politics / How Federal Government Bail-out Helps Banks, Not States- Sahara Reporters (1110 Views)
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How Federal Government Bail-out Helps Banks, Not States- Sahara Reporters by Dezzx(m): 10:01am On Nov 05, 2015 |
The multi-billion naira bailout offered by the Federal Government to financially strapped state governments is more a windfall for several Nigerian commercial banks than a boost to states, a financial consultant has told SaharaReporters. CBN Governor Godwin Emefiele The Nigerian-born, UK-based consultant said he discovered “a fundamental problem with the way the bailout is structured” after he reviewed the strategic implication of the Bail-out arrangement. “I looked into the so-called bailouts and was shocked to realize that they were not actually meant for the states, but for the benefit of banks doing business with the affected states,” he said. “In effect, the Federal Government just guaranteed to banks that they will receive all the monies they loaned to state governments, even though most of the states had not defaulted on the loans,” he added. “In the long run, none of the states are benefiting from the bailout,” he said. According to him, the Federal Government had structured the bailouts in such a way that “it is the commercial banks that have been given new revenue streams spread over 226 months at the expense of the states.” The consultant added that most of the states he reviewed did not default on their bank payments, “hence there was no need for a bailout.” He added: “The ones that are struggling with payment of workers and contractors had been doing so for years now, so what they really need is financial re-structuring.” He added that the restructuring should come through expenditure control and more focused drives to dramatically increase internally generated revenues (IGR). The expert described the bailouts as a false panacea. “With the bailout, which they did not ask for or need, their financial states will improve in the very short-run—45 to 90 days—and then they will be worse off afterwards,” he predicted. He concluded that the big winners from the bailout arrangement “are commercial banks which stand to pocket N1.032 trillion over 226 months. The amount also represents the magnitude of the financial loss to states over the same period of time.” In a brief the consultant concluded that the bailout would be an albatross for state governments and “a financial bazaar for banks.” The UK-based consultant remarked that Zenith Bank would receive N347 billion from the bailout funds while First Bank would get N196 billion. He added that the United Bank for Africa (UBA) and Sterling Bank would pocket N104 billion N72 billion of the bailout funds respectively, adding that a variety of other commercial banks would receive smaller amounts. According to the consultant, if the state governments defaulted on their debts, Zenith Bank would have lost N193 billion, First Bank N110 billion, and UBA N105 billion. “If these monies were taken out of the banks’ balance sheets, the banks would become insolvent and, perhaps, collapse. So, rather than Jim Ovia [the majority shareholder at Zenith Bank] facing a possible loss of N193 billion, the Federal Government has handed him N347 billion. And Nigerians will have to repay this amount till at least 2034,” said the consultant. He said it was disturbing that this “fraudulent transfer of public funds to commercial banks was happening under Buhari.” He added: “I wonder whether the CBN [Central Bank of Nigeria] had lost their head, or they are now representing the interest of Jim Ovia and other bankers instead of that of Nigerians?” Recalling that the CBN had bailed out commercial banks in 2009, the financial expert wondered why the Buhari administration was “railroaded into another bailout of banks in the guise of bailing out so-called insolvent states.” He insisted that the CBN’s role in the bailout “smacks of fraud and questionable interest,” adding, “What assurance do we have that the cycle will not repeat itself in the future?” Cost to states Benefit to banks. http://saharareporters.com/2015/11/05/how-federal-government-bail-out-helps-banks-not-states |
Re: How Federal Government Bail-out Helps Banks, Not States- Sahara Reporters by ricsman(m): 10:03am On Nov 05, 2015 |
really I want to believe this, given the fact that after the so called bailout, some state are still owning workers. since those that usually shout it are happy about the thread let me help them shout it out its Sahara reporters oooooooo from an unknown consultant. |
Re: How Federal Government Bail-out Helps Banks, Not States- Sahara Reporters by feldido(m): 10:13am On Nov 05, 2015 |
Sauce for the rice na ![]() Meanwhile this is broad day Kwaruption under the self acclaimed anti Kwaruption Ruler... Who is deceiving who? SMH |
Re: How Federal Government Bail-out Helps Banks, Not States- Sahara Reporters by temitemi1(m): 10:18am On Nov 05, 2015 |
Which kind country be this self ![]() |
Re: How Federal Government Bail-out Helps Banks, Not States- Sahara Reporters by rozayx5(m): 10:20am On Nov 05, 2015 |
Re: How Federal Government Bail-out Helps Banks, Not States- Sahara Reporters by Dezzx(m): 10:34am On Nov 05, 2015 |
feldido:http://saharareporters.com/2015/11/05/how-federal-government-bail-out-helps-banks-not-states |
Re: How Federal Government Bail-out Helps Banks, Not States- Sahara Reporters by IbokUtoroh(m): 11:08am On Nov 05, 2015 |
and apc fans were singing bailout as one of the achievements of baba dullard. can u imagine bailing out banks via states at the same time impoverishing the masses. so much for mr integrity and master of kwarapshun bulldozer. with this madam ngozi okonjo iweala has been vindicated, we nlw know okonjonomics meant well for the economy than buharinomics which stinks kwarapshun and a whole lot of cluelessness embedded and enveloped around it. Apc chanji |
Re: How Federal Government Bail-out Helps Banks, Not States- Sahara Reporters by IbokUtoroh(m): 11:13am On Nov 05, 2015 |
watch hkw defenders of mr integrity avoids this thread. make I make small call..... omenka, passingshot, egift, madam nairaland economics ngeneukwenu, beremx, donphilous, mynd44, dekdek...... come and see foods and wines, dis one na new wine in abandon bottle. |
Re: How Federal Government Bail-out Helps Banks, Not States- Sahara Reporters by resty4(m): 11:51am On Nov 05, 2015 |
Buhari is a dura dullard indeed. |
Re: How Federal Government Bail-out Helps Banks, Not States- Sahara Reporters by Sibrah: 12:01pm On Nov 05, 2015 |
I don't understand the what this secret financial genius is saying at all. Is he saying the Banks are getting the money being released and then granting the state the long term loan. |
Re: How Federal Government Bail-out Helps Banks, Not States- Sahara Reporters by Nobody: 1:23pm On Nov 05, 2015 |
Emefiele (ex Zenith bank director) is Jim Ovia's boy |
Re: How Federal Government Bail-out Helps Banks, Not States- Sahara Reporters by Phame: 3:36pm On Nov 05, 2015 |
Pls, don't release the bail-out for Idris Wada pls. I have this fear he would use it to finance his campaign. |
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