naijaking1, waa se oriire. tie koniibaje.
let there be truth!

naijaking1:

[size=18pt]The Takeover Agenda [/size]
Written by Demola Abimboye
Sunday, 08 August 2010

Erastus Akingbola, embattled former chief executive officer of Intercontinental Bank PLC reveals in a petition to the attorney-general and minister of justice how a plot was hatched to take over the bank from its owners

His return to the country was as miraculous as his departure a year earlier, beating eagle-eyed security operatives in Lagos and Abuja on both occasions. Twelve months after his 21-year-old baby – the Intercontinental Bank PLC, IB, PLC – was kidnapped from him by the Central Bank of Nigeria, CBN, and he escaped being captured by going on self exile in the United Kingdom, Erastus Akingbola, former managing director of the bank, flew quietly into the country August 3, 2010, through the Nnamdi Azikiwe International Airport, Abuja.

The following day, he reported voluntarily at the headquarters of the Economic and Financial Crimes Commission, EFCC, at 10.15a.m. accompanied by Felix Fagbohungbe, his lawyer. By press time last Friday, August 6, he was yet to be released.

Akingbola’s unscheduled return to the country has created new dimensions to the various legal battles instituted against him on allegations first, of “money laundering” and later, “breach of fiduciary relations” or the ones he filed to clear his name from the charges and the takeover of his bank by the CBN. It also opened a new vista in his attempt to retrieve the bank he holds as dearly as his baby from the CBN as well as unearthed the politics of the travails of the former president of the prestigious Chartered Institute of Bankers of Nigeria, CIBN.

In a fresh petition to Mohammed Adoke, attorney-general and minister of justice, Akingbola has revealed that rather than allegations of stealing money of IB PLC, the duo of Sanusi and Bukola Saraki, governor of Kwara State, have used the so-called reforms of the banking sector by the former soon after he became governor of the CBN on June 4, 2009 to plot a systematic take-over of the 21-year-old bank. The grand plan is being executed by Mahmoud Lai Alabi, former employee of the governor who once turned around WEMA Bank PLC before selling it to SW8 Investments Limited.

The document obtained exclusively by Newswatch was titled: “Fraudulent takeover of Intercontinental Bank PLC by Dr Bukola Saraki, Mallam Lamido Sanusi & Mahmoud Lai Alabi.” The former IB PLC boss revealed that about two and a half years ago, the governor who was former managing director of Societe Generale Bank of Nigeria, SGBN, which belonged to the Saraki family; had requested that his distressed bank be merged with Akingbola’s outfit. But the deal failed principally because of SGBN’s debt crisis which forced the CBN to revoke its licence a couple of years earlier. “We conducted a due diligence exercise and noticed N30 billion negative capital. So the board of IB PLC turned it down. Saraki was very unhappy,” Akingbola said.

Saraki never betrayed his emotions but bid his time. He continued to do business with Akingbola and obtained about eight billion Naira loans for his companies. Time to have his pound of flesh soon came when it was time to renew the appointment of Chukwuma Soludo as CBN governor. Saraki was alleged to have prevailed on the late President Umaru Yar’Adua not give the professor of Economics a second term. Instead, he took Sanusi to the late president as the next man for the coveted job. “Being my customer, Saraki confirmed this personally to me,” Akingbola wrote.

On June 4, 2009, government announced Sanusi’s appointment as CBN governor. Barely two weeks in office, on June 18, he began a probe of 10 banks including IB PLC. To Akingbola, this was unusual, as the regulatory institution had just completed a comprehensive examination of the bank as part of normal protocol and gave it a clean bill of health. The fresh examiners concluded work mid- July and the bank waited for their report. “Suddenly, they returned claiming that several accounts, which they had verified and agreed with us as performing were now re-classified non-performing,” he told the justice minister.

The manipulations notwithstanding, IB PLC’s ratios were reportedly alright. Yet, the examiners returned four more times to re-classify more accounts as “non-performing.” These included accounts Akingbola and the bank’s board regarded as their bests. The embattled banker said these unusual re-classifications forced him to ask some of the examiners what the problem really was. “They confided that the new CBN governor was bent on removing certain bank CEOs, and wanted to show that IB PLC was too exposed to bad loans.”

They revealed further that Sanusi had formed a team in CBN reporting to him directly and that each completed examination report was turned down if it was not damning enough. They were then ordered to go back until they achieved certain ratios. “One of the examiners showed me a report on IB PLC, which was favourable. This had been rejected by the CBN governor as it did not justify or warrant my removal.”

Worried by the development, Akingbola claimed he sought Saraki’s assistance since he recommended Sanusi’s appointment. The Kwara State governor reportedly said Sanusi was unhappy with him and Cecila Ibru of Oceanic Bank because the duo had contributed six billion Naira to stop his confirmation by the Senate. “I refuted this allegation by telling Saraki that my religion would never allow me to do such a thing, as no human can undo what God has ordered in Heaven.”

Akingbola revealed that he did not stop there. He met Sanusi and asked him about the six billion Naira Senate bribery allegation. “He said he had put that behind him, as ‘not all king makers in council will support the choice of a new Emir.’ I once again reiterated my innocence, based on my religion that the God I serve will never permit me to try to block someone else’s good fortune.”

Still not convinced he had cleared himself from the festering mess, Akingbola told Aliko Dangote, president, Dangote Industries, the strange CBN’s repeated examinations and the bribery allegation by Sanusi. He promised to intercede. Surprisingly, Sanusi told Dangote that it was Saraki who revealed to him the bribery plan and that Akingbola even lobbied him to assist him become the CBN governor. Saraki had allegedly incited Sanusi against the Intercontinental boss to facilitate his removal and takeover of IB PLC. “It has now become evident that both Saraki and Sanusi used the opportunity of the worldwide financial crisis of 2008-2009, to jump into certain banking institutions and take them over. The crisis had been acknowledged and was being well-managed by Soludo, the former CBN governor. The entire industry was affected, as others worldwide,” Akingbola said.

He noted that the Nigerian economy was hit by four economic catastrophes: the oil price drop from $147 per barrel to $30 forcing oil importers to refuse to sell in a hurry at this new low price, so banks had to give them time for the price to improve; the worldwide stock market collapse that led all foreign investors in the Nigerian Stock Exchange to hurriedly sell their shares thereby further depreciating the NSE index which had adverse effect on the banking industry; the CBN devaluation of the Naira by 40 percent which meant that importers with unsettled bills had to source more Naira to buy Dollar, and thus strained bank customers and the loan portfolio of the banks and a panic among overseas banks that had dollar placements with Nigerian banks. They immediately gave notice and withdrew their funds. IB PLC lost $1.2 billion in this way.

The petitioner said that rather than the new CBN governor perform the role of ‘lender of last resort,’ he used the crisis to takeover banks for his mentor. To date, no report of the examination was made available to any of the sacked CEOs, the management or the boards. They had no opportunity to learn how the CBN came to its decision, nor were given opportunities to respond to the examination reports as is the usual process. “My removal by Sanusi was done in flagrant disregard of the legal provisions regarding the removal of the bank directors (i.e. Section 35 of the bank and other Financial Institution Act, Cap. B4 Laws of the Federation, 2004) as there was no lawful special examination ordered into the affairs of Intercontinental Bank PLC, as required by law. Since no order for special examination of the bank’s affairs was signed by Sanusi, as required of him by the law of this country, his order for my removal is improper and unlawful,” he insisted.

Akingbola recollected that two lorry loads of policemen were sent to IB PLC to remove him, saying it was like a bad movie, a big surprise that a person could be driven away from a business he had started and nurtured for 21 years in one hour; and without any opportunity to contest it. “I was surprised that the next morning (Saturday), all the papers carried personal interview with Sanusi, in which he accused all the CEOs of various misdeeds. This showed that it was pre-planned and well-rehearsed.”

In the evening of August 19, the deposed bank chief executive received a call that Sanusi, under the powers that President Yar’Adua delegated to him, had ordered the EFCC, police and State Security Services, SSS, to arrest him and that two lorry loads of personnel were en route to his house. He hurriedly left the house, mindful of all that had transpired in the previous 72 hours. At that instant, he recalled a professional disagreement he had with Sanusi while he was CEO of First Bank PLC. That time Sanusi’s staff were de-marketing IB PLC by spreading false stories that the bank was distressed. Although Akingbola complained to Soludo who reprimanded him, this sad memory convinced him that Saraki and the new CBN boss wanted to take over IB PLC by fraudulent means. He believed that if they should capture and put him in their custody, they could kill him “in order to silence any opposition to their plans.” He voted with his feet.

Alabi was appointed by the CBN as the new CEO of IB PLC. Instructively, he was an employee of Saraki as chairman of Songa Farms and several development funds in Kwara State. On assuming office, one of his first achievements was to write off Saraki’s loans to the tune of seven billion Naira. The loans were given to Linkers, Dicetrade, Skyview Properties and Joy Petroleum. He also wrote off loans totalling N32 billion for the friends of the governor and Sanusi. According to Akingbola, all the written-off loans had been classified as “good” and “performing” by CBN examiners. More importantly, Saraki secured his loans with his properties in Ikoyi and Victoria Island, Lagos and Abuja.

The CBN examination report of May 2010, was said to have complained about this massive “cash gift” to Saraki. It also noted that there is a N95 billion loan over-provision, which means IB PLC was deliberately marked down previously.

Next, Alabi recruited former SGBN staff as executive directors and loan managers. For example, Gbenga Alade, formerly of SGBN, is now executive director, ED, Risk Management. “As each of the senior management of IB PLC was being terminated, Alabi was recruiting and replacing them with former Societe Generale Staff, in order to complete the takeover. It is clear, from these actions that I was removed to smooth the takeover of IB PLC for Saraki,” Akingbola said, adding “In fact, Saraki is running IB PLC by proxy. Saraki has now used his political power to takeover IB PLC after his failed peaceful merger attempts.”

He is peeved that Sanusi claims to have injected N100 billion, less than 10 percent of IB PLC’s value, and as such now owns the bank 100 percent. But before the take over, the bank had a balance sheet of N1.6 trillion, paid-up capital of N230 billion, 330 branches, two foreign subsidiaries, 10 well- established subsidiaries and 12,000 members of staff. “Where is the justice,” Akingbola wondered.

Worse still, when CBN injected the fund, he wrote to the board that it was a seven-year loan. Akingbola is worried by CBN’s desperation to sell the bank within a year of the loan. Consequently, he has appealed to Adoke to institute independent investigation into the “so-called” banking reform of Sanusi, the fraudulent N32 billion loan write-off at IB PLC and all the allegations against the banks’ CEOs. Also he called on the government which believes in the rule of law, to reverse the fraudulent takeover of IB PLC and return it to its board, management and shareholders. “Even with the deliberate damage being done to the banks and their stock prices on a daily basis, if we are given six to nine months, the banks will be restructured to normal, favourable and fair positions,” he pleaded.

But saraki has denied the allegation that he is owing the sum of seven billion Naira, being outstanding debt of three companies allegedly linked to him. The governor who spoke through Fatigun Akintoba, special adviser, communications and strategy, described the claim as frivolous, mischievous and a calculated attempt to mislead the unsuspecting public and drag his name into the mud. He said Saraki had resigned his appointment as a director in all companies that he has had interests, including Limkers Nigeria Limited and Skyview Properties Limited and that he was not involved in the day-to-day operations of the two companies. He claimed that neither the governor nor any member of his family was at any time whatsoever a shareholder or director of Joy Petroleum Limited.

The governor stated that Limkers which was alleged to be owing N1.89 billion, has paid N1.7b, that is about 90 percent of the loan. Therefore, the issue of waiver does not arise.

Skyview Properties’ loan was a “margin facility” which gave the total control of the management of the said shares, for which the loan was secured, to the bank. In addition to the value of the shares, the company paid N343 million. “This should be noted, as in similar situations, other customers have insisted that their exposures are only covered to the extent of the values of the shares in the books of the banks,” he said.

Akintoba said Alabi is not an ex-staff of Saraki as claimed by Akingbola and this is not the first bank in which he has been saddled with such responsibility by the CBN. He was at Spring Bank and Wema Bank before the emergence of Lamido Sanusi. “It should be noted that Alabi’s involvement in Shonga Holdings Limited as a non-executive chairman was a service to his home state based purely on merit. Shonga Holdings does not belong to Saraki but a registered corporate entity owned by the new Nigerian farmers and four major banks as shareholders; and it is the holding company for commercial farming enterprise.

Saraki said it is unfortunate that the issues raised in the petition were laced with political mischief and a calculated ploy to heat up the polity and distract the public attention from Akingbola’s ineptitude and inadequacies.

Saraki said he has no shares in Intercontinental Bank, therefore, the issue of his running the bank by proxy does not arise. Also, the claim that he was instrumental to the appointment of Lamido as CBN governor, who in turn chose Alabi to replace Akingbola was baseless and unfounded. He charged Akingbola to face and address the problems at hand rather than shifting blames and giving political colouration to the issues.

On the issue of the merger between SGBN and Intercontinental Bank, contrary to Akingbola’s claim in the petition, the failure of the merger did not affect the relationship between the two of them because after the merger deadlock, Akingbola came to seek his favour on the survival of Intercontinental Bank. First, he did a letter for him to intervene on his behalf from the late President Yar’Adua to give Intercontinental Bank more time to build its capital. It was after the merger that he also came to ask Saraki to plead with Bio Ibrahim, former transport minister, to get lucrative account of the ministry and its parastatals like Nigeria Port Authority, Nigerian Maritime Safety Agency, NMSA, Nigeria Shippers Council, Nigeria Railway Corporation and National Inland Water Ways.

Besides the petition, however, investigations by Newswatch revealed that contrary to CBN’s assertion that IB PLC borrowed money to stay alive, the bank as at August 14, when the apex bank removed Akingbola, was not owing CBN one kobo even though it was normal for banks to borrow from it. Conversely, it owed the inter-bank market N73 billion as at that time. Yet it was not the heaviest debtor. However, all efforts to get CBN to release the list of all banks borrowings from it proved abortive. A source said the CBN should have shown which bank borrowed what over a period so it becomes very transparent. “Borrowing from Central Bank is not a crime. Why is the facility there if you think we shouldn’t use it? Have you forgotten that Unity Bank, even though it was found to be seriously under-capitalised was let off the hook. The same thing with WEMA. And what about ETB owned by Mike Adenuga,” the source asked.

But the source said that now that Akingbola is back in Nigeria, he should defend his reputation already shot to pieces. Currently, he is involved in five suits. He instituted one while four were against him – three locally and one in London, the United Kingdom. The ousted banker fired the first salvo on August 18, 2009, when he sued the CBN for wrongful removal. In the case marked FHC/L/CS/903/09, Akingbola through F.O Fagbohungbe & Co, his lawyers, had prayed the court to quash Sanusi’s order which purportedly ousted him from office “for not being in good faith, contrary to due process of law, discriminatory, ultra vires, illegal, unconstitutional, null and void.”

He prayed the court to reinstate him to his lawful position as group managing director of the bank and issue a perpetual injunction stopping Sanusi, CBN, it servants or officers from unlawfully interfering, harassing, victimising or disturbing him in the exercise of his duties. He averred further that Sanusi did not comply with the provisions of Section 33(1), 35(1)(d) and (2)(d) and (e) of the Banks and Other Financial Institutions Act, BOFIA, cap B3, laws of the Federation of Nigeria 2004, in making the order of August 14 which removed him from office.

Akingbola contended that the CBN did not carry out “special examination” of the bank’s books and affairs on June 18, 2009, and that there was no information to Sanusi that the bank was failing within the context of Section 35 of BOFIA and that despite repeated requests for the report of the Joint CBN/NDIC Ad hoc Assignment,” Sanusi “refused, ignored and neglected” to furnish him with a copy. He said that Sanusi and CBN, both respondents, did not make recommendations including shoring up the capital base of the bank for the board of directors’ consideration. He is, therefore, claiming 50 billion Naira exemplary damages against Sanusi and CBN.

On August 19, Abdullahi Mustapha, judge of the Federal High Court, granted Akingbola the permission to challenge his sack. Consequent upon Akingbola’s audacity, the CBN petitioned the EFCC to help it recover some of the alleged bad loans. It, however, took the anti-graft agency four months to institute a case number FHC/L/CS/443c/2009: The Federal Republic of Nigeria v. Erastus B.O. Akingbola. The case was filed on December 21, 2009. The 28-count charge bordered on money laundering and other economic crimes amounting to N346 billion against Akingbola. Count one said he “created or caused to be created a false and misleading appearance of active trading in the shares of Intercontinental Bank on the Nigerian Stock Exchange by approving the utilisation of an aggregate sum of N179.385 billion of the bank’s funds for the purchase of Intercontinental Bank’s shares.

He was also accused of causing the bank to transfer 8.540 million pounds in favour of Fuglers Solicitors, London on March 13, 2009, and another 1.3 million pounds on July 13, 2009, being “money derived from an illegal act with the aim of concealing the illicit origin and thereby committed an offence contrary to and punishable under section 14(1) (a) of the Money laundering (Prohibition) Act, 2004.

Other counts included transfer of various sums from the bank to some companies in which he is a majority shareholder such as N5.5 billion on April 2, 2008, to Summit Finance Company Limited and subsequently shared it out to other directors and he got N255 million; N1,729,312,500 to the same company on March 20, 2008; N4,406,081,973.82 to Tropics Properties Limited in May 2009, N1,214,368,896.81 to Tropics Securities Limited; N4,379,549,129.37 to Bankison Nigeria Limited in May 2009, and N1,214,368,896.81 to Tropics Securities Limited; all with intent to conceal their origin.

Loans were also allegedly given to companies belonging to companies owned by other directors of the bank. These include eight billion Naira Soon-Kak Holding Limited linked to Ikechi Kalu; N8 billion to Tofa General Enterprises linked to Isyaku Umar; N8 billion to Cinca Nigeria Limited where Hycinth Enuha is a director and N8 billion to Harmony Trust and Investment Limited. Raymond Obieri, IB PLC chairman is a director in this outfit.

Akingbola dismissed the counts saying that there was no evidence to support the claim that he misappropriated N346 billion and 10.9 million pounds. On December 23, 2009, EFCC instituted suit no FHC/L/CS/1492/2009: Chairman, EFCC v. Dr. E.B.O Akingbola for Mareva injunction and to freeze his accounts. This application was heard in the chambers of the trial judge during the Christmas vacation of that year and judgement given on December 31, 2009. The judge froze Akingbola’s accounts and “temporarily attached” his assets pending conclusion of his trial. He, however, allowed him access to N1.4 million per month as living expenses and retaining legal advisers, “being amount equivalent to his last take home pay as chief executive of Intercontinental Bank PLC.”

But the order has been challenged by Akingbola and is pending in an appeal number CA/L/388/2010. In the appeal, Akingbola among other grounds condemned the ex-parte application and that it was heard in chambers during the Christmas vacation contrary to Order 46 Rule 4 of the Federal High Court (Civil Procedure) Rule 2009 which precluded all judges of the Federal High Court from hearing civil matters from December 23, 2009 and January 5, 2010. “All the applications were heard on December 30, and determined on December 31, while no summons was filed by EFCC for an urgent hearing of the application,” his lawyers deposed.

Fred Agbaje, a constitutional lawyer, told Newswatch that a judge can hear an ex-parte application in chambers and that even a hearing can be heard likewise once both parties agreed. Also, he said, in special cases such as security matters or where a minor is involved and the judge wants to protect the people’s identities, matters can be heard in chambers. Outside of these two scenarios, all cases must be heard in the open court. “But in this case, since there was no summons for urgent hearing, with due respect to the judge, he has embarked on a voyage of illegality.”

To freeze Akingbola’s assets outside Nigeria, a suit was also instituted by Intercontinental Bank in the High Court of Justice in England in folio No. 1680. Other defendants in the matter are Kayman Company Limited, Verndale Properties Limited, Jasmine Properties Limited, Caelum Limited and Sanami Limited. On December 23, 2009, Justice Nicol issued a freezing injunction that Akingbola must not “remove from England and Wales any of his assets which are in England and Wales up to the value of 10.5 million pounds or in any way dispose of, deal with or diminish the value of any of his assets whether they are in or outside England and Wales up to the same value.” He, thereafter, listed all the assets but told Akingbola that he had a right to apply to vary or discharge the order. He has since done so. Hearing in the matter comes up in December.

In November last year, the Securities and Exchange Commission instituted proceedings at its Administrative Proceedings Committee while on March 2, 2010, it initiated another action at the Investment and Securities Tribunal, IST, Abuja, marked IST/OA/12. Instructively, issues pleaded in this case were, in fact and content, the same as in all other cases whether locally or abroad. Consequently, Fagbohungbe told IST that the application before it was another avenue or means of persecuting Akingbola, albeit through an abuse of judicial process with a serious likelihood of creating chaos and bringing the tribunal on a collision course with not just the Administrative Proceedings Committee of SEC but also the Federal High Court, Court of Appeal and the High court in England whose decision would be recognised and enforced in Nigeria.

He urged IST to condemn the action of the applicant in perpetually litigating either directly or through privies on the same subject matter. “The conduct is tantamount to forum shopping, contemptuous of the judicial system and a gross abuse of judicial process,” he pleaded.

The lawyer cited Fatayi-Williams, J.S.C. in the case of Savage v. Uwechia (1972) 3 S.C. 206 at 212 when he held that: “It is our view and this view has been expressed many times in this court that there must be an end to litigation. To borrow the homely phrases used by Spencer-Bower and Turner, a plaintiff should not be allowed to take two bites at the same cherry. To allow the plaintiff in the instant case to do so is to connive, albeit unintentionally at a gross abuse of the process of this court.”

The crisis in the banking sector since the sack gale of August 2009, has impacted negatively on the economy. About 7,000 bankers have lost their jobs by early January this year while more than 14,000 were pencilled down for retrenchment. The worst hit banks were IB PLC and Oceanic Bank. Both sacked about 2,500 workers. WEMA bank sacked 1,000 while others like First Bank, Fin Bank, First City Monument Bank, Diamond Bank and StanbicIBTC have retrenched hundreds of their staff.

When the sack gale was becoming too devastating, Sunday Salako, acting national president, Association of Senior Staff of Banks, Insurance and Financial Institutions, ASBIFFI, warned that the sack whirlwind violated the nation’s labour laws as well as the agreement the union reached with most banks. Also the federal government called on the banks to halt the mass sack of workers. Adetokunbo Kayode, then labour minister, then had to caution the banks that they could not do what they liked and warned them to stop further retrenchment.

The manufacturing sector has also felt the effect of the banking reforms. Most companies no longer enjoy loan or overdraft facilities. The attendant credit squeeze has forced them to retrench workers or close shops.

As yet it is not clear what the CBN intends to do to the banks whose CEOs were removed last year. When he first took them over, Sanusi went all over the world to look for buyers for the banks. But the noise was so loud then that his plan had been exposed. Interested buyers quickly backed off. All the international investors who were interested knew it would be continuous litigation against those banks. “Where have you even seen the governor of a central bank going round media houses and going round the international community telling them that my banks are bad? Who will buy those shares? That was why the shares kept coming down. And let me tell you, if today the government is courageous enough to return the banks to their owners, the share prices will go up immediately,” a source told Newswatch.



Reported by Soji Akinrinade and Bala Dan Abu

a typical nigeria is the one that is full of envy and jealous.
one year after Sanusi injected 100b into intercontinental, the bank has lost more that 500b.
what was the inter share value before the injection.
their customers withdrew billions of naira after the sacking.
the bank is still operating with a devalued status that sanusi caused
so if sanusi didnot come or did not take action those banks would go under? BIG LIE. not intercontinental nor oceanic

the man is still an innocent untill proof otherwise by a competent court of law not SANUSI nor EFCC

if you work in a bank in nigeria nigerians go call you all sorts of names

let us open our eyes and mind and follow the events unfolding.

to hell to all the bad belle people.

we are still watching.
this doesnt mean go ahead. until it is actually said.
this is naija, any thing can happen any time.

Sanusi must and will surely go before time.

lets wait and see

any bet?

Businesses groan under the impact of banking reforms
Cover Stories May 17, 2010
By Babajide Komolafe, Yinka Kolawole, Godwin Oritse, Franklin Alli, Amaka Agwuegbo & Naomi Uzor
LAGOS—THE business community, weekend, protested the negative effect the ongoing reform of the Central Bank was having on their businesses and the economy in general. A random sample of the apex bank’s reform on the business community conducted by Vanguard showed that almost every aspect of the economy was negatively impacted by the reform.
A cross section of maritime operators, real estate developers, manufacturers as well as financial sector operators lamented that the banking reforms created more problems and had caused the death of several businesses, unemployment and low capacity utilisation.

National President of the Real Estate Developers Association of Nigeria, REDAN, Chief Olabode Afolayan told Vanguard: “The ongoing banking reform is destroying businesses and has created crisis of confidence in the system.

“We had expected that cushioning effects on the economy would have accompanied the reform. The short and long-term effects of such reform ought to have been envisaged. For almost six months, there has been no single transaction in real estates.

“The intervention in the banking industry by CBN has created fear in the minds of people generally and no bank wants to take the risk of giving loans to creditors. Some people actually rely on credit facilities from the banks because there is no economy that grows without the involvement of banks.”

Some property developers who spoke to Vanguard observed that in the first quarter, the economy witnessed severe credit squeeze due to the CBN intervention in banking operations. They noted that this manifested in a slump in the real estate business as funding was not forthcoming for new property development. They also noted that there was a sharp decline in demand for property, especially in areas like Ikoyi, Victoria Island and Lekki, with some of them having had their valuations reduced by as much as 10 per cent.

A facility manager admitted that the banking reforms forced property prices to fall in some areas. He stressed that most of the prices fell due to banks’ debtors selling off their property below valuation prices to enable them settle their debts and thus avoid prosecution by the Economic and Financial Crimes Commission, EFCC.
See more on Financial Vanguard


8 Responses for “Businesses groan under the impact of banking reforms”
franklin says:
May 17, 2010 at 10:43 amI agree with you Ademola Sanusi never realised that being CBN governor takes more than being a banker, his policies ought to take into consideration the overall impact to the economy. his action has had a more devastating impact to the economy than it has on restructing the banks i would say one thing. quit while you are ahead.
joseph says:
May 17, 2010 at 9:38 amI don’t think it is wisely to blame the central bank for what is happening in the banking industry. Most of the bank executives knew that they have committed financial crime but they failed to admit that. Some of their financial crime they have committed are, intentionally inflate financial statements by not using IFRS correctly, using insider information for their own personal benefits and gains rather than for the benefit of the shareholders and finally they failed to follow the banking ethic. That is what i think the central bank was trying to correct and has a negative effect on the bank contomers.
ADEMOLA says:
May 17, 2010 at 8:11 amSanusi is just a local banker with task to oversee CBN that has international links.Does he ever think that he is in a sensititve position in which his actions and decisions will affect the economy.The practices in banking sector before Sanusi got there is not peculiar to Nigeria alone.It happens every where even in advanced countries although if there is real fraud it has to be properly investigated .he is just looking for later appointment with world bank or IMF.He has succeeded in destroying the economy through various means.He has allowed Nigeria to be less attractive to foreign investors.Many Nigerians working in the banks and companies with various family members depending on them for survival had been sacked.a lot of companies going into administration within months of getting to CBN.I am not writing anything again.The guy has made complete mess of our economy.Why can


http://www.vanguardngr.com/2010/05/17/businesses-groan-under-the-impact-of-banking-reforms-2/

Daring stakeholders in the banking sector to contest on-going reform in the court of law if they felt convinced that he was pursuing Northern agenda, Sanusi accused the debtors of reaping where they did not sow.
[/b]

[b][b], and yet frustrating the judgement by asking courts not to hear the cases saying the courts doesnt have the jurispudence. 2. saying the sacked MDs cannot chanllenge the removal. and this causing adjournment here and there.  
if he believes he is right with the whole things let the aggrieved parties go to court and him with his lawyers deffend themselve. and the the allegation/theft/fraud/wrong doings/anthing is determined and the offenders penanlized by court or wrong governor put to shame. instead he does nt what the case to be determined by courts in the first instance.

him eyes don day clear now.

we are getting closer to the end of the drama.[/b]

everybody is entitle tp his opinion.
none the less some of us really appreciate the story even though some ppl said is old story.
the moral behind it is that u learn irrespect of the age of the story and mode.

if you dont have any possitive contribution to make on any topic just let ppl that will benefit be.
must you criticise ?

please let us be possitive minded so that we can forge ahead.

the poster, pls keep it up. we will appreciate more of this.

thank you

Talking from all sides of the month is hobby. even in the strange landssssss.

we are still watching

FG may buy banks’ bad debts in July – Sanusi
By Yemi Kolapo and Oluwole Josiah with agency report, Published: Thursday, 6 May 2010




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CBN Governor Lamido Sanusi, CBN Headquarters in Abuja (background).



The Federal Government will be able to start buying bad debts from the deposit money banks in July, paving the way for a pick-up in lending and economic growth, the Governor of the Central Bank of Nigeria, Mr. Lamido Sanusi, has said.



Sanusi based his optimism on the likely passage of the Asset Management Company bill by the Senate. The bill was later passed on Wednesday.



Sanusi told Bloomberg in an interview in Bahrain on Wednesday that “in all likelihood, we will have a law in the month of May. Once that is in place, we can have transactions as early as July.”



Nigerian banks cut back on lending after a debt crisis last year left them with toxic assets estimated to be worth $10bn by Eurasia Group, a New York-based research company, in May. The central bank sacked the top managers of eight banks for their handling of the crisis and bailed out the industry with an injection of N620bn.



The banking crisis had damped lending and growth in the economy, which would probably expand by seven per cent this year, little changed from 2009, Sanusi said, adding that banks were unlikely to pick up lending before their balance sheets were repaired.



Credit to the private sector fell for the third consecutive month in March, dropping by 0.2 per cent from the month before, the apex bank said on Wednesday.



Sanusi said Nigeria‘s inflation rate might drop below 10 per cent by the end of the year and was ”not a big risk” at present. Inflation slowed to 11.8 per cent in March from 12.3 per cent the month before.



Government spending had not been ”aggressive” and much of the budget remained unspent, he also noted.



In line with the various options available for banks to pull through these turbulent times, one of our correspondents also gathered that the sector might begin to see mergers and acquisitions between players from July. It was learnt that talks were already ongoing on possible M&As.



With increased transactions, the banks will be able to reposition for optimal performance in the new banking regime.



The Senate approved the legislation to create the asset management company, which would help return the banking sector to a lending position, on Wednesday.



The Senate Committee on Banking, Insurance and other Financial Institutions, however, warned that the proposed Asset Management Company of Nigeria would not foreclose the failure of banks.



Chairman of the committee, Senator Nkechi Nwaogu, gave the warning, just as the Senate passed the bill on Wednesday to establish the company that would help banks dispose their toxic assets.



She said, “It does not totally obliterate or totally foreclose bank failures because there are banking institutions that, maybe the amount of remedy they will require will be economically unwise, when we begin to put every other thing into perspective.



“So, there will still be death. It is expected that if it had not been for the measures that were put in place, perhaps we might be talking about many more bank failures as we have today.”



The bill, which was sponsored by the Senate Leader, Senator Teslim Folarin, was earlier committed to three committees – banking, finance and capital market – for treatment.



While presenting the bill for a third reading, Nwaogu said that AMCON would have an authorised share capital not less than N20bn, which would be subscribed to by the Federal Government and held in trust by the CBN and the Ministry of Finance.



She said the Federal Government would guarantee the bonds or debt instruments notwithstanding the provisions of Section 47 of the Fiscal Responsibility Act.



According to Nwaogu, “The corporation shall have special powers to act as or appoint a receiver/manager for a debtor company, whose assets have been pledged as collateral for an eligible loan/debt acquired by it.



“The corporation will have the power to designate any class of bank assets as eligible bank assets and will not require borrowers’ consent for the purchase of eligible bank assets.”



There were, however, arguments on the powers of the President to appoint members of the board of directors because the bill had stipulated that the Ministry of Finance and the CBN would recommend for nomination, those to sit on the board.



http://www.punchng.com/Articl.aspx?theartic=Art201005060592426

we are from God and we are unto God. may his gentle soul rest in peace.
Amin. Allahu Akbar

we are still watching

biina:

seen the light? You seem to be confusing issues.
There was a provisioning scheme in place that the banks were not adhering to. The CBN made them comply and resulted in some banks being insolvent. Should Sanusi have enacted a review and back dated it?

the simple fact is that provisioning for non performing loans as stages and percentage, and banks according tho the financial standard being used b4 sanusi came in, spread the provision over a period of time. but sanusi just came and said the all banks must do 100% provision. that makes many of them to made provision in excess of their liquidity or leaving them with insufficient deposit base.
that explain why many of the banks are feeling relunctant to submit their financials to cbn then to publicize it. they prefer to be paying the penalty of 10k per day than to expose their yash or to be the first to show poor figures.
now , sanusi (CBN) want to go back to the old stye to spread the provisioning.

naijaking1:

I take it that you have never heard about Prof. Akpan Ekpo, and Mrs Juliet Madubeze, or you just want to play your old 'show it to me' game?

http://allafrica.com/stories/200908170390.html

Why Two CBN Deputy Govs Lost Job
o ANAN Chief Faults CBN's Strategy
Intercontinental Recovers N4.8B
By Ade Ogidan and Godwin Ijediogor, Lagos and Simeon Nwakaudu, Makurdi
AS operators, regulators, customers and the public take stock of the fallout from the sacking of five banks chiefs, information reaching The Guardian indicated that the action did not actually enjoy the total backing of the apex bank's helmsmen.
A sharp disagreement was said to have emanated during meetings summoned to agree on the action, which saw five banks' chief executives lose their positions.
It was gathered that some of the apex bank's deputy governors opposed the move, its timing and motive.
But that might have cost the deputy governors, Mrs. Juliet Madubueze and Professor Akpan Ekpo, their own jobs, as they were dismissed from their positions to which they were appointed early this year, as recently reported, though the reports were silent on the real reasons for their removal.
As the dust began to settle during the week, fresh posers emerged as to whether the CBN actually followed due process in the banks chiefs' sack, especially following the apex bank's acknowledgement of some errors in the figures released, with many wondering why the announcement was rushed.
Most of the figures released by the CBN, as debts owed the banks have continued to be faulted.
In some cases, others described as non-performing have been discovered to be actually performing, although CBN rose sharply yesterday to say only it can determine whether a loan is performing or not.
Another critical issue is that of one of the banks insisted that CBN actually okayed its accounts, only to now make a U-turn.
In a related development, president of Association of National Accountants of Nigeria (ANAN), Mrs. Iyamida Gafa has faulted the manner the CBN has handled the crisis in the sector. She said the piecemeal approach adopted would favour the banks yet to be screened by the apex bank.
Addressing journalists at the Government House, Makurdi after a courtesy visit on the Benue State Deputy Governor, Mrs. Gafa stated that the CBN should have critically assessed all banks operating in the country and come out with a comprehensive report before making its findings known.
"The step taken by the CBN at present is a bit one-sided. The others which have not been given a clean bill of health, what becomes of them?" she queried.
She noted that it would be difficult to follow the procedures that the CBN would use in assessing the remaining banks, fearing that the process could be compromised, since action had already been taken on the five banks, whose chief executives and directors were sacked.
Mrs. Gafa said ANAN was not satisfied with the process adopted by the CBN, saying that the apex bank should have used a holistic approach, to provide a level playing field for all players in the industry.
The ANAN president called on accountants to play better roles as professionals to stabilise the economy. She added that if the external auditors of the affected banks had been playing their roles effectively, the rot in the banks would have been detected earlier.
She suggested that no auditing firm should be allowed to audit a company or bank for more than five years, saying a situation where some firms audit one institution for more than five years could lead to cover up and fraud.
Meanwhile, the new management of Intercontinental Bank Plc, one of the banks whose chief executive was sacked last Friday, said it had recovered N4.8 billion out of the N210.9 billion alleged non-performing loans.
Besides, the bank claimed not to have experienced any panic withdrawals, contrary to earlier expectations.
But the Acting Managing Director of the bank, Mr. Joseph Olusola Ajewole, was not forthcoming about the whereabouts of Mr. Lai Alabi, who was earlier announced as the acting managing director by the CBN governor, Sanusi Lamido Sanusi.
Ajewole, at a pres briefing in Lagos yesterday, affirmed the solvency of the bank, courtesy of the N100 billion CBN injected into it and rising customers' deposit level.
According to him, some good measure of success has been recorded in the bank's loan recovery exercise.
"I will like to inform you that we have recorded significant success in the area of debt recovery, as some of the delinquent debtors have started paying down. Many have visited us with satisfactory pay-down plans.
"We, therefore, use this opportunity to call on the remaining ones to come forward and honour their obligation to the bank, as it is not our plan to embarrass any customer. But we are out to replenish the liquidity stock of the bank, so that we will be able to do more business with them and effectively contribute our quota to the growth of our national economy."
He added: "The task of making the bank a favourite brand again has just begun and I can assure you that all hands are on deck to deliver results on all fronts. I have been encouraged seeing how the various levels of the bank's staff have risen to the challenges.
"I have seen a clear demonstration of commitment and determination from all the staff of the bank in managing the immediate fall-out of the CBN intervention.
Ajewole was evasive about Alabi's non-resumption of office, neither did he explain how he came on board as the helmsman in acting capacity.
He however debunked fears that Alabi was indisposed or yet to be cleared by the security agencies, insisting: "I am only here for a limited time. Alabi is currently not available and we cannot understandably allow a vacuum to be created. I can confirm to you that Alabi has accepted the offer of heading the bank. He is not indisposed, neither is he awaiting clearance from security agencies. But if you have any information contrary to this or can confirm his whereabouts, please tell us."
So far, only 10 banks have been audited, with CBN said not to have communicated its findings to any of them.
The comprehensive report might not be ready until October, when auditing of the remaining 14 banks would have been completed.
But sources at the apex bank said it was ready to roll out sanctions against those found culpable any moment from now, ranging from sack of the boards and top management of the effected banks to forced mergers.
The offences of the affected banks are mainly on bad loans and capital adequacy.
Some financial analysts said the CBN should make recommendations on resolution options and discuss with the Presidency and relevant authorities before implementation, due to sensitive nature of the issue.
They are of the view that banks that have closed the year before the audit commenced should be allowed to publish their accounts, since the audit is ongoing and continuous.
They equally call for resolution of all outstanding issues on non-performing loans within the current financial year through provision in interim results, as many banks are already doing, rather than forcing cumulative provision that would crash banks capital adequacy ratios. This, they noted, is to avoid negative insinuations that will trail a retroactive audit as working to an answer or witch-hunting.
Because of the sensitive nature of power supply in the country, financial observers urge that companies involved in power and oil should be exempted till December, so as not to jeopardise the seven-point agenda of the government, as stopping work will cause social chaos and fuel scarcity.
To many bankers, it appears strange to profit and loss accounting and Balance Sheet auditing to ask a bank to provide for a performing loan because the customers' account in another bank is not performing or ask a bank whose year, for instance, ended in December last year to provide for non-performing loans falling due in January this year.
They called for an orderly recovery, rather than disrupt the already ongoing process and probably give reasonable deadlines to reach certain threshold, fearing that some other debtors could disappear with the loans.
Rather than a take-over, they suggested that the owners of the banks should be given reasonable time to recapitalise, if it becomes necessary, insisting that forced merger has never worked anywhere in the world.
They stated that foreign governments supported their banks when they had problems and wondered why the case should be different in Nigeria, stressing that banking is more than risk management.

Confusion in the banks: CBN struggles to justify its action
Business, Headlines Aug 22, 2009
*Action hasty
*Too many loose ends
*Raises credibility and integrity question
*Debtors fault CBN
*Banks puncture bank’s EW and non performing loan argument
By Omoh Gabriel, Business Editor
THE Central Bank of Nigeria appears to be developing cold feet over the war it declared on bank debtors. On Thursday evening, the bank hinted reporters in Abuja that it was about issuing another statement which they suspected was going to be the second list of debtors the apex bank had vowed to release, only for the reporters to be told that the CBN had changed its mind and that the statement was no longer coming.
The CBN’s action on the five banks has generated reactions, claims and counter claims. The apex bank on Thursday took notice of claims by some individuals on the published list of debtors/defaulters that the figures posted against them were not correct and threatened to go to court.
The bank admitted typographical errors in the titles of some government officials and some companies, saying “The general public and all concerned should note that the list published is as at May 31, 2009 and if any of the defaulters/debtors have made any repayments after that date, they should sort it out with the relevant bank.

“The title “accountant general” under Intercontinental Bank Plc list, should read “accountant general of Zamfara State” while the name “Delta State Government” under the Oceanic Bank list, should read “Delta Steel Company.” The Central Bank of Nigeria regrets any inconvenience caused as a result of the typographical errors mentioned. Meanwhile, list of other debtors/defaulters is being compiled and will be published on an on-going basis.”
Bankers speaking on condition that they would not be named, Friday, took exception to the CBN excuse of publishing bank related figures of May in August when it had made it mandatory for banks to render daily returns of their transactions. The CBN action, they said, meant that it was admitting to Nigerians, that there exists a high level of inefficiency in the apex bank.
They said the CBN had no excuse whatsoever to release such a shoddy list. Bankers also faulted the CBN excuse of the five banks using the expanded window for funding arguing that the window was encouraged by the CBN for banks in need of funding to utilise as it was far cheaper for them to do so because the cost of fund offered by CBN was at eight per cent while inter bank funds was in the region of 12-15 per cent. One source said the CBN used what it created as a trap for the banks.
Sources cited the case of Union Bank with a huge deposit base and non performing loans of N71 billion, saying the bank has the capacity to absorb the loan loss provision. “The CBN has not helped matters by its own admission of errors in its published list of debtors. Its statement is an admission that all is not well in the way and manner it has gone about the entire exercise,”one source said.
Sacked officials of Intercontinental Bank said the bank was never subjected to any special examination and that the special examination was only being conducted now by the CBN. Sources in Oceanic Bank made a similar allegation against the CBN. “The haste with which the CBN conducted the exercise has left so much room for questions and has cast doubt on the real intention of both the Federal Government and the CBN”, sources said.
The affected banks executives are raising fundamental questions such as: Why and how did CBN arrive at five banks? Why did it not complete the examination of all the banks before sanctioning some banks? Does the injection of N100 billion into a bank with capitalisation of over N500 billion justify the take over of the bank?
What is the value of the injection vis a vis the total value of the bank to entitle the CBN to appoint the MDs and other directors of the bank? Did the CBN approve these banks financials all these past years? If yes, what has changed? Were the non-performing accounts put in the books in last three months?
Why did CBN take this decision without regard to the interest of the shareholders? Why should CBN not allow the shareholders to appoint and or remove their directors? How can an MD single handedly appointed by CBN governor serve the interest of the shareholders and not the interest of the man who appointed them?
Debt profiles
Bankers alleged that the sacked managing directors were not given any opportunity to explain their actions and the debt profiles in their books after the examination. If they were given such opportunity, perhaps the misrepresentation of facts contained in the published list of debtors and the amounts they are alleged to be owing the banks would not have risen.
Besides, if the CBN had asked its appointed officers in the bank to compile and up date the list of debtors, the situation would have been different.
The affected banks are also asking the CBN to publish the bad loans or non performing loans of all banks including those that are cleared so that the public can assess how much of this is either to direct loans to government or indirect loans to government through their contractors or other government agencies like PPPMA.
Disagreement at the board before the announcement Bankers said the CBN action on the five banks did not actually enjoy the total backing of the apex bank’s helmsmen, which may have led to disciplinary action against those who opposed the move.

Some of the sacked banks CEOs
As operators and regulators begin to take stock of the tsunami which is bound to change the way big ticket lending and borrowing is done in the industry, unknown developments that characterized the shake-out are beginning to emerge. A sharp disagreement was said to have occurred during meetings called to agree on the action which saw the five bank CEO’s lose their positions.
It was gathered that some of the board members opposed the move, the timing and motive behind it. But with a done-deal stamp on the decision, the said top officials were only playing with their jobs for daring to oppose the move. The next move was their dismissal from their respective positions to which they were appointed earlier in the year. The CBN remained silent on the reason for their removal.
Posers are being raised on whether the apex bank followed the due process in effecting its decisions with many concluding that it was a rush job. Most of the figures released by the Central Bank as debts owed the banks have continued to be faulted. In some cases, others described as non-performing have been discovered to be actually performing although CBN rose sharply on Friday to say only it (CBN) could determine whether a loan is performing or not. Another critical issue is that of one of the banks which has insisted that the CBN actually okayed its accounts only to turn around to do a u-turn.
Available data on the published accounts of the banks from industry study as at March 2009 show an insight into developments in the industry. These data indicate that18 out of the 24 banks operating in the country had a total loan portfolio of N4.4595 trillion.
Total deposit of the banks was N8.0673 trillion. Of the N4.4595 trillion loans and advances in the18 banks four of the sanctioned banks, Union Bank, Intercontinental, Oceanic and Afribank carried N1.3175 trillion of the loans representing 30 per cent of the total loans and advances granted by the18 banks. While the total non performing loans of the 18 banks stood at N239.4 billion out side the margin loans, the four banks’ non performing loans was N 115.3b representing about 45 per cent of non performing loans in the 18 banks.

State of the banks as reported by Afrinvest in March 2009
Afribank: Afriinvest, an institutional investor said, based on March 2008 financial statements, Afribank reported liquidity and capital adequacy levels that indicated emerging strains from rapid growth between 2007 and 2008. By more stringent measures, the bank held barely 11.2 per cent in capital for its gross asset book, with only 15 per cent of total assets being available as cash and FGN securities. Loans constituted 33 per cent of total assets and the group reported N6.3bn in short term equities exposure.
In the opinion of the institutional investor this represented a commitment of about 15.9 per cent of total shareholders funds as at date. Given an inflow of almost N105 billion in new capital during the first half of 2008, expectations are that liquidity and capital adequacy metrics will have improved substantially. Afribank, it said, reported a 57 per cent increase in gross loans, to N116.1 billion in March 2008.
Non performing loans are high, at 13.7 per cent of total loans, albeit having come down from 17.6 per cent in the previous year. “Given the extent of industry-wide loan growth in 2008, and Afribank’s post-recapitalisation drive to increase market share, we note our expectations that these levels of loan performance will not have improved significantly during 2008/2009.
Indeed, given softening economic conditions, and significant volatility across the market for much of underlying customer business, we see little scope for loan quality improvements at the bank, barring major write-downs off capital raised in 2007, and provisions off 2008/2009 earnings”, it said, adding, that Afribank is largely deposit funded, mainly by short-term demand deposits.
It noted a significant skewing of the deposit book towards shorter term liabilities, less than one month, during 2008, matching more closely with asset creation, with historically no less than 80.0 per cent of loans having maturities less than a month. While new capital inflows in 2008 provided an important new source of long-term funding for operations (as well as short-term trading liquidity), we note the bank’s vulnerability, in line with industry standard, to short-term deposit funding, in an intensely competitive market space.
Intercontinental: Afriinvest said Intercontinental was reporting 77.8 per cent of its February 2008 total assets as carrying some degree of risk. Its words: “While loans constituted only 32.8 per cent of total assets, including on-balance sheet money market placements and other assets, excluding cash and FGN securities, as being with some degree of risk, we would estimate shareholders capital to be at 18.5 per cent of total risk assets.
From a liquidity standpoint, assuming a more stringent characterisation of what constitutes liquid assets, we would estimate that 19.4 per cent of February 2008 total assets were liquid mainly cash and FGN securities, equivalent to 25.6 per cent of total deposits.”
Intercontinental Bank reported a N 456.3 billion loan book in February 2008. Historical report non performing loan ratios have come down significantly, to 3.6 per cent of gross loans in February 2008. Management reports exposure mainly to corporate, commercial, real estate and public sector lending, in approximate order of magnitude. From a sectoral perspective, our understanding is that manufacturing and telecoms constitute the largest sources of loan book exposure for the bank.

Mallam Sanusi Lamido Central Bank Governor (right) and Babatunde Lemo deputy Governor, Operations, Central Bank of Nigeria at the press briefing on the managerial restructuring and developments of some Nigerian Commercial banks.
Deposit liabilities constituted 89.3 per cent of total non-capital funding for the bank. 73.4 per cent of these deposits in February 2008 were maturing in less than 1 month. As of February 2008, current accounts and fixed term deposits accounted for 92.7 per cent of deposits. We note that other than foreign credit lines for settling off-balance sheet, fully funded contingent liability transactions, the major conspicuous potential source of the reported slow-down in deposit growth would be from customer current and fixed-deposit accounts. Intercontinental reported no major on-balance sheet structured financing from wholesale sources of funding.
Union Bank: Missing out on the window of opportunity to conduct a major capital raise over the last boom cycle, Union Bank reported operating performance in 2008 that adhered to its historical culture of slow, steady, incremental advancement. While much of the market saw volumes at least double in 2007/2008, capital constraints at Union Bank, and a protracted leadership transfer process ensured more moderate growth levels. On this basis, the bank was largely absent from much of the more aggressive risk asset creation that happened over the last 24 months.
Overall, however, we note that as a large bank in its own right, Union Bank is widely exposed to weakening macroeconomic conditions, perhaps more so on account of its less buoyant capital base, and less nimble operating culture. Capital adequacy levels suggest a bank with thin buffers relative to gross risk exposure levels, when measured by our more aggressive definitions of risk.
We note, however, that some of the biggest risks that the bank is exposed to are systemic in nature, with N467.9 billion being outstanding as amounts due to Union Bank from other banks and financial institutions as of March 2008, equivalent to almost 4.0x shareholders capital. These placements represented 41.4 per cent of the bank’s total asset book.
However, placements with non-bank financial institutions amounted to N110.5 billion of this amount. Gross loans came up to no more than 25.9 per cent of assets, with 12.5 per cent of assets being core liquid instruments: such as cash and FGN securities.
As a major net liquidity provider to domestic banks, Union Bank leverages its legacy retail franchise to benefit from interest rate arbitrage opportunities at the short end of the market. With a historical legacy of poor loan performance, and hence less active as a mainstream lender in recent years, the bank appears to have missed out as much on the opportunities as on the volatility that characterised market performance in 2008. Loan quality metrics continue to be troubling at Union Bank.
By our assessment, non performing loan as a share of total loans grew to 24.5 per cent as at March 2008, from 18.7 per cent in the previous year. These are levels significantly higher than any bank within our coverage, and amount to no less than N71.5 billion in absolute value of troubled loans at the bank, equivalent to 60.0 per cent of the banks total shareholders funds. Non performing loans levels have been high historically at the bank, but gross exposure numbers saw a major jump, 109.4 per cent in 2007/2008, within a loan book that grew by barely 60.0 period over the same period.
Dependent on a mix of short term deposits and institutional financing, foreign bank credit lines for funding its operations, Union Bank’s March 2008 balance sheet appeared at once vulnerable to the global financial crisis, with N120.1 billion in amounts due to banks outside Nigeria, and to the domestic liquidity crisis, with N616billion in deposits maturing in less than one month.
These two funding sources were the two major components of the bank’s book of liabilities, at 12.0 per cent and 61.4 per cent respectively. We note that retaining customer deposits, and diversifying away from these two major sources of funding will be a major challenge for the bank in 2009, along with the continuing struggle with credit quality, operational efficiency, innovation and market share retention.” It was gathered that Union Bank had planned twice to raise funds from the capital market but was denied access. It had also planned to sell part of its shares to foreign investors and was not allowed to.
Oceanic Bank: R.Ajibola Oluyede of TRLPLAW, speaking on the position of Oceanic Bank said “Our client is being punished because of its heavy support for the importation of petroleum products, which is an essential commodity, and without such support could have become scarce and result in political upheaval. To ensure that the country has uninterrupted supply of petroleum products banks finance importers of petroleum products. These importers are licensed and duly approved by PPPRA an agency of the government, which issues importers with import quotas based on which it pays subsidies on imports of kerosene and petrol.
Based on amounts advised by Oceanic Bank’s customers, over N20 billion is yet to be paid by PPPRA to these customers’ accounts with Oceanic Bank in respect of LCs dating as far back as December 2008. The bank has fully paid the overseas suppliers whilst PPPRA is over eight months in arrears in reimbursing the bank. There was a letter from the Association of Major Marketers of Petroleum Products to the PPPRA advertised at page 16 of The Punch newspaper of Tuesday, August 18, 2009 which confirms that PPPRA owes members of their association over N70 billion. How are the banks that have in good faith supported the government’s petroleum subsidy programme to be held responsible for the delay by PPPRA to pay” it queried.
According to Ajibola Oluyede “CBN is fully advised of all foreign lines accessed by Oceanic Bank and at no time did CBN advise or caution against these lines. The lines are used to service the domestic economy and are used to finance critical imports like petroleum products. Whilst these positions were open the CBN without warning devalued the currency by N30 to the US dollar; without consideration for the loss implications of the open lines. For a foreign line base of $500 million it translated to a cash loss of N15 billion to the bank.
The attempt to characterise the financing of essential goods including consumables as speculative is wrong, untrue, unfair and unjust. As a result of global meltdown, foreign banks withdrew the foreign lines leading to a funding contraction. Such a funding contraction is obviously not due to mismanagement. This ought to have been predictable and support given to the banks to ensure it did not sharply affect their liquidity.
“The CBN governor said he took the actions leading to the takeover of our client because the CBN was having to guarantee interbank deposits and he read that as a sign that the system was under threat. This is clearly a fallacy. On the contrary a robust interbank system with free flow of fund between banks with shortfall and those with surplus is a crucial part of a healthy banking system.
In times of disruption like those that happened in the situations set out above this market dries up because banks are unable to measure risk. Part of the role of the CBN in such times is to aid market rejuvenation. This is what guaranteeing interbank deposits does. This is exactly what the Bank of England did recently without harm to the system. Infact it is partly responsible for the return of the system to profitability. In our country this was the understanding of the measure and the CBN had already indicated that these guarantees will be withdrawn by March 2010. It is in these circumstances therefore unjustifiable and even irrational for this peremptory takeover 8 months before the set date. Our clients trust in your sense of justice, which we have also advised, is well worth appealing to. We therefore anticipate with gratitude your prompt and decisive response”.
Reasons for CBN action: Some bankers are of the view that the CBN has every reason to intervene in the banking sector only if there is crisis. This time around they say the apex bank has bungled every reason it has adduced so far. The CBN accused the five banks of high level of non-performing loans which was attributable to poor corporate governance practices, lax credit administration processes and the absence or non-adherence to the bank’s credit risk management practices.
Thus the percentage of non-performing loans to total loans ranged from 19 per cent to 48 per cent. The five banks will, therefore, need to make additional provision of N539.09 billion. The total loan portfolio of these five banks was N2,801.92 billion. Margin loans amounted to N456.28 billion and exposure to oil and gas was N487.02 billion. Aggregate non-performing loans stood at Nl,143 billion representing 40.81 per cent.
The huge provisioning requirements have led to significant capital impairment. Consequently, all the banks are under
capitalised for their current levels of operations and are required to increase their provisions for loan losses, which impacted negatively on their capital. The CBN did not give the nation the benefit of the state of each of the banks. It gave a total view of the situation without giving specifics.
Debtors take on CBN: But a number of persons and corporate bodies listed as owing the five banks various sums of money are contesting the amount the CBN claimed they are owing. Among those who reacted to the CBN publication are the chairman of Obat Oil and Petroleum Company, Fredrick Akinruntan, businessman Jimoh Ibrahim and Rockson Engineering Company. Akinruntan described the inclusion of his name in the debtors’ list as embarrassing, claiming that the report did not reflect the reality on ground.
He was accused of owing Oceanic Bank N4.47 billion. He denied owing any unserviceable loan. He said he collected N2.5 billion from the bank to develop a property in Abuja and has never defaulted on the terms he agreed with the bank. Akinruntan said the bank should speak up on his claim. Also, Ibrahim, who is the group managing director of Global Fleet Group, denied owing Oceanic Bank N14 billion. He threatened to sue the CBN for “lying about the amount” involved. In a briefing in his office in Abuja Ibrahim said:
“My company did not owe Oceanic Bank N14. 7 billion. The CBN lied on the figure, a development that has affected the credibility of the CBN’s regulatory function.
“Oceanic Bank, by a letter dated May 18, 2009, had put all the outstanding debts of all Global Fleet Group at N8 billion as the bank acknowledged receipt of N3 billion I paid in May this year. In the letter acknowledging the receipt, the bank had written that ‘the total outstanding on your facilities will be N8 billion.’ He accused the apex bank of unfairness by describing the loan as “non-performing” even after paying N3 billion.
Ibrahim said that “the turnover on the account of Global Fleet Group since inception is over N100 billion and will need Oceanic Bank to do reconciliation and provide evidence of withdrawal to enable us pay.” Similarly, the management of Rockson Engineering Company said that the funds it allegedly raised from Intercontinental Bank were meant for implementation of the power projects it is handling for the Federal Government, which has failed to release money for the plants.
The projects are the Alaoji (1072MW), Gbarain (225MW), Egbema (338MW) and Omoku (230MW) power stations. Describing the step taken by the CBN as inaccurate and uncalled for, the chairman of Rockson, Senator Anietie Okon, said the firm was indebted to Intercontinental Bank to the tune of N14.4 billion and not N36.9 billion as claimed by the apex bank.
His words: “Specifically, CBN claims that Rockson Engineering Limited is indebted to Intercontinental Bank Plc to the tune of N36, 989, 685, 692.84. For the avoidance of doubt, we like to state that our reconciled and mutually agreed commitment with Messrs Intercontinental Bank Plc is N14, 423, 291, 589.49.”
A statement from Dangote Industries stated inter alia: “We refer to the CBN advertorial in various print publications dated 19th August 2009, listing Alhaji Aliko Dangote as a director and shareholder of Dansa Oil and Gas Limited, a defaulting customer to Intercontinental Bank Plc. We wish to state for the records that Alhaji Aliko Dangote is neither a director nor a shareholder of Dansa Oil and Gas Limited as averred.
This is verifiable through the Company Registration documents held by the Corporate Affairs Commission (CAC) wherein directors of the said company are listed as: Alhaji Sani Dangote, Alhaji Mohammed Dangote, Mr Ali Dangote. With reference to Dangote Industries Limited’s indebtedness to Oceanic Bank Plc to the value of N2,526,460,000.00, we are in dispute over the charges and are very close to resolution.
A company of our size will take on facilities from bankers and financiers in the course of our business. As a responsible organization, we deliver to our obligations in servicing these loans. “It is on record that our credit rating remains admirable and our bankers have confidence in our ability to meet our obligations.”
Management of Dansa Oil & Gas Limited on its part said “We refer to the advertorial published by the Central Bank of Nigeria, dated August 19, 2009, where Dansa Oil and Gas Limited was listed as one of the defaulting customers of Intercontinental Bank plc and wish to state the facts as follows: Intercontinental Bank plc in 2007/2008 granted a facility to Dansa Oil & Gas for stock acquisition in the Nigerian capital market.
The facility was used 100 per cent for the purpose it was granted. The funds were disbursed directly to the stockbroker appointed by Intercontinental Bank and the shares were held in trust for the bank inclusive of our own contribution of 30 per cent in cash and shares.
Part of the documents given to Intercontinental Bank to support the loan facility included the mandate to sell without recourse to Dansa Oil & Gas Limited at any point, should the value of the stocks fall below 120 per cent, a right Intercontinental Bank did not exercise till the market fell far below that value.
Given the market situation and having understood the implications of not exercising the right to sell, Intercontinental Bank approached Dansa Oil & Gas Limited on April 28 2009 requesting a meeting. During the meeting Intercontinental Bank proposed a restructure of the facility for a new seven year tenure within which period they expected that the market will have recovered and they will be able to exercise the right to sell. This fresh proposal came with a moratorium period for one year for both interest and principal effective 2009.

How Sanusi Allegedly Set Banks MDs Up
By Onyedika Agbedo
AGAINST the backdrop of the recent sacking of three more bank MDs, by the Central Bank of Nigeria (CBN), bringing the number of banks whose managing and executive directors have been sacked to eight, analysts have continued to look at the critical reasons behind the controversial 'reforms' by the apex bank.
Industry sources alleged that most of the banks affected by the reforms were wittingly or unwittingly set up for the circumstances that eventually led to the sack of their directors.
For instance, it is being alleged that the CBN's deliberate and sudden switch from Expanded Discount Window (EDW) to Inter-bank market signalled the beginning of erosion of liquidity and stability in the banking sector.
Sources alleged that through a text message on June 16, this year, the CBN Governor, Mallam Sanusi Lamido Sanusi had directed nine banks managing directors to proceed to Inter-bank henceforth "in view of the closure of EDW."
According to the source, banks going to EDW did not mean they had problems. "It was a trading window popularly called arbitraging in money market. It is not a liquidity window. At EDW, banks borrow at 10 per cent interest and lend at between 14 per cent and above," claimed the source.
The Guardian also gathered that 23 of the 24 banks were at the EDW with Standard Chartered Bank being the only exception and that out of the 23 banks, 11 were regular at the EDW.
At the time of CBN's first intervention, FinBank, for instance, The Guardian learnt, had taken N50 billion which it placed in other banks. It had Inter-bank placements with other banks totalling N45 billion. This was the same setting for Union and Intercontinental Banks.
"When Sanusi shut EDW without notice, the banks were predictably caught in-between and naturally requested enough time to enable them to recover the money they had already lent out to other banks. The CBN refused on the grounds that the window was inappropriate.
"Sanusi instead directed them to go to 'Inter-bank' and went ahead to introduce 'Guaranteed Inter-bank'. The banks were now forced to patronise this in compliance with his text message of June 16."
The source said: " If Sanusi had given the banks the shortest loan tenures of 90 days notice (but did not because he had already made up his mind to undermine them) these monies lent out would have come back. The contradictions in the debtors' list showed that the money was back between June, July and August whereas CBN cut off date was May 31, this year. This was the major reason why CBN's debtors list was so controversial."

i think all the pro sanusi should tell us what has sls achieved since assuming cbn power, apart from the allegation and sacking of the ceo's which later worsen the banking industry as confidence is lost. then job loss that characterise post sanusi reform.
we should not be talking base on promise but what we are seen and what we can percieve.
this everybody knows is affecting other sectors and economy in general.
and some mumus are saying sanusi weldone.
Latest on sanusi's reform , to encourage lending cbn reduce rates and banks have to reduce their fixed deposit rates too.
as i talk to u and according to thisday newspaper on monday, ppl are doing capital flight and take their money to ghana and other neignbouring west african countries for better interest rates.
fix deposit rate is as low as 3% and maxi of 7% for 1billion and above.
what type of economist or cbn governor is sanusi
what makes sanusi to be the one for this job.

nigerians should wake up.


long life nigeria , long life RP

i need the forum's help,
me , my wife and daughter of 5 months old have interview on nextweek @ america embassy for dv visa lottery.
what are the likely quetions that we may expect.
my wife applied as single but we were married before the 1st letter was sent to us. we both filled the forms and now we have a baby that was not included in the form.
we have not informed the embassy or kentucy office b4 we got the letter for the interview.
we have gotten an international passport for the baby too and did her medicals.
hoping to go for the interview and be successful by the grace of God.
what are the likely questions we may expect.
this o level questions is another issue

please. forum advise

side

sanusi is our heroe. after tafa balogun.

I pray God reward him for all his deeds accordingly. Amen

Ribadu and El rufai be expecting another radical northerner like you very soon. Everyone that keenly follow nigeria politics knows sanusi must definitely be compensated like them Ribadu and els. The moving is going toward what we call 'THE END'. Well it may have part two.

Hope they are not planning what may later turn out to be SOUTHERN AGENDA.

I think compass just quoted the almighty governor. They can be sued for libel if the quotation is wrong or something is added to the quoted speech. The fact is that all of up know that it is what sanusi can say. I swear. That is his still of talking. Ki lagbe ki le ju. Jonathan just said that he would support the reform this week. That same the the finance minister also said fg will support him if the reform wont jeopardise the economy. May be that is his fear. Cos there is an agenda to work to achieve which the acting president may not support as he is not in the picture. The question fall is 'what is the net benefit of the sanusi's reform so far. Positive or negative? God shall safe us.

The guy is afraid of what obj might have advised jonathan. Afterall, he jailed obj man, thief george. Yoruba them they say 'ki oju mari ibi ese(gbogbo ara) ni oogun re. i.e for eyes not to see bad things/happenings, leg (the whole body) is the medicine. I think the anakonda guy tried for leaving through leave.

Are there real. Or you people want to be reach by gathering there 1k 3k from unsuspecting and greedy nigerians. Any way, I will give it a try.

CBN Softpedals On Banks' Takeover, Meets Shareholders


, As Skye Bank Names Durosinmi-Etti As Akinfeminwa's Successor
By Enitar Ugwu and Onyedika Agbedo

THERE are indications that the initial plans of the Central Bank of Nigeria (CBN) to outrightly takeover the rescued commercial banks may have collapsed, as the apex bank intends to open discussions with key shareholders of the affected banks on the way out.

The affected banks are Oceanic, Intercontinental, Union, PHB, Afribank, Finbank and Spring.

Meanwhile, following the recent CBN policy directive stipulating a 10-year maximum tenure for banks' chief executives, the Board of Directors of Skye Bank has appointed Mr. Kehinde Durosinmi-Etti as successor to Mr. Akinsola Akinfemiwa, the out-going chief executive of the bank.

Akinfemiwa is one of those caught by the policy directive, having already spent 10 years as GMD/CEO of Legacy Prudent Bank and Skye Bank cumulatively.

The apex bank had planned to hand over the rescued banks to some preferred core local or foreign investors on a wholesale acquisition basis.

But sources close to the financial advisers appointed by CBN to re-examine the policy hinted The Guardian at the weekend that the initially preferred investors had been foot-dragging on the Expression Of Interest (EOI) since September last year when CBN approached them, a development that might have forced the apex bank to throw it open by appointing the advisers late last year and mandating them to scout for investors.

The advisers are Deutsche Bank, StanbicIBTC, and Chapelhill & Denham.

They had returned to the CBN with an avalanche of problems militating against positive response from hundreds of investor-call letters already sent out.

The major problem cited was inadequate legal backing for any such acquisition and safety of the investments, against the background of the legal controversy surrounding CBN's intervention in the affected banks.

This development may have made the CBN hold back on its plan to publish last month the guideline on acquisition of the banks, as its governor, Mallam Sanusi Lamido Sanusi, had promised late last year.

Close observers of the new developments say this may have necessitated the use of the Economic and Financial Crimes Commission (EFCC) and other agencies to force the original owners of the banks to back down on their tough stance against a forceful takeover of their bank by either the CBN or any investor appointed by it.

It was generally believed that due process was not followed in the intervention, which raised legal roadblock against new investor confidence.

However, sources close to the apex bank hinted that the CBN has initiated dialogue with the original owners of the banks to find a common ground for a resolution of the seeming logjam.

A meeting with some of the directors was held two weeks ago in Abuja, but no immediate agreement was reached. The most problematic among the banks are Intercontinental and Oceanic.

But it was also learnt that the apex bank is holding some other options close to its chest in the event that the owners refuse to toe its line.

The most likely options, according to insiders, are either liquidation or nationalization. But it is believed that liquidation would be more favoured, since public opinion has consistently been against nationalisation.

However, even the liquidation option was also said to be ''toxic,' since it will lead to some other serious consequences for the entire economy.

It was gathered that a third option- recapitalisation by the owners- have also run into serious problem, as the owners are now arguing that CBN's intervention has worsened the financial health of their banks, making recapitalisation a near impossibility, a situation that also made acquisition a difficult option even without legal huddles.

CBN is believed to be back to the drawing board on other options to save the situation.

Durosinmi-Etti will assume office on August 1, 2010. A seasoned banker with many years of cognate banking experience, he started his banking career in 1987 and rose to become the managing director of legacy EIB.

He is currently the Deputy Managing Director of the bank, a position he has held since January 2006, when Skye Bank began operations.

The Board also approved the appointment of Timothy Oguntayo as Deputy Managing Director designate. Oguntayo is presently an Executive Director in the bank, and has over 28 years of banking experience spanning Corporate Finance, Credit and Risk Management, Corporate Banking, Investment Banking, Project finance and commercial banking.



IT's WELL EVEN INSIDE THE WELL

CBN Softpedals On Banks' Takeover, Meets Shareholders


, As Skye Bank Names Durosinmi-Etti As Akinfeminwa's Successor
By Enitar Ugwu and Onyedika Agbedo

THERE are indications that the initial plans of the Central Bank of Nigeria (CBN) to outrightly takeover the rescued commercial banks may have collapsed, as the apex bank intends to open discussions with key shareholders of the affected banks on the way out.

The affected banks are Oceanic, Intercontinental, Union, PHB, Afribank, Finbank and Spring.

Meanwhile, following the recent CBN policy directive stipulating a 10-year maximum tenure for banks' chief executives, the Board of Directors of Skye Bank has appointed Mr. Kehinde Durosinmi-Etti as successor to Mr. Akinsola Akinfemiwa, the out-going chief executive of the bank.

Akinfemiwa is one of those caught by the policy directive, having already spent 10 years as GMD/CEO of Legacy Prudent Bank and Skye Bank cumulatively.

The apex bank had planned to hand over the rescued banks to some preferred core local or foreign investors on a wholesale acquisition basis.

But sources close to the financial advisers appointed by CBN to re-examine the policy hinted The Guardian at the weekend that the initially preferred investors had been foot-dragging on the Expression Of Interest (EOI) since September last year when CBN approached them, a development that might have forced the apex bank to throw it open by appointing the advisers late last year and mandating them to scout for investors.

The advisers are Deutsche Bank, StanbicIBTC, and Chapelhill & Denham.

They had returned to the CBN with an avalanche of problems militating against positive response from hundreds of investor-call letters already sent out.

The major problem cited was inadequate legal backing for any such acquisition and safety of the investments, against the background of the legal controversy surrounding CBN's intervention in the affected banks.

This development may have made the CBN hold back on its plan to publish last month the guideline on acquisition of the banks, as its governor, Mallam Sanusi Lamido Sanusi, had promised late last year.

Close observers of the new developments say this may have necessitated the use of the Economic and Financial Crimes Commission (EFCC) and other agencies to force the original owners of the banks to back down on their tough stance against a forceful takeover of their bank by either the CBN or any investor appointed by it.

It was generally believed that due process was not followed in the intervention, which raised legal roadblock against new investor confidence.

However, sources close to the apex bank hinted that the CBN has initiated dialogue with the original owners of the banks to find a common ground for a resolution of the seeming logjam.

A meeting with some of the directors was held two weeks ago in Abuja, but no immediate agreement was reached. The most problematic among the banks are Intercontinental and Oceanic.

But it was also learnt that the apex bank is holding some other options close to its chest in the event that the owners refuse to toe its line.

The most likely options, according to insiders, are either liquidation or nationalization. But it is believed that liquidation would be more favoured, since public opinion has consistently been against nationalisation.

However, even the liquidation option was also said to be ''toxic,' since it will lead to some other serious consequences for the entire economy.

It was gathered that a third option- recapitalisation by the owners- have also run into serious problem, as the owners are now arguing that CBN's intervention has worsened the financial health of their banks, making recapitalisation a near impossibility, a situation that also made acquisition a difficult option even without legal huddles.

CBN is believed to be back to the drawing board on other options to save the situation.

Durosinmi-Etti will assume office on August 1, 2010. A seasoned banker with many years of cognate banking experience, he started his banking career in 1987 and rose to become the managing director of legacy EIB.

He is currently the Deputy Managing Director of the bank, a position he has held since January 2006, when Skye Bank began operations.

The Board also approved the appointment of Timothy Oguntayo as Deputy Managing Director designate. Oguntayo is presently an Executive Director in the bank, and has over 28 years of banking experience spanning Corporate Finance, Credit and Risk Management, Corporate Banking, Investment Banking, Project finance and commercial banking.



IT'S WELL< EVEN INSIDE THE WELL

For your information Prof charles soludo started this islamic banking stuff. Just that it was not started. Islamic banking is not the problem as it is just banking without interest payment or recieve but profits sharing from the investment of the loan. The main problem is the hausas in the north that have caused more harm than good to the economy and the entity called nigeria.

Well done Sanusi. By the time all the sacked bankers join the array of unemployed nigerians, and some of them and their dependants dont have enough to cater 4 their needs. May be crime can increase. Economy get devastated. All the sanusi's , his advocates, and other loyal northerners eyes will clear. Thank God what is happening now is for all. GOOD OR BAD All of us go benefit positively or negatively. I just pity some of us that falls under catigory 'grass' that usually suffer when 2 elephants fight. I pray God help us.

Beaf!!!

Gbam!

asha 80:

are you one of those sacked from intercontinental bank

NO.

are u ok

SOLUDO vs SANUSI.

who among them do you prefer?

support your choice with reasons.

, do you have facts and figures


God shall help us.

SOLUDO vs SANUSI.

who among them do you prefer?

support your choice with reasons.

, do you have facts and figures


God shall help us.