An analysis by Business Highlights
At a time Nigerians are upbeat that the
Nigeria Deposit Insurance Corporation (NDIC) and the Central Bank of
Nigeria (CBN), through which the N640bn (about $7bn) bailout was
lavishly given out to nine banks during the 2006 to
2008 banking shakeups will lead the process of the recovery, on Friday
last week, both federal agencies dashed away another N786bn to one bank
alone; Skye, withdrew its license and hurriedly created Polaris Bank as
its receiving bridge bank.
Nigeria Deposit Insurance Corporation (NDIC) and the Central Bank of
Nigeria (CBN), through which the N640bn (about $7bn) bailout was
lavishly given out to nine banks during the 2006 to
2008 banking shakeups will lead the process of the recovery, on Friday
last week, both federal agencies dashed away another N786bn to one bank
alone; Skye, withdrew its license and hurriedly created Polaris Bank as
its receiving bridge bank.
While announcing the revocation of Skye
Bank’s licence on Friday in Abuja, CBN Governor, Mr. Godwin Emefiele was
quick to reveal that a bridge bank known as Polaris Bank, created by
the Nigeria Deposit Insurance Corporation (NDIC)
has assumed the assets and liabilities of Skye Bank.
Bank’s licence on Friday in Abuja, CBN Governor, Mr. Godwin Emefiele was
quick to reveal that a bridge bank known as Polaris Bank, created by
the Nigeria Deposit Insurance Corporation (NDIC)
has assumed the assets and liabilities of Skye Bank.
According to him, “The bridge bank will
inject N786bn to recapitalise the bank and return it to stability and
profitability before selling to interested investors”.
inject N786bn to recapitalise the bank and return it to stability and
profitability before selling to interested investors”.
Reactions of industry analysts who spoke
to Business Highlights Abuja Bureau chief shortly after the revocation
announcement were mixed as many traced the development to the
over-bearing negative influence of nonperforming loans
(NPL).
to Business Highlights Abuja Bureau chief shortly after the revocation
announcement were mixed as many traced the development to the
over-bearing negative influence of nonperforming loans
(NPL).
An issue of national economic importance
now is that a total of N1.426tn (N640bn plus N786bn) of Nigerian
commonwealth are in the hands of few banks without any clear recovery
timelines.
now is that a total of N1.426tn (N640bn plus N786bn) of Nigerian
commonwealth are in the hands of few banks without any clear recovery
timelines.
Business Hilights recalls that the
embattled chairman of the Special Presidential Panel on Recovery of
Government Assets and Properties’ (SPPRGAP), Mr. Okoi Obono-Obla had
earlier in the month, announced government’s ongoing investigations
and plans to recover all bailout funds given to stressed banks in the
wake of banking reforms during the time current Emir of Kano, Mallam
Sanusi Lamido Sanusi was governor of the apex bank.
embattled chairman of the Special Presidential Panel on Recovery of
Government Assets and Properties’ (SPPRGAP), Mr. Okoi Obono-Obla had
earlier in the month, announced government’s ongoing investigations
and plans to recover all bailout funds given to stressed banks in the
wake of banking reforms during the time current Emir of Kano, Mallam
Sanusi Lamido Sanusi was governor of the apex bank.
Checks on the affected banks’ annual
reports on the bailout (N640bn) show that the bailouts never appeared in
their yearly annual reports, a sign of fraud-driven complacency.
reports on the bailout (N640bn) show that the bailouts never appeared in
their yearly annual reports, a sign of fraud-driven complacency.
Obono-Obla had made it clear that the
banks had yet to refund the money over a decade after, stressing that
the N640bn (about $7bn) bailout fund was not a gift to the commercial
banks and so must be recovered and returned to government’s
coffers.
banks had yet to refund the money over a decade after, stressing that
the N640bn (about $7bn) bailout fund was not a gift to the commercial
banks and so must be recovered and returned to government’s
coffers.
However, in a swift, the Federal
Government has dropped Mr Okoi Obono-Obla as the Chairman, Special
Investigation Panel on recovery of Public Property on grounds of
flagrant granting of media interviews on critical issues on the
eve of election.
Government has dropped Mr Okoi Obono-Obla as the Chairman, Special
Investigation Panel on recovery of Public Property on grounds of
flagrant granting of media interviews on critical issues on the
eve of election.
The announcement was made by Mr Salihu
Isah, Special Adviser, Media and Publicity to the Minister of Justice,
Mr Abubakar Malami.
Isah, Special Adviser, Media and Publicity to the Minister of Justice,
Mr Abubakar Malami.
He said that Obono-Obla was directed to
stop carrying out operations as head of the panel and that the directive
which was issued in a letter addressed to the panel’s chairman was
signed by Malami.
stop carrying out operations as head of the panel and that the directive
which was issued in a letter addressed to the panel’s chairman was
signed by Malami.
According to Isah, the decision to
release Obono-Obla of the position was based on the grounds that his
recent actions were contrary to the enabling act that established the
panel.
release Obono-Obla of the position was based on the grounds that his
recent actions were contrary to the enabling act that established the
panel.
It was not clear whether the removal will end the planned recovery process of the bailout funds for banks between 2006 and 2008.
Obono-Obla had revealed that “We are
currently doing a lot of investigations to recover monies that have been
taken away from the people of Nigeria.
currently doing a lot of investigations to recover monies that have been
taken away from the people of Nigeria.
“One of them is the almost seven billion
dollars bailout fund that the Central Bank of Nigeria granted commercial
banks in 2006, 2007 and 2008.
dollars bailout fund that the Central Bank of Nigeria granted commercial
banks in 2006, 2007 and 2008.
“After 13 years or so, these commercial banks have not returned that money to the coffers of the Federal Government of Nigeria.
“When we enquired from the Central Bank
of Nigeria (CBN) the status of that money, the banks told us that the
money was ‘dashed’ (given free) to the commercial banks,’’ he said.
of Nigeria (CBN) the status of that money, the banks told us that the
money was ‘dashed’ (given free) to the commercial banks,’’ he said.
The panel chairman said that the money
belonged to the people of Nigeria and so could not be given away like
that to commercial banks owned by private individuals.
belonged to the people of Nigeria and so could not be given away like
that to commercial banks owned by private individuals.
Business Hilights recalls that barely one
month after former CBN Governor and current Emir of Kano, Alhaji Sanusi
Lamido Sanusi assumed duty, he raised alarm that by the fact that the
total amount outstanding for banks at the
Expanded Discount Window (EDW) was N256.571 billion, most of which was
owed by five banks including Bank PHB Plc (Keystone Bank), Spring Bank
Plc, Equitorial Trust Bank Limited (Sterling Bank Plc) and Wema Bank
Plc.
month after former CBN Governor and current Emir of Kano, Alhaji Sanusi
Lamido Sanusi assumed duty, he raised alarm that by the fact that the
total amount outstanding for banks at the
Expanded Discount Window (EDW) was N256.571 billion, most of which was
owed by five banks including Bank PHB Plc (Keystone Bank), Spring Bank
Plc, Equitorial Trust Bank Limited (Sterling Bank Plc) and Wema Bank
Plc.
It is important to recall that the entire
reform effort by Governor Sanusi followed a significant reform effort
begun by his predecessor, Prof Charles
reform effort by Governor Sanusi followed a significant reform effort
begun by his predecessor, Prof Charles
Soludo in 2004 on the consolidation of the banking industry in Nigeria.
Sanusi stated further that a review of
the activity in the EDW showed that four banks including
Intercontinental Bank (now Access Bank), Union Bank, Oceanic Bank (now
Ecobank) and AfriBank (now Mainstreet Bank) had been almost
permanently locked in as borrowers and were clearly unable to repay
their obligations. A fifth bank, he added, had been a very frequent
borrower when its profile ordinarily should have placed it among the net
placers of funds in the market.
the activity in the EDW showed that four banks including
Intercontinental Bank (now Access Bank), Union Bank, Oceanic Bank (now
Ecobank) and AfriBank (now Mainstreet Bank) had been almost
permanently locked in as borrowers and were clearly unable to repay
their obligations. A fifth bank, he added, had been a very frequent
borrower when its profile ordinarily should have placed it among the net
placers of funds in the market.
According to him, “Whereas the five banks
were by no means the only ones to have benefited from the EDW, the
persistence and frequency of their demand pointed to a deeper problem
and the CBN identified them as probable source
of financial instability, most likely suffering from deeper problems
due to non-performing loans,” said Sanusi.
were by no means the only ones to have benefited from the EDW, the
persistence and frequency of their demand pointed to a deeper problem
and the CBN identified them as probable source
of financial instability, most likely suffering from deeper problems
due to non-performing loans,” said Sanusi.
To get to the root of the matter, the
Governor ordered a joint examination of 10 banks by the CBN and the
Nigerian Deposit Insurance Corporation (NDIC).
Governor ordered a joint examination of 10 banks by the CBN and the
Nigerian Deposit Insurance Corporation (NDIC).
The 10 banks were Diamond Bank, First
Bank, United Bank for Africa, Guaranty Trust bank and Sterling Bank,
Afribank Plc, Intercontinental Bank Plc, Union Bank of Nigeria Plc,
Oceanic International Bank Plc and Finbank Plc.
Bank, United Bank for Africa, Guaranty Trust bank and Sterling Bank,
Afribank Plc, Intercontinental Bank Plc, Union Bank of Nigeria Plc,
Oceanic International Bank Plc and Finbank Plc.
By the result of the examination, which
was made public on August 14, the CBN found five institutions in a
‘grave situation’ namely Afribank Plc, Intercontinental Bank Plc, Union
Bank of Nigeria Plc, Oceanic International Bank
Plc and Finbank Plc.
was made public on August 14, the CBN found five institutions in a
‘grave situation’ namely Afribank Plc, Intercontinental Bank Plc, Union
Bank of Nigeria Plc, Oceanic International Bank
Plc and Finbank Plc.
Sanusi said the Management was found to
have also acted in a manner detrimental to the interest of their
depositors and creditors. In exercise of the powers of his office as
contained in Sections 33 and 35 of the Banks and Other
Financial Institutions Act 1991, as amended, and after securing the
consent of the Board of Directors of the CBN, Sanusi removed and
replaced the executive management of the five banks. He injected N420
billion in the form of tier 2 capital to the five banks
to enable them continue as going concern.
have also acted in a manner detrimental to the interest of their
depositors and creditors. In exercise of the powers of his office as
contained in Sections 33 and 35 of the Banks and Other
Financial Institutions Act 1991, as amended, and after securing the
consent of the Board of Directors of the CBN, Sanusi removed and
replaced the executive management of the five banks. He injected N420
billion in the form of tier 2 capital to the five banks
to enable them continue as going concern.
After the action on the five banks and
the clean bill of health to the five other banks, the CBN commenced the
audit of the remaining 14 banks namely: Bank PHB, Equitorial Trust Bank,
Spring Bank, Wema Bank, Access Bank Plc, Citibank
Nigeria Limited, Ecobank Nigeria Plc, Fidelity Bank Plc, First City
Monument Bank Plc, Skye Bank Plc, Stanbic IBTC Bank Plc, Standard
Chartered Bank Limited, Zenith Bank Plc and Unity Bank.
the clean bill of health to the five other banks, the CBN commenced the
audit of the remaining 14 banks namely: Bank PHB, Equitorial Trust Bank,
Spring Bank, Wema Bank, Access Bank Plc, Citibank
Nigeria Limited, Ecobank Nigeria Plc, Fidelity Bank Plc, First City
Monument Bank Plc, Skye Bank Plc, Stanbic IBTC Bank Plc, Standard
Chartered Bank Limited, Zenith Bank Plc and Unity Bank.
