{"id":310,"date":"2018-09-24T12:18:00","date_gmt":"2018-09-24T12:18:00","guid":{"rendered":"http:\/\/thefreezoneblog.com\/blog\/2018\/09\/24\/politics-of-banks-bailou\/"},"modified":"2018-09-24T12:18:00","modified_gmt":"2018-09-24T12:18:00","slug":"politics-of-banks-bailou","status":"publish","type":"post","link":"https:\/\/thefreezonechannel.com\/old\/politics-of-banks-bailou\/","title":{"rendered":"Politics of banks\u2019 bailout"},"content":{"rendered":"
\n<\/a><\/div>\n
\n<\/div>\n
\nAn analysis by Business Highlights<\/u><\/u><\/div>\n
\n<\/div>\n
\nAt a time Nigerians are upbeat that the
\nNigeria Deposit Insurance Corporation (NDIC) and the Central Bank of
\nNigeria (CBN), through which the N640bn (about $7bn) bailout was
\nlavishly given out to nine banks during the 2006 to
\n 2008 banking shakeups will lead the process of the recovery, on Friday
\nlast week, both federal agencies dashed away another N786bn to one bank
\nalone; Skye, withdrew its license and hurriedly created Polaris Bank as
\nits receiving bridge bank.<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nWhile announcing the revocation of Skye
\nBank\u2019s licence on Friday in Abuja, CBN Governor, Mr. Godwin Emefiele was
\n quick to reveal that a bridge bank known as Polaris Bank, created by
\nthe Nigeria Deposit Insurance Corporation (NDIC)
\n has assumed the assets and liabilities of Skye Bank.<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nAccording to him, \u201cThe bridge bank will
\ninject N786bn to recapitalise the bank and return it to stability and
\nprofitability before selling to interested investors\u201d.<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nReactions of industry analysts who spoke
\nto Business Highlights Abuja Bureau chief shortly after the revocation
\nannouncement were mixed as many traced the development to the
\nover-bearing negative influence of nonperforming loans
\n (NPL).<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nAn issue of national economic importance
\nnow is that a total of N1.426tn (N640bn plus N786bn) of Nigerian
\ncommonwealth are in the hands of few banks without any clear recovery
\ntimelines.<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nBusiness Hilights recalls that the
\nembattled chairman of the Special Presidential Panel on Recovery of
\nGovernment Assets and Properties\u2019 (SPPRGAP), Mr. Okoi Obono-Obla had
\nearlier in the month, announced government\u2019s ongoing investigations
\n and plans to recover all bailout funds given to stressed banks in the
\nwake of banking reforms during the time current Emir of Kano, Mallam
\nSanusi Lamido Sanusi was governor of the apex bank.<\/u><\/u><\/div>\n
\nChecks on the affected banks\u2019 annual
\nreports on the bailout (N640bn) show that the bailouts never appeared in
\n their yearly annual reports, a sign of fraud-driven complacency.<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nObono-Obla had made it clear that the
\nbanks had yet to refund the money over a decade after, stressing that
\nthe N640bn (about $7bn) bailout fund was not a gift to the commercial
\nbanks and so must be recovered and returned to government\u2019s
\n coffers.<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nHowever, in a swift, the Federal
\nGovernment has dropped Mr Okoi Obono-Obla as the Chairman, Special
\nInvestigation Panel on recovery of Public Property on grounds of
\nflagrant granting of media interviews on critical issues on the
\n eve of election.<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nThe announcement was made by Mr Salihu
\nIsah, Special Adviser, Media and Publicity to the Minister of Justice,
\nMr Abubakar Malami.<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nHe said that Obono-Obla was directed to
\nstop carrying out operations as head of the panel and that the directive
\n which was issued in a letter addressed to the panel\u2019s chairman was
\nsigned by Malami.<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nAccording to Isah, the decision to
\nrelease Obono-Obla of the position was based on the grounds that his
\nrecent actions were contrary to the enabling act that established the
\npanel.<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nIt was not clear whether the removal will end the planned recovery process of the bailout funds for banks between 2006 and 2008.<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nObono-Obla had revealed that \u201cWe are
\ncurrently doing a lot of investigations to recover monies that have been
\n taken away from the people of Nigeria.<\/u><\/u><\/div>\n
\n\u201cOne of them is the almost seven billion
\ndollars bailout fund that the Central Bank of Nigeria granted commercial
\n banks in 2006, 2007 and 2008.<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\n\u201cAfter 13 years or so, these commercial banks have not returned that money to the coffers of the Federal Government of Nigeria.<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\n\u201cWhen we enquired from the Central Bank
\nof Nigeria (CBN) the status of that money, the banks told us that the
\nmoney was \u2018dashed\u2019 (given free) to the commercial banks,\u2019\u2019 he said.<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nThe panel chairman said that the money
\nbelonged to the people of Nigeria and so could not be given away like
\nthat to commercial banks owned by private individuals.<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nBusiness Hilights recalls that barely one
\n month after former CBN Governor and current Emir of Kano, Alhaji Sanusi
\n Lamido Sanusi assumed duty, he raised alarm that by the fact that the
\ntotal amount outstanding for banks at the
\n Expanded Discount Window (EDW) was N256.571 billion, most of which was
\nowed by five banks including Bank PHB Plc (Keystone Bank), Spring Bank
\nPlc, Equitorial Trust Bank Limited (Sterling Bank Plc) and Wema Bank
\nPlc.<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nIt is important to recall that the entire
\n reform effort by Governor Sanusi followed a significant reform effort
\nbegun by his predecessor, Prof Charles
\n<\/u><\/u><\/div>\n
\nSoludo in 2004 on the consolidation of the banking industry in Nigeria.<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nSanusi stated further that a review of
\nthe activity in the EDW showed that four banks including
\nIntercontinental Bank (now Access Bank), Union Bank, Oceanic Bank (now
\nEcobank) and AfriBank (now Mainstreet Bank) had been almost
\n permanently locked in as borrowers and were clearly unable to repay
\ntheir obligations. A fifth bank, he added, had been a very frequent
\nborrower when its profile ordinarily should have placed it among the net
\n placers of funds in the market.<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nAccording to him, \u201cWhereas the five banks
\n were by no means the only ones to have benefited from the EDW, the
\npersistence and frequency of their demand pointed to a deeper problem
\nand the CBN identified them as probable source
\n of financial instability, most likely suffering from deeper problems
\ndue to non-performing loans,\u201d said Sanusi.<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nTo get to the root of the matter, the
\nGovernor ordered a joint examination of 10 banks by the CBN and the
\nNigerian Deposit Insurance Corporation (NDIC).<\/u><\/u><\/div>\n
\nThe 10 banks were Diamond Bank, First
\nBank, United Bank for Africa, Guaranty Trust bank and Sterling Bank,
\nAfribank Plc, Intercontinental Bank Plc, Union Bank of Nigeria Plc,
\nOceanic International Bank Plc and Finbank Plc.<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nBy the result of the examination, which
\nwas made public on August 14, the CBN found five institutions in a
\n\u2018grave situation\u2019 namely Afribank Plc, Intercontinental Bank Plc, Union
\nBank of Nigeria Plc, Oceanic International Bank
\n Plc and Finbank Plc.<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nSanusi said the Management was found to
\nhave also acted in a manner detrimental to the interest of their
\ndepositors and creditors. In exercise of the powers of his office as
\ncontained in Sections 33 and 35 of the Banks and Other
\n Financial Institutions Act 1991, as amended, and after securing the
\nconsent of the Board of Directors of the CBN, Sanusi removed and
\nreplaced the executive management of the five banks. He injected N420
\nbillion in the form of tier 2 capital to the five banks
\n to enable them continue as going concern.<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nAfter the action on the five banks and
\nthe clean bill of health to the five other banks, the CBN commenced the
\naudit of the remaining 14 banks namely: Bank PHB, Equitorial Trust Bank,
\n Spring Bank, Wema Bank, Access Bank Plc, Citibank
\n Nigeria Limited, Ecobank Nigeria Plc, Fidelity Bank Plc, First City
\nMonument Bank Plc, Skye Bank Plc, Stanbic IBTC Bank Plc, Standard
\nChartered Bank Limited, Zenith Bank Plc and Unity Bank.<\/u><\/u><\/div>\n

<\/p>\n

\n<\/u> <\/div>\n","protected":false},"excerpt":{"rendered":"

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 […]<\/p>\n","protected":false},"author":1,"featured_media":1353,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[80],"class_list":["post-310","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","tag-finance","has-post-title","has-post-date","has-post-category","has-post-tag","has-post-comment","has-post-author",""],"yoast_head":"\nPolitics of banks\u2019 bailout - The Freezone Channel<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/thefreezonechannel.com\/old\/politics-of-banks-bailou\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Politics of banks\u2019 bailout - 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