CBN sacks bank executives

[gogannaka]

It seems like the new CBN governor does not hesitate at using the powers granted him.
After probing 11 out of the 24 banks in the country,he has already sacked 5 Bank MD's (intercontinental bank,oceanic bank,finbank,union bank and afribank) with analysts saying more will come.

Most people believe it is a northern agenda.
If 50% of the banks probed have skeletons in their cupboards then is it safe to keep our money in the banks any longer?
The federal government has also injected 400billion naira into the banks.
Are we sure this economic meltdown will not bring our economy down?

[Dan-Borno]

season of failed banks again.  i am startled by the news i
read online, it is always the same story, only top shots in
naija are involved in everything, after all, me kaci mai kasha
that the poor man will save in the bank?

we are watching, that is, if sanusi is doing this for the sake
of humanity and nigeria in particular.  when soludo was on
seat, he is a saint, now new things have started resurfacing.

[Dante]

Its really good re-shuffling the debtors. But too sad the government has to announce this so publicly. In developed countries, this happens everyday or every week there must be a target if the account doesnt perform.

[bakangizo]

No cause for alarm. No bank would be allowed to fail.

[waduz]

BKG, we all hope so. But could you elaborate more why " No bank would be allowed to fail"?

[gogannaka]

@ muntata,it is even more worse when the list published by the CBN contained errors. Most of the debtors have denied that their debts are non-performing.

In my own opinion the EFCC is just trying to show its relevance after receiving an F from the US secretary of state but they have nothing tangible to hold against the sacked bank chiefs.
@ BKGZ how is the govt planning on supporting the weak banks? By injecting tax payers money into these banks or by selling them to foreign or richer banks?

I remember a time when there were rumours that intercontinental bank was having problems. The CBN under Mr Soludo advertised(Full page) on the national dailies on behalf of intercontinental bank, assuring people that the bank is sound and healthy. Now,few months later it is only evident that the rumours were actually true.
I think Soludo played a part in the Bank's crises.

[HUSNAA]

Its really good re-shuffling the debtors. But too sad the government has to announce this so publicly. In developed countries, this happens everyday or every week there must be a target if the account doesnt perform.

Nigerians are very sensitive to naming and shaming and this acts as an effective deterrent. I see no reason why ppl who contribute to the dereliction of the country shouldnt be exposed. If we protect their identities we are not helping the situation. Now that these ppl who are looked up to in society have been exposed despite their denials of any wrong doing, it will make others stop and think before acting similarly and I can tell you that what happened with Ribadu and El Rufai as a result of their campaigns against corruption will not happen to Lamido Sanusi.

[gogannaka]

Husnaa i think you got it all wrong.
The CBN exposed the list of Bank Debtors whose loans are non-performing.
The point is that, it is their companies that collected the loans and not the individuals and as it is in the law,the company is a legal entity on its own which can sue and be sued. I see no reason why the CBN had to publish the names of the board members of the companies.
They didn't go themselves to collect the loans,it is the managements that collect loans.
Also,there is no way businesses like theirs can do without loans from banks likewise the banks cannot make profit without giving out loans.

It is not uncommon for businesses to have difficulties paying back loans due to one reason or the other,be it tough economic conditions (like with Nigeria),losses, mismanagement etc. So why must the CBN so publicly announce to the world that these people are bank debtors.It looks like it wants to tarnish their image.
So far,majority of the debtors have denied their loans to be 'non-performing'. If the CBN is fair then it should list the loans which some of these companies collected which are 'performing'.
If it were other countries they would have started suing the CBN for damages.
It isn't fair honestly. But to the talaka it is the news of the day don babu abun da talaka yake so kamar yaga faduwar mai kudi.

[Muhsin]

I respect this view, GGNK.

[HUSNAA]

Husnaa i think you got it all wrong.
The CBN exposed the list of Bank Debtors whose loans are non-performing.
The point is that, it is their companies that collected the loans and not the individuals and as it is in the law,the company is a legal entity on its own which can sue and be sued. I see no reason why the CBN had to publish the names of the board members of the companies.
They didn't go themselves to collect the loans,it is the managements that collect loans.
Also,there is no way businesses like theirs can do without loans from banks likewise the banks cannot make profit without giving out loans.

It is not uncommon for businesses to have difficulties paying back loans due to one reason or the other,be it tough economic conditions (like with Nigeria),losses, mismanagement etc. So why must the CBN so publicly announce to the world that these people are bank debtors.It looks like it wants to tarnish their image.
So far,majority of the debtors have denied their loans to be 'non-performing'. If the CBN is fair then it should list the loans which some of these companies collected which are 'performing'.
If it were other countries they would have started suing the CBN for damages.
It isn't fair honestly. But to the talaka it is the news of the day don babu abun da talaka yake so kamar yaga faduwar mai kudi.

Performing loans? which performiing loans? When all the money is in a few pockets or companies as you would like to call it then how can CBN name any performing companies? THERE ARE NONE!!!!!!!!!!!!!!!!!
It doesnt matter that it is the companies not the individuals who collected the loans. The companies are synonymous with the individuals that own the controlling share of the companies and there is no way the company will collect a loan without their say so. I stand by what I say... Name and shame. I see u are acting in exactly the same way as alamesiegha's ppl reacted when he was caught...............

[bakangizo]

Husnaa is right. You see, goga, the issue of legal entity does not arise here. Desperate times call for desperate measures. If you don't do this, then getting those monies back would hard indeed. Do you know that already more than N25 Billion was recovered in just one week after the publication of the list? In nigeria, and indeed the world over, you can't shield the individuals from the commitments of their companies when it comes to issues like these. Remember the case of ENRON in the US? It's all about corporate governance, honesty, transparency and ethics. When these were abused and the people/public funds is placed in jeopardy, you can't hide behind the sanctity of "legal entity". In these situations, the people behind the corporations are unmasked. That is what is referred to as 'Lifting the veil of Incorporation'.

These are ppl that  collected money that u and I have deposited in these banks. Our small small deposits of 5, 10, 20 thousands. And then refused to pay back. The worst is that in most cases the loans were channelled to personal uses. They were used to finance useless, flamboyantly extravagant lifestyles. An example: Among the defaulters is this guy in Katsina. He's owing close to N5 Billion. But come to KT and see the type of house he's building. He has probably the finest house being built in katsina. A mega mansion in the GRA, just close to Goruba Estate. He is the talk of the town, while everyone was wondering how he suddenly "made it". During his wedding few months ago, planes were chartered to Katsina, making the airport a beehive of planes. You will think it was an Oil Sheik's wedding. ;D
But I agreed that some have genuine reasons why their loans were non-performing. This they will sort out with the banks.

Husnaa is right. You see, goga, the issue of legal entity does not arise here. Desperate times call for desperate measures. If you don't do this, then getting those monies back would hard indeed. Do you know that already more than N25 Billion was recovered in just one week after the publication of the list? In nigeria, and indeed the world over, you can't shield the individuals from the commitments of their companies when it comes to issues like these. Remember the case of ENRON in the US? It's all about corporate governance, honesty, transparency and ethics. When these were abused and the people/public funds is placed in jeopardy, you can't hide behind the sanctity of "legal entity". In these situations, the people behind the corporations are unmasked. That is what is referred to as 'Lifting the veil of Incorporation'.

These are ppl that  collected money that u and I have deposited in these banks. Our small small deposits of 5, 10, 20 thousands. And then refused to pay back. The worst is that in most cases the loans were channelled to personal uses. They were used to finance useless, flamboyantly extravagant lifestyles. An example: Among the defaulters is this guy in Katsina. He's owing close to N5 Billion. But come to KT and see the type of house he's building. He has probably the finest house being built in katsina. A mega mansion in the GRA, just close to Goruba Estate. He is the talk of the town, while everyone was wondering how he suddenly "made it". During his wedding few months ago, planes were chartered to Katsina, making the airport a beehive of planes. You will think it was an Oil Sheik's wedding. ;D
But I agreed that some have genuine reasons why their loans were non-performing. This they will sort out with the banks.

BKG, we all hope so. But could you elaborate more why " No bank would be allowed to fail"?

The failure of any bank now would be disastrous. It will have far-reaching negative effects on the economy. So the CBN won't allow any to fall. Which was why those 5 banks were injected with some funds to help buoy them up. At the end of the day, the banks would be encouraged to merge, and in some cases the weaker ones would be acquired by stronger ones.

In my own opinion the EFCC is just trying to show its relevance after receiving an F from the US secretary of state but they have nothing tangible to hold against the sacked bank chiefs.
@ BKGZ how is the govt planning on supporting the weak banks? By injecting tax payers money into these banks or by selling them to foreign or richer banks?

I remember a time when there were rumours that intercontinental bank was having problems. The CBN under Mr Soludo advertised(Full page) on the national dailies on behalf of intercontinental bank, assuring people that the bank is sound and healthy. Now,few months later it is only evident that the rumours were actually true.
I think Soludo played a part in the Bank's crises.

Firstly, believe me there's a lot against the sacked banks MDs. There was gross insider abuse, negligence, not to talk of collusion with  the culprits. Some of those companies can be traced back to them.

Secondly, the govt/CBN planned to inject some funds into the weak banks. Of course it is tax payers money. But it would be used to save the Tax Payers. ;D But it is important to note that this 'bail out' money is not free. It is in the form of a soft loan. Or rather an "investment" by the govt into the banks. The govt will later redeem its money after the banks have shored up their capital. But CBN's aiming to encourage the banks to merge. The target is to have about 15 banks or so.

Thirdly, when the Intercontinental rumour was flying about, Soludo did what was the best for everyone then. If the CBN had kept quite, the rumour would gain credibility. This will lead to panic, and subsquent "run" on the bank. That means an immediate collapse of that bank. Now, the biggest problem is it won't stop there. There will be a ripple effect in the banking industry, spreading to other banks and financial institutions. That is the fear. So the best thing is to calm the public, and hopefully work to solve the problem 'in-house'.