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.
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.
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.
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'.
