- Apex Bank Doesn't Know How Much 'Sanctioned' Banks Need
- Says N200bn Offer Isn't Bailout
- New CEOs Asked To Make Requisition
- Anxiety Mounts As Oceanic Plans Massive Sack
The apex bank, however, said yesterday that the money was not a bailout for the banks - Equitorial Trust Bank (ETB), Bank PHB, Wema Bank and Springbank.
Rather, the managing directors of three banks, whose chief executives were recently removed, were asked to analyse the banks' records so as to determine the exact amount of fresh capital to be injected into the banks, and to present the figures to the CBN.
It is expected that the new managing directors would tomorrow convey their requirements, the total sum of which could be higher or lower than the N200 billion announced by the CBN.
Industry watchers say the failure of the CBN to determine the exact size of fresh capital required by the affected banks "has cast doubts on the integrity and transparency of the CBN audit exercise."
Former banker and Managing Consultant, Simeon and Rose Associates, Mr. Cliff Mbagwu, yesterday said the failure of the apex bank to release the funds, weeks after it announced the package, was ironical and contradicted its liquidity claims on the banks.
According to him: "Asking the new managing directors to analyse and determine how much the banks actually needed, after the CBN had announced a stipulated amount, cast doubts on the integrity of the overall audit process."
But explaining the development, the CBN said its decision on the last four banks was different from that of the first five sanctioned some months ago.
In a telephone chat with The Guardian, CBN's spokesman, Mohammed Abdullahi, said the funds would come when the banks demand for it. "As they demand, they get," he said.
"This time around, we did not use the word, 'injected'. We said we are giving them liquidity support. So, if they ask, they get it. That is why injection is different from providing liquidity support," he added.
Meanwhile, sources in some of the first five banks that got N420 billion from the CBN, said the new executive directors were subjecting marketers to unrealistic targets, an issue of worry to regulators before the current intervention by the Sanusi-led CBN.
Certainly, anxiety is reportedly mounting in Oceanic Bank Plc as the new management plans massive sack over what the workers regard as frivolous excuses such as staff indebtedness to the bank and failure to meet unrealistic targets.
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| Report: Courtesy 'The Guardian' |
The source said the management had, last week, released a memo requesting that all staff "with debt in their account or record" would either be requested to pay up or be advised to leave the bank; and since many of the staff cannot repay such debt, the alternative would be for them to leave the bank."
It was gathered that the new CEOs are in consultation with the CBN Governor, Sanusi Lamido Sanusi and will, by tomorrow, come out with the actual figures to be injected in the troubled banks.
After the second phase of its audit of the 24 banks on October 2, the CBN had raised the red flag on another five banks, three of which were said to be in grave liquidity situation. It thus announced an immediate package of N200 billion to shore up their liquidity.
The action, which was sequel to an earlier intervention in five banks whose chief executives were removed, also saw the exit of three chief executives -Ike Oraekwuotu of ETB, Francis Atuche of Bank PHB and Charles Ojo of Springbank.
The monetary offer was to ensure that the banks were restored from the brink of failure, which was reportedly caused by high ratio of non-performing loans and poor corporate governance practices.
But authoritative sources in some of the affected banks said that contrary to its public position, the CBN had not injected any fund into the banks two weeks after.
The indication emerging is that the apex bank was at a loss regarding the exact size of fresh capital required by the affected banks, a development, which casts doubt on the integrity and transparency of the CBN audit exercise.
It is expected that the new managing directors would tomorrow convey their requirements, the total sum of which could be higher or lower than the N200 billion announced by the CBN.
Reacting to the new stand by the CBN, Mr. Mbagwu queried: "Could that not even mean that the banks may not really need the money? If they (CBN) did an audit and felt that those banks actually needed funds, and several weeks after, the funds are not released (and they are holding another meeting to know how much to release), that could either mean that the audit wasn't properly done or that the banks don't actually need the money after all. If they needed it, the action should have been immediate."
He continued: "The actual amount needed by the so-called troubled banks should have been determined by the auditors that examined the banks.
"They should have been able to know what the shortfall is in each of the areas that caused the problem. They don't need the input of the banks again to determine what is needed."
Mbagwu said the questions to ask are: What are the recommendations of the auditors in terms of what is needed to bring the banks back to life? Are the new managing directors doing another audit to determine the level of needed input by the CBN?
He said with the foregoing indications, the banks' situation is nowhere as grave as the CBN alleged. "It would have immediately provided the banks the funds to survive else they would have run into trouble," he added.
After the first phase of its audit on August 14, the CBN had sacked the five chief executives of Oceanic Bank, Intercontinental Bank, Union Bank, Finbank and Afribank and injected N420 billion into the banks.
But indications later suggested that the banks did not actually need the size and volume of the bailout to stabilise their operations.
According to reports, out of the N420 billion, the banks had barely used N100 billion on the whole, with Oceanic using N50 billion, Intercontinental N32 billion and Union N16 billion.
This, analysts say, could have necessitated the current measure applied by the CBN on the reported health of the recently declared troubled banks.
As it did with the first five banks, the CBN appears to have perfected moves aimed at reassuring foreign investors and correspondent banks of positive liquidity status of the embattled banks.
Checks by The Guardian revealed that the new chief executives of the affected banks had been briefed on proper response to queries concerning the apex bank's intervention.
A statement reportedly sent last Wednesday to officials of the banks reads in part: "Our bank is strong and has enough capital and liquidity. Provision of N200bn by the CBN as liquidity support and long-term loans for the four newly affected banks has enabled them to continue normal business while pursuing recapitalisation plans.
"The Special Examination was undertaken by the CBN. All questions about it should be addressed to their advisers, but the CBN has announced that our bank is strong and has enough capital and liquidity to support itself now and in the future.
"We are continuing to work normally and we have benefited from the successful actions of the CBN to maintain stability in the banking sector.
"The first phase of the process of restoring financial sector stability is complete, with ongoing action to focus on: building capacity within the regulatory regime, improving risk management framework, easing the flow of credit, particularly to the real sector of the economy, improving governance structures and practices in the financial services industry, and improving confidence in the economy in general."
By Marcel Mbamalu, from 'Guardian'
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