By Omoh Gabriel, Business Editor
LAGOS — IN a move targeted at ascertaining the level of banks’ exposure to fuel marketers and other energy players, the Central Bank (CBN) yesterday ordered banks operating in the country to submit to it, their loans and advances to the energy sector.

Also, the apex bank has directed banks and Discount Houses in the country to adopt December as common accounting year-end beginning from 31st December, 2009.

The move by the CBN is aimed at sanitising the banks and rid the system of their heavy exposure to oil marketing companies which took facilities from banks when oil prices were high and could not service same when crude oil prices crashed last year

In a circular issued in Abuja, with reference no BSD/DIR/GEN/CIR/03/010 signed by D.A.N. Eke, Acting Director, Banking Supervision, entitled “Circular to All Banks Re: Submission on Details of Total Exposures to Companies in the Energy Sector”, the CBN said “All banks are hereby requested to submit to the Acting Director of Banking Supervision details of their total exposures to the companies in the Energy Sector, namely Up-Stream, Down-Stream and Oil Service companies, as at May 31, 2009.

“The details should include: the borrower; the outstanding balance; the performance status under the following classification; performing, non- performing and restructured collaterals given and their current market value.

“The information should reach the Ag. Director of Banking Supervision no later than Friday, June 26, 2009” the CBN said.

Common year-end for banks

On the adoption of a common year-end, the Central Bank said “In order to further enhance the level playing field in the banking sector post-consolidation, it has become necessary to adopt a uniform accounting year-end in the industry.

As agreed at the Bankers’ Committee meeting of March 21, 2009; December 31 has been adopted as a common accounting year end for all banks and discount houses effective from 2009.

“Consequently, the Boards and Management of all banks and discount houses are hereby advised to ensure that all the necessary legal and regulatory requirements to put effect to this agreement are in place as well as required notifications to and approvals from the relevant agencies.

The Boards and Management of banks and discount houses are furthermore reminded to streamline the year ends of their subsidiaries with that of the parent company in line with S.3 34 (5) of CAMA, 1990 as amended.

“Banks and discount houses are to note that a maximum accounting period of eighteen (18) months and a minimum accounting period of six (6) months are allowable as a full accounting year during this period of transition.

In adherence to this, banks whose year-ends do not coincide with December 31, should inform the CBN of the number of months to be covered by their next audited accounts bearing in mind the maximum and minimum accounting period stated above”.

The move by the CBN is aimed at sanitising the banks and rid the system of their heavy exposure to oil marketing companies which took facilities from banks when oil prices were high and could not service same when crude oil prices crashed last year.

Banks exposure to oil marketing companies and margin loans have been issues that banks have been grappling with. According to PricewaterhouseCoopers audit report on banks in the country early in the year, the global decline of oil prices have adversely affected many Nigerian banks as the loans given to oil marketers have gone bad.

Some of the banks have changed their oil and gas group heads as a result of this. Further, the audit report indicated that banks also suffered a setback by the sudden devaluation of the naira.

All of these have put a hole in the balance sheet of most banks in the country.

I’ll fire bank MDs if I have to — Sanusi

The new CBN Governor, Sanusi Lamido Sanusi has told all who cared to listen that he would insist on adequate disclosure by banks

In an interview with the Financial Times of London published yesterday, his very first interview since assuming office, Sanusi will be preoccupied with three issues in the first few months of his term. These are transparency, accurate disclosures of the bad loans in the banking industry, and systemic risks that may appear from handling individual risks of some banks.

The key area of transparency expected by Sanusi is in the area of accounting procedures and integrity.

He said in the FT report, “I think it’s also important to send very clear signals to bank executives that it’s not a crime to make a loss, but it’s criminal to lie about it. If at any point in time I have reason to believe that a bank chief executive is not fit to be chief executive, I will remove him.”

Sanusi has by this directive instituted an audit process of the bad loans on banks’ balance sheets, especially those related to loans granted to oil marketing companies. This process is expected to be completed by Friday this week.