By Victor Ahiuma-Young & Ifunanya Okafor
SINCE the controversial sacking of the management of five of the nationâ€™s top banks by the Central Bank of Nigeria (CBN) over alleged professional misconduct, a lot has been happening in the banking sector.
In an interview with the Acting President of the umbrella body for senior workers in the sector, the Association of Senior Staff of Banks, Insurance and other Financial Institutions, (ASSBIFI), Comrade Sunday Salako, he explains some of these issues and expresses the bodyâ€™s worries.
A lotÂ has happened since your last press briefing, what is your overview of the development so far?
Well, we are still monitoring events as they unfold and we do not want to be in a hurry to make categorical statement. But for now, we are watching the event. Now that some of the debtors are paying, we are also following that. You also know there are emerging issues of behind the scenes activities, we are also following it. But for now, we are watching them.
As an association,Â how do you respond to the use of EFCC involvementÂ in recovery of debts incurred in a business transaction ?
The problem is, for every banking transaction, especially when it comes to the issue of credit, performing and otherwise,Â there are conditions, there is a tenure. So if a loan is performing, of course there is no need of sending law enforcement agency to attack the customer.
You know that banks do not need money, they need customers to also make their profit. So when you chase their customers away, you are also creating friction between the bank and the customer which will not even portend well for the development ofÂ the industry. But of course, where you are able to establish that there are some customers who do not want to pay, then that is another thing entirely. But I still know that even under that, you still have to follow due process.
You cannot coarse people. We are no more under military rule. Yes, people who are reluctant to pay or who are very recalcitrant, you can apply some measure of force. But it does not have to be a blanket one because a lot of people are claiming that some of these loans are performing. So if they are performing, it means you cannot recall the loan, you cannot flush the account.
It has been one controversyÂ after the other since the release of debtorsâ€™ names as some are threatening to go to court over the publication of their names. Do you see this as a clean or tidy job by the apex bank?
Let us give them the benefit of doubt that they have very good intention. But the way they have gone about it, they seem to be too much in a hurry. And once you are doing something in that kind of speed, you are boundÂ to make some mistake. Because, if they have done a thorough job, they should have been able to establish which accounts are performing and what are the balances on those accounts that are not performing so that at the time you are going to the press, you already have undisputed figure. But this idea of somebody saying the figure you are ascribing to me is not correct is not good. It shows the job is not thorough.
People have asked whether is it in detention that the debtors are going to pay the money?
I think the idea behind the locking up of ex-MDs of those banks and the threat to arrest the debtors is not limited to the issue of debt alone. I think there are other issues . Now, one hears about issues ofÂ insider loans and other unethical practices said to have been done using depositorsâ€™s money, likeÂ to buy shares of the organisation. You know, trying to take ownership of that bank, consolidating their grip on those banks and things like that.
Then, money laundering. They are also saying they are involved in money laundering . Of course, if you do that, there is a relationship between economic crime and money laundering. Never the less, if you want debt recovered, you do not have to keep the debtors behind bars to recover the debts. You have to ask them to go out and source for money to pay. Of course, they may have their reason for keeping them and I believe they cannot keep them perpetually. Because, they have to follow the rule of law.
How has the action affected the workers of the banks?
Well, for us, the thing is that we are looking at it from two perspectives. One is the moral aspect of it that is happening in our industry. It shows that some people are unprofessional. It means, some of us have been engaging in unethical practices. Because banking is based on the confidence of the customer and the moment your customer begins to lose confidence in your activities, then there is a problem. So, for us, we feel so bad about that. But on the other side, we look at it that most of these issues do not directly affect our members because these toxic assets are too high and they are done at the very highest level of the echelon of the management of the bank. Some of them did not even go through the normal credit assessment procedure. So most of our members are immune from that.
The only thing is that we are now looking at is,Â if anything happen to those banks, our members will suffer most. That is why we also appreciate what the CBN is doing, trying to bail the banks out. If that intention is genuine and tailored toward achieving that logical position at the end of the day, then we will not have any problem. Yes, if it is genuine, that means sustaining the jobs of our members. But for now, we just believe, we feel bad as professionals, that some of our members or some of our colleagues, whether they are senior or otherwise are also involved in unethical practices.
With the CBNâ€™s appointment of public relations consultants to these banks, what happens to thoseÂ employed directly by the bank?
I think the stay of the CBN is temporally. It is for a short while. I donâ€™t think they want to stay there permanently. Even the MDs that were appointed there now, they are on acting capacity now.
They are given some timeÂ to go and do so, so , so at the end of which they are expected to leave. Their stayÂ is for a short period and I donâ€™t see any of these activities threatening the job of our members. Because the banks are not distress, what you have is toxic assets. They have given out more than what the law say and that way theyÂ cannot meet their obligations. Now money has been provided, so it is as if nothing happened. In fact, we do not believe that any employer should be looking at the issue retrenchment of workers.
But should some of them decide to retrench, what will happen?
We will not resist it, but we will also move against them because workers have nothing to do with the current crisis.
Do you think that the publication of the banksâ€™ debtors names will sanitise the banking business?
Well, I think what needed to be done and that is what we have done at various organs of government. At the National Assembly, you are aware that some of our laws are being reviewedÂ and we have made our position known to them. We need to strengthen some of the sanctions that are embedded in some of these regulation so that you do not just allow somebody to ground a bank and go away only to come after five years and become a political figure again and rise to prominence. So we need to strengthen those sanctions. So if you have good legal frame work that have good procedures, you know, best practices in the banking sector, it would deter people from taking advantage of some of the system and inflicting terror on this system .
What is your respond to reports that the ongoing crisis has affected rating of the nation by international creditors and financial institutions?
Well, rating itself has its own lapses,Â because how do you arrived at the ratings in the first place? I think they need to question their own rating capacity and the sincerity of their rating because if you have rated some of these banks A-plus or some of the triple A-plus, then they are having problem now, it shows that there are certain things you have also not been able to discover when you were carrying out your examination.
It also boils down to the same fact that we are saying, that even the regulator is not immune from this blame. They have been perpetually sitting in the headquarters of these banks, looking at the books every year. Most times, they spend between three and six months before they conclude the audit exercise of any bank. It means nobody discovered any thing in 2007, nobody discovered anything up to 2008, some of the banks had their financial year ended March 2009. So,Â if now we are now comingÂ with this kind of discoveries, it shows that some people, either they collaborated or they failed to uncover what they are supposed to do.
What is your take on the CBNâ€™s moves to dispose of the banks to foreigners?
Well, I think there will be problem. One thing people do know is that we have just begun a reform exercise. It will also have aÂ lot of implications both for the industry and also for the nation.
The implications are,Â one is legal. A lot of shareholders will go to court. Within five years, you have allowed people to buy these banks through a process which was adjudgedÂ to be alright and celebrated worldwide. By consolidation, a lot of these banks are also listed among the best, I mean, most capitalized in the continent and some of them even in the world. Now, if you convert this intervention fund to equity, and you now ask foreign investors to come and pick them, of course, at what level are they picking them? Now, let me give you one scenario. For instance, aÂ stock that was valuedÂ N 33 in 2007, it is aboutÂ N14 or N15 now. Now, if you are buying that stock now, and the rule of the Security and Exchange Commission (SEC) is that you cannot do underground negotiation ofÂ stocks, you have to buy from the market and it has to be at the approved rate. Now, if you are buying at this level, what you are doing is that you are giving undue advantage to the foreign investors to acquire more with little. Because, those who had bought at maybe N33 at that time, spent more. Now the value of the stock has watered down and somebody will be buying at 13, 14,15, will be buying more and of course will be in a position to take a very good chunk of that equity.
Then, he will become owner of the place. That is one. Will other shareholders also sit and watch? Then, two. I also know that if there is a core investor in a place, to have another core investor, there is a problem. The law does not allow two core investors in a place, in an organization. So, that is another scenario they have to look at. Then, the third one is that, how are we sure that those who will come as foreign investors are really foreign investors? Are we sure they are not fronting for Nigerians here? Those whites that will come, are we sure that theyÂ will not be fronting for Nigerians. That is why you cannot have sanity because a lot of things some of these multinationals do with immunity are been done because they have the backing of Nigerians in high places who are actually owners of the business. So, that is why we are saying leave the banksÂ to determine through the board and the shareholders how they will sort themselves out. Give them the money. Of course it is public money. They must return within a specified period.
We can look at various windows opened to them. One is either to go to the market and raise money to pay up or among the shareholders, they can raise some and pay up the debt. So, for you now to say you want foreign investors by all means, shows that there is an agenda. This time around, we are not saying it is eastern, western or whatever it is. But you cannot force an organization to be bought or force people from overseas to come and buy.
Are they better than those who are running itÂ now? So that is the problem we have with that.
And the CBNâ€™s take over plans?
Well, the issue is one of regulation. As a regulator, the CBN has a right and that legal backing to go to any of the bank and do what should be done. But the issue is if you take over a place forcefully, what happens to the owners? We are still studying the Act, the one that is under review now. They have the power to take over the bank. O f course, you can take over a bank in certain situation. If they limit to that level, everybody will score them very high. But if they begin to go the way they are going, a lot of people will be reading meanings into all their intentions and actions. If any body has done wrong, deal with the people but do not force anything on those banks.
What do you think will happen to those funds after the recovery?
Well if they recover the fund, I think the issue of the intervention fund should be sorted out. Because they are being bailed out because confidence has been eroded. Now that you are getting them back, then, they should be able to pay. Maybe the issue of asking some body from over seas to take over will not arise again. Maybe what theÂ CBN will simply do is ask the shareholders to reconstitute the board andÂ management of the affected banks and give them another opportunity to lead.