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CBN going beyond its brief

Sir Sunny Nwosu, National Coordinator, Independent Shareholders Association of Nigeria (ISAN)

What is going to be the fate of shareholders in the five banks that CBN said it was going to sell to the foreign investors?

CBN in the first place are not the owners of the banks that they said would be sold to foreign investors. The apex bank has no legal right to sell any privately owned bank to any foreign investor. I think they are going beyond their responsibility.
Our association is in support of the reforms that is being implemented but we are against the manner in which it hurriedly took the action by removing the managing directors and executive directors of the affected five banks.

The CBN’s responsibilities in the economy is among others to ensure monetary stability, regulate the banking industry to ensure that the banks perform the expected role it is expected to play to spur growth and development of the country. Other functions of the CBN include: Keeping and maintaining foreign exchange earnings for the country, lender of last resort to the banking industry etc. They are not meant to sell any bank that is not performing but has the power to discipline bank officials as well issuing and withdrawing bank licence.

So at the moment, we are going to keep our eyes on the banks and see how it is going to sell the banks and then we would look for a way we can resist it.  The CBN giving its reforms does not recognise the interest of shareholders, what it is after is the interest of depositors. It forgot that without shareholders there would be no bank where depositors would transaction monetary activity.

Is the shareholders in support of the ongoing banking reforms?

Yes of course, we are in support of the reforms. Due process should have been followed before the sack of the five managing directors and their executive directors.
We are querying the rationale and parameters used by the apex regulatory bank for sacking the chief executives of the five banks over alleged misuse of shareholders funds and lack of risk management capability. The CBN’s  approach of the reform sector has created a crisis of confidence locally and internationally for the Nigerian economy.

CBN as a bank of last resort was highly dishonourable in its approach to the nation’s banking ills as it  has the capacity to bridge the liquidity gaps and work in harmony with the banks towards recovering the bad loans.

Our position flows from the fact that the CBN has refused to tell us the role of CBN three resident examiners in all Nigerian banks including the indicted ones. The hurried manner in which the so called examinations were done and the attendant series of rebuttals by perceived debtors show to a large extent the reform in the banking sector does not put the general economy into consideration. We are also saying that it is against natural justice to portray the banks’ MDs as devils while absolving government officials who approved the returns of the said banks.

Is shareholders in support of the way that these banks were run by accumulating so much loans?

We are not is support with the mannner and volume of loans given by these banks.
Most of the bad loans attributed to some highly Nigerian was actually occasioned by the Federal Government reneging on its agreement with them.

The case of Transnational Corporation of Nigeria (Transcop),owing the banks was actually invested in NITEL, which ownership is being controlled by the government having  revoked Transcorp’s 51 percent holdings.We feel strongly that the Federal Government cannot be completely exonerated from the non performing loans of the banking industry because of her huge debt to local contractors. To us the inability of the government to service her indebtedness’ and the lack of will to address the general economy reflected in the banking industry crisis. We feel that it is illogical for a nation that has accepted and internalised due process and rule of law to allow one of her institutions to undermine our collective aspirations by the obnoxious removal of the five chief Executives of the banks without giving them opportunities to either understand the cause of their removal of defend themselves .Our association appreciate the CBN operation under a special instrument, it feel that such should be in consonance with companies and Allied Matters ACT (CAMA). The CBN’s new reforms has however completely eroded the right and privileges of Nigerian Shareholders in the Nigeria banks.


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