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The reason CBN intervened in banks — Sanusi

By Omoh Gabriel Istanbul, Turkey

GOVERNOR of the Central Bank of Nigeria (CBN), Sanusi Lamido Sanusi, yesterday, in Istanbul, Turkey, explained the nature of the apex bank intervention in the banks, especially Spring Bank and Wema Bank.

The International Monetary Fund  (IMF) has endorsed the banking reform.  Sanusi, who addressed a joint press conference with the minister of finance, Mansur Muhtar, at the on-going annual meetings of the World Bank and the IMF, said the situation in Spring Bank was very grave and compounded by the involvement of Bank PHB.

According to him, the N62 billion with which Bank PHB bought Spring Bank created a big hole in PHB and by extension serious liquidity and governance issues in Spring Bank. He said that Wema Bank escaped the CBN hammer by the whiskers because of the new management involved, adding that the apex bank would work with the new management in place to ensure that it continues to meet its obligations to its customers.

CBN Governor, Sanusi Lamido Sanusi, addressing House Committee on Banking and Currency over five troubled banks in Abuja recently.
CBN Governor, Sanusi Lamido Sanusi, addressing House Committee on Banking and Currency over five troubled banks in Abuja recently.

According to the CBN in its latest audit, which actually ends the exercise for all the 24 banks in the country, “the order to the board of Wema Bank Plc is to recapitalise by 30 June 2010.

It is noted that Wema Bank Plc came under new ownership and management in June 2009 who took over a bank already in a grave situation and should not be held responsible for the present condition of the bank. The CBN will work with the Bank to ensure a successful completion of the recapitalisation exercise.”

The order to the board of Unity Bank is for it to recapitalise by June 30, 2010. It is noted that Unity Bank Plc was adjudged to have insufficient capital for its current level of operations but was adjudged to have a healthy liquidity position and with no indication of poor corporate governance practices.

The CBN therefore exercised its powers under Section 13..3 of BOFIA to order the Board of Unity Bank Plc to recapitalise by the said date while  the CBN will continue to monitor the situation in the bank.

The CBN had on Friday, sacked the managing directors of ETB, Bank PHB and Spring Bank as well as their executive directors after they failed to pass the just concluded special joint examination by the CBN and the NDIC. Meanwhile, the International Monetary Fund (IMF) at the ongoing IMF/World Bank Meetings said it endorsed the ongoing reforms by Central Bank of Nigeria (CBN) Governor Sanusi Lamido Sanusi, which led to  the removal of three more bank Chief Executive Officers last Friday.

Speaking during the presentation of the Economic Outlook for Sub Sahara Africa to journalist at World Bank/IMF meetings, Ms. Monso Sayeh, said the Fund was in full support of the latest intervention by the CBN.


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