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Shareholders get CBN nod to recapitalise banks

By Emma Ujah & Peter Egwuatu
LAGOS — INDICATIONS have emerged that the Central Bank, CBN, has given the shareholders of the nine troubled banks to recapitalise the banks.

Meanwhile, the Nigeria Deposits Insurance Corporation, NDIC, in its 2008 annual report, released yesterday said it recovered N16 billion from the sale of some properties of the 48 liquidated banks last year.

Chairman of Ibadan Zonal Shareholders Association of Nigeria, Chief Aderemi Oyepeju, who was at a meeting with the CBN and shareholders over the reforms in the banking industry, confirmed to Vanguard yesterday that the CBN has given the shareholders power to recapitalise the troubled banks, just as it did with Equitorial Trust Bank Limited.

The troubled banks are Intercontinental Bank Plc, Oceanic Bank Plc, Finbank Plc, Union Bank of Nigeria Plc, Afribank Plc, Wema Bank Plc, Unity Bank Plc, Bank PHB Plc and Spring Bank Plc.

According to Oyepeju, “The CBN Governor, Mallam Lamido Sanusi said, any of the shareholders that can provide the needed fund to recapitalise the troubled banks will be allowed to do so. We don’t have anything to do with the sacked CEOs of the troubled banks. All the CBN is after is the recapitalisation of these banks in order to guarantee depositors and other stakeholders of the funds.”

Meanwhile, the shareholders also cautioned the Central Bank over the management of the proposed Asset Management Company, AMC, noting that credible and professional people should be appointed into the Board of Directors of the company.

According to Oyepeju, “We don’t want the CBN to allow just anybody on the Board of AMC. We want representatives from Nigeria Deposit Insurance Corporation, NDIC, CBN, Securities and Exchange Commission, SEC; National Insurance Commission, NAICOM; Nigerian Stock Exchange, NSE;  Pension Commission, PENCOM; Chartered Institute of Stockbrokers, Institute of Chartered Accountant of Nigeria, ICAN; Registrars, and Shareholders Groups.”

The shareholders’ leader who spoke against the backdrop of the crisis in the banking crisis, said, “The shareholders do not want a repeat of what happened in the management of some of those banks whose Managing Directors and Executive Directors were sacked by the CBN as a result of mismanagement and lack of corporate governance amongst others to happen in AMC.

“The reason we want credible and professional people to run the new company is to allow for transparency and trust.”
It should be noted that the CBN has disclosed its readiness to provide a fresh N250 billion to buy back bad debts of banks under the ongoing banking reforms through the proposed AMC.

Oyepeju who spoke the minds of his shareholders’ group commended the CBN for the action taken to sanitize the banking industry.

According to him, “When we met with the CBN governor in Abuja after the bankers’ committee meeting, we were convinced on all the actions taken against those banks found wanting. In fact, the CBN even soft-pedalled in the sanctions placed on the management of those banks when one compares the degree of the offences committed by them.”

He also called on NAICOM to carry out forensic auditing of all the insurance companies so as to sanitise the industry.
“We don’t want what happened to our banks to happen to the insurance companies. NAICOM should wake up from its slumber and take a decisive step to revolutionalise the industry”, he declared.

NDIC recovers N16bn from failed banks

On its part, the Nigeria Deposit Insurance Corporation, NDIC, said it recovered N16 billion from the sale of some properties of the 48 liquidated banks last year.

According to the corporation’s 2008 Annual Report issued in Abuja, yesterday, the figure was part of the over N178 billion trapped in the affected banks.

The NDIC took possession of physical assets, including landed property, vehicles/ general and chattels of the banks in liquidation which proceeds are used to settle liquidation dividends depositors and creditors of the failed banks.

“Effective management of physical assets usually began with securing physical possession of the banks’ physical assets like plant and machinery, land and building and other chattels and keeping them in safe custody” the report said.

According to the report, the sum of N408, 577,750.00 was realised from the disposal of physical assets of the banks-in-liquidation by the corporation, adding that out of that amount, funds realised from landed properties amounted to N402,212,020.00 while the sum of N6,365,730.00 was realised from chattels.

Further physical asset disposal exercise of the banks-in-liquidation by NDIC in 2008 revealed that the sum of N26,697,650.00 or 6.54 per cent of the total value was realized from 11 banks closed in January 2008 while N381,880,100.00 or 93.46 per cent of the total value of their physical assets was realised from the assets of 36 banks closed before 2006.

The corporation said the nation’s judicial process has continued to hinder the timely resolution of cases and recovery of debts.

“The cumbersome judicial process of the regular courts had made it difficult for the corporation as liquidator to recover the large volume of loans and advances of the banks-in-liquidation. The debt recovery cases instituted by the liquidator had dragged on for many years without any appreciable progress”, it said.

Banks record growth

Meanwhile the organisation said the banking sector recorded growth in the year under review, in spite of the global economic meltdown, total assets recording a growth of 46.56 percent, having increase from N10.47 trillion in December 2007 to N15.34 trillion as at December 2008.

However, the rate of aggregate profitability of all the 24 commercial banks in the country fell as their profit before tax decreased by N16 billion from N619.96 billion as at the end of 2007 to N603.88 billion in 2008.

It also noted that banks exhibited poor corporate governance and record keeping in their transactions in the year under review.

It said that many boards were weak and failed to provide necessary management oversight.  In addition there were huge non–performing insider–related facilities and inadequate debt recovery efforts.

Those inadequacies necessitated the on-going banking sector reforms of the Governor of the Central Bank, Mr. Lamido Sanusi, resulting in the removal of the management of eight banks.

Bank customers  commend return of  ETB to shareholders

However, bank customers have commended the Central Bank for returning  Equitorial Trust Bank (ETB) to the shareholders and reinstating Dr. Mike Adenuga Jr. to the Board as a non-executive Director.

The customers noted that the development would strengthen the bank and restore confidence in financial service industry in the country.

A cross section of customers in the manufacturing sector, Information Technology and the Asian business community voiced their support for the action of the apex bank, saying that the reversal of the CBN’s position is a confirmation of the fact that the special examination conducted by the CBN did not find any criminal offence against any member of the Board of the Bank and its Executive Management team.

The customers also commended the planned recapitalisation of the bank which they said would properly reposition it as one of the most capitalized banks in the nation’s banking industry.


Disclaimer

Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.