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Crave for global status ruined banks – CBN

Mr. Akinola Akintunde (L), President Nigeria-British Chambers of Commerce, Mr. Sanusi Lamido Sanusi, Governor, Central Bank of Nigeria and Mr. Duro Lakanu, Deputy President, Nigeria- British Chamber of Commerce during a courtesy visit by the Chamber to the Governor.
Mr. Akinola Akintunde (L), President Nigeria-British Chambers of Commerce, Mr. Sanusi Lamido Sanusi, Governor, Central Bank of Nigeria and Mr. Duro Lakanu, Deputy President, Nigeria- British Chamber of Commerce during a courtesy visit by the Chamber to the Governor.

By Oscarline Onwuemenyi
The Central Bank of Nigeria (CBN) has said that the crave by banks to assume global status was partly responsible for the ruin in the system, with many of them spreading their resources very thin unmatched by corresponding income.

This was made known by the Governor of the CBN, Dr. Sanusi Lamido Sanusu, while delivering a keynote address at the NTA Public Lecture, held at the Musa Yar’Adua Centre, Abuja , Represented by the Deputy Governor in charge of Surveillance, Dr. Kingsley Chiedu Moghalu, the Governor said that the banks went global without addressing some fundamental issues even at the domestic level.

One big challenge was therefore capacity of operators to run bigger and more complex financial conglomerates, which resulted into increased branch network; more complex transactions; managing subsidiaries and affiliates; cross-border operations; risk management and improving customer services.

Speaking on the paper titled, “Post-consolidation era in the Nigerian banking sector: Issues, Challenges and Opportunities”, the Governor argued that to ensure the soundness of the Nigerian banking system, the CBN had consistently introduced reforms in the system.

Other  post-consolidation challenges include corporate governance, integration issues, insolvency resolution and pressure to meet shareholders expectations.

According to the Deputy Governor, “the global financial crisis occurred on account of the concentration of the exposure of financial institutions to overvalued sub-prime mortgage”.

Furthermore, he said that the impact was immediately felt in North America and Europe with material reduction in available credit and the resultant slump in demand for goods and services.  “The crisis has been felt in Nigeria through lower oil prices, slump in capital flows pressure on foreign reserves and a drastic decline in the performance of the stock market.

According to him, the outcome of  the special examination created opportunities for forensic audit of the ten weak banks; strict implementation of the provision of the code of corporate governance on zero tolerance for false reporting; institution of a common accounting year and for all banks/discount houses; recapitalisation programme.

The Deputy Governor assured that “on the basis of the information available to us so far, we are confident that the banking system is safe and sound because we have dealt with the major sources of systemic distress”. The CBN, he said, will continue to take measure/initiatives aimed at  strengthening the banking system.


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