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 Yarâ€™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, â€œPost-consolidation era in the Nigerian banking sector: Issues, Challenges and Opportunitiesâ€, the Governor argued that to ensure the soundness of the Nigerian banking system, the CBN had consistently introduced reforms in the system.
OtherÂ post-consolidation challenges include corporate governance, integration issues, insolvency resolution and pressure to meet shareholders expectations.
According to the Deputy Governor, â€œthe global financial crisis occurred on account of the concentration of the exposure of financial institutions to overvalued sub-prime mortgageâ€.
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.Â â€œThe 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 ofÂ 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 â€œon 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 distressâ€. The CBN, he said, will continue to take measure/initiatives aimed atÂ strengthening the banking system.