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No deadline for rescued banks’ recapitalisation

*Payment of bailout funds after AMCON take-off

By Omoh Gabriel, Business Editor
The Central Bank Governor, Sanusi Lamido Sanusi has said that the ntral Bank of Nigeria has not set any deadline for the recapitalisation of the eight rescued banks.

sanusi

The Governor who spoke to Vanguard on telephone from Mecca also said that the CBN is only helping the banks by injecting life support into them so that they can survive. The CBN, he told Vanguard, is not in any way involved in the discussion for the recapitalisation of the banks. He said that it is the responsibility of the board, management and shareholders of the banks to recapitalise them.

According to him, it is the directors of these banks and their key shareholders that are in talks with investors to recapitalise the troubled banks. He said the current reforms going on in the sector have been carried out in the most transparent manner.

He debunked the insinuations that the CBN has directed the management of the troubled banks to recapitalise by the end of June.

Last week Tuesday, there were reports that at an exclusive bankers committees meeting, the CBN governor told the troubled banks to recapitalise by June thus setting a deadline for the banks to pay back the N620 billion the CBN injected into the eight troubled banks. The banks include Union Bank, Intercontinental, Oceanic, Afribank, Finbank, BankPHB, Spring Bank, Equatorial Trust Bank,
Wema Bank and Unity Banks.

Informed sources in the Financial sector, however, told Vanguard that the CBN Governor at the said meeting on Tuesday was briefing bank chiefs on the progress made so far at the National Assembly on the Asset Management Company Bill which when passed will absorb  about N400 billion off the toxic asset of six of the troubled banks. The source said that Lamido had made projections that if the bill sails through by the end of this month (April), all things being equal, the Asset Management company will come on stream between May and June and if that happens, it will be possible for the Asset management company to take over the non-performing loans of these banks and they will become attractive to investors to recapitalise them. This, he said, does not suggest in any way a deadline for recapitalisation but a possibility being foreseen.

It will be recalled that the Central Bank Governor, Mr. Sanusi Lamido Sanusi, had said in South Africa at this year’s World Economic Forum that the apex bank expects the N620 billion it injected into the eight troubled banks to be repaid by May.

According to Sanusi, who spoke in Pretoria, South Africa: “We expect that by April, May, the exposure with the banks should have been paid back by the banks.” The CBN boss said the repayment was envisaged on the passage of the Asset Management Company, AMC, bill by the legislature, by March. The company, when operational, is expected to buy_off non_performing assets from the troubled banks. The apex bank, on a rescue mission to the banking industry, injected N620 billion to shore up the fortunes of eight ailing banks and save them from imminent collapse. Sanusi had said that the inability of the banks to repay the money was due to the liquidity tied up in non_performing assets, explaining that AMC would help them overcome this challenge.

“When AMC bill is approved and it is set up, part of what it will do is to buy up the non_performing loans of the banks and evaluation will be based on the collateral and what we think is the reasonable value for the underlying collateral.

“When AMC buys the non_performing loans, those banks will be in a position to pay back the money that we put in because the reason they cannot pay back now is their liquidity which is tied up in non-performing assets,” he added. Sanusi said talks on possible mergers of the ailing banks with local and foreign banks were going on, adding that shareholders and directors of the banks were working with advisers on the offers made.

“If there is continued interest, we will get transactions done shortly,” he added, reassuring that “the days of expressing apprehension in the banking system had been put behind with the reforms. The confidence has actually come back. All people are waiting for is the continuation of movement forward as we pursue the AMC bill,” he said.

Sanusi said the absence of President Umar Yar’Adua did not create any vacuum in the banking reform as the Acting President, Dr. Goodluck Jonathan, had provided endorsement for the apex bank’s actions. “I have never felt anything like a vacuum and I have always said that. In the President’s absence, the Vice_President was always acting and he is now formally the Acting President,” Sanusi said. The CBN boss said sacking of the banks’ chief executives showed that they were not above the laws and must comply with guidelines.

“We had a problem of people not complying with the laws and this is usually the story with Nigeria. Banking is ultimately a matter of trust and all leadership positions are positions of trust. If you have a bank CEO who refuses to comply with the guidelines, it then trickles down. “So, you had banks that were not well run because the leadership had issues. It was a governance problem and that is what we have got to address. We have got to get to a situation where the people who are responsible for running banks understand that they should run and govern themselves and they do not require being forced to do so,” he stressed.


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