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Banks’ losses welcome, Says Sanusi

From left: Mr. Phillips Oduoza, Deputy Managing Director, United Bank for Africa (UBA) Plc; Chief Ferdinand Alabraba, Chairman, Board of Directors, UBA plc; and Mr. Tony Elumelu, Group Managing Director/CEO, UBA Plc, during the 48th Annual General Meeting of the bank, held in Abuja on Monday

As UBA shareholders seek Sanusi’s  resignation

By Babajide Komolafe, Oscaline Onwuemenyi & Amaka Agwuegbo
LAGOS —CENTRAL Bank Governor, Sanusi Lamido Sanusi, yesterday, said that losses being declared by banks in the country were a welcome development.

He said that plans to buy up bad loans in the banking sector and an expansionary budget for this year could increase inflation and put pressure on the exchange rate and forex reserves.

Sanusi who spoke in Abuja after the CBN monetary policy committee meeting said: “The losses being declared by banks are a welcome development, which shows maturity of the financial market. In the past people complained that banks were declaring huge profits in an economy that is in recession, and ask how that can be.

“But we have come to a stage where banks have recognised it is not a crime to make loss. If you make a loan and because of economic environment the loan is not performing   you provide for it, disclose it in your books and the market will not punish you.

“A year and half ago, a bank would even hesitate to show that its profit for this year is lower than that of the previous year and will do everything to show it had profit and even pay dividend. Now banks recognize that you can show a lower profit, you can show a loss, and the investors will not walk away.

“All that they want to know is that you are a strong bank and your future is bright. If you notice banking shares have continued to rise. So for me it is a welcome development, banks now know that one day you have a good year and you make profit, another day you make a bad year, and you make lower profit, and in some years you have a terrible experience you make a loss.”

On the proposed Asset Management Company, AMC, Sanusi said: “The AMC is both a company that deals with non-performing loans as well as a recapitalization vehicle. If the amount of money that the bank gets from the sale of assets is not enough to ensure its capital at that level where they are ready for next round of recapitalization, the AMC is actually empowered to inject money into the banks in exchange for equity.”

He added that there was no intention by the bank for the AMC or government to completely own the banks, adding: “but we do hope that as the shareholding directors discuss with merging partners, the AMC will facilitate the transaction.”

The CBN governor observed that the AMC did not hold all the solutions to the challenges in the banking sector, but would merely act as a vehicle to promote efficiency and enhance the recapitalisation in the banks.

Shareholders ask CBN gov to resign

Shareholders of the United Bank for Africa, UBA, yesterday, demanded the immediate resignation of the CBN Governor, Mallam Sanusi Lamido Sanusi, describing his banking reform as a monumental failure.

The shareholders who made the demand at the bank’s 44th Annual General Meeting, AGM, in Abuja said the reform embarked on by the Central Bank of Nigeria, CBN, in the past one year was a failure.

Lamenting that the reform had, so far, rendered the economy comatose with the nation’s banks currently unable to lend to any sector of the economy, the shareholders said the apex bank Governor, Lamido Sanusi, should resign from his office.

Their position on the CBN reform was similar to the submission by the National Security Adviser, Lt. Gen. Aliyu Gusau, last month, that Sanusi’s reform was faulty and had ruined the economy.

At the bank’s AGM, President of the Association for Advancement of the Right of Nigerian Shareholders, Mr. Sunny Nwosu, said though he was neither against the apex bank reform nor in defence of any of the CEOs allegedly found guilty of mismanaging banks’ resources, he felt that the cleansing process was not handled properly.

Other speakers who criticised the apex bank’s cleansing process included Mr. Farouk Umar, Chairman, Ibadan Zone Shareholders Association, and Mr. Aderemi Adepeju.

Nwosu noted that he was against the fixing of tenures for chief executives of banks in the country, the phasing out of the universal banking model, and the prosecution of CEOs of the rescued banks.

He said: “We are not actually against reform but it must follow due process, which is the normal thing internationally. You can see the damage that this hasty action has already done to the economy. The economy is totally in bad shape whereby if the CBN reform had been carried out appropriately, it would not have affected the economy as it has done now.
Killing of entrepreneurship

“Nothing is moving in this country now and that’s why we will continue to have unemployment. This is why we are against the way the management of CBN carried out the reform. Let us look at the issue of tenure. It is not the duty of CBN to fix tenure for CEOs of banks; it is the duty of the shareholders and the directors to do that. Unless something is done to correct this, it will kill entrepreneurship in this country.”

Asked whether the shareholders group had discussed their grievances with the CBN Governor, Nwosu said: “We are not the one to create any forum to meet with the CBN governor. If he feels that he needs to educate shareholders, whom he does not have respect for, he should devise a way.

“Those that dared to go there to see him, he told them that if they had come to talk to him about the decisions he had taken on the banks, they should go and sell their shares and move to another sector.

“My advice to Sanusi is that he should just resign so that the banking sector can move forward because he has failed. Let somebody who is neutral to the sector and who will not have the type of attack that Sanusi is getting through the misuse of his power come on board.”


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