Breaking News

CBN, NDIC, others should be probed over banks’ margin exposure–stakeholders

By  Peter Egwuatu
THE Federal Government has been called upon to intervene in the on going effort to sanitise the banking industry by investigating and probing the bank examiners of the Central Bank of Nigeria (CBN), Nigeria Deposit Insurance Corporation (NDIC), Securities and Exchange Commission (SEC), Nigerian Stock Exchange (NSE) and Auditors.

The stakeholders at a seminar on “Margin exposure of banks” organized by Proshare Nigeria Limited, weekend, in Lagos unanimously agreed that the action taken the CBN in sacking five banks managing directors out of the 24 banks operating in the country was not in the best interest of the economy.

According to the stakeholders, “ Why should only 10 banks be examined out of the 24 banks? Why did the CBN not exercise patient until it completes the examination of all the 24 banks before coming out with the punitive measures. This action of examining only 10 banks and sanctioning 5 is not the best it would lead to a lot of unhealthy practices, such as de-marketing among banks, unnecessary panic, massive withdrawal of funds, etc.”

The seminar participants indicted the CBN, NDIC, SEC, NSE, and auditors who examine and approve the financial results of these banks.According to them, “ If the CBN, NDIC, SEC, NSE, and Auditors were able to examine the books of these banks they would have corrected this anomaly of reckless disbursement of margin loans that was not adequately collateralised.”

To this extent, they called on the Federal Government to quicky investigate these agencies and impose disciplinary measures tantamount to what the CBN did for the five banks managing directors that was indicted and sacked.

The participants agreed with the CBN that the banks were reckless in the use of investors funds, saying all the banks, with few exempted, are culpable to this financial indiscipline.

According to them, “ The banks managing directors should not be blamed alone, CBN, NDIC, SEC and NSE who approves the result should share the blame. If they had been proactive they loan exposure would not have escalated up to this level.”

They further opined that most investors and depositors rely on the approved results from these agencies in making investment decisions.According to them, “ The Auditors of these banks should be sanctioned as well. Many of them satisfy the results and investor s take decision based on their report.

In most of the annual financial statement, the auditors will state, “ In our opinion, the Bank as kept proper accounting records and the financial statements are in agreement with the records and that the financial statements drawn are in conformity with Statement of Accounting Standards issued by the Nigerian Accounting Standard Board and relevant international accounting standards”. They forget that banks are not supposed to have loan exposure beyond 5 or 10 per cent. So these are all criminal arts  that need to be addressed.”


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