By Omoh Gabriel, Business Editor
LAGOS â€” FOUR weeks after the Central Bank (CBN) sacked the chief executives and executive directors of five banks and injected N420 billion into the banks, Vanguard can authoritatively disclose that the banks needed just N100 billion financial assistance to stabilise their operations and not the whooping N420 billion injected by the apex bank.
Already, some bankers are saying the CBN blew the situation out of proportion to achieve a desired end.
Bank treasurers yesterday told Vanguard that â€œthe five troubled banks did not, after all, need the size and volume of bail out injected by the Central Bank of Nigeria, CBN, allegedly to stabilise their operations.â€
All the banks, according to them, have stabilised in both the interbank market and clearing house.
According to treasurers who volunteered information â€œOut of the N400 billion injected by the CBN into the five banks, the banks have used barely N100 billion on the whole.â€
Of the five banks, Oceanic is said to have utilised the highest after using N50 billion out of the N100 billion the CBN injected into it.
Intercontinental Bank, Vanguard learnt, used N32 billion out of the N100 billion injected into it.
Similarly Union Bank is said to have utilised just N16 billion out of the N120 billion injected. Afribank and Finbank had N50 billion each and have not utilized up to 5 per cent of the fund injected.
Bank treasurers point to the fact that even the portions so utilised were precipitated by the undue pressure on the banks following the CBN action of August 14.
â€œThe funds so far used out of the amount injected by the CBN represents about 25 per cent of the total bail-out fund and the amount has so far actually stabilised the banks,â€ a banker said.
Bankers also say that what the bailed out banks are currently doing is using the fund to play in the interbank market where banks lend to one another.
According to them, the N100 billion the banks have used is also the same amount the CBN used to print the N420 billion bail-out fund. Banking insiders are of the view that the true situation of the banks was blown out of proportion by the CBN to prepare the ground for the take-over of the affected banks.
It will be recalled that on August 14, the CBN Governor at a world press conference in Lagos said the CBN was â€œinjecting N400 billion as tier two capital into the five banks to salvage their financial conditionâ€.
According to him, â€œthe huge provisioning requirements have led to significant capital impairment. Consequently, all the banks are undercapitalised for their current levels of operations and are required to increase their provisions for loan losses, which impacted negatively on their capital.
Indeed one is technically insolvent with a Capital Adequacy Ratio of 1.01 per cent. Thus, a minimum capital injection of N204.94 billion will be required in the 5 banks to meet the minimum capital adequacy ratio of 10 percentâ€ but he injected N400 billion.
â€œThe five banks were either perennial net-takers of funds in the inter-bank market or enjoyed liquidity support from the CBN for long periods of time, a clear evidence of liquidity.
In other words, these banks were unable to meet their maturing obligations as they fall due without resorting to the CBN or the inter-bank market. As a matter of fact, the outstanding balance on the EDW of the five banks amounted to N127.85 billion by end July 2009, representing 89.81 per cent of the total industry exposure to the CBN on its discount window while their net guaranteed inter-bank takings stood at N253.30 billion as at August 02, 2009.
Their Liquidity Ratios ranged from 17.65 per cent to 24 per cent as at May 31, 2009. (Regulatory minimum is 25%).”