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CBN deploys new examiners in troubled banks

By Omoh Gabriel, Business Editor
LAGOS—Fresh doubt as to the real intention of the Central Bank emerged weekend as stakeholders in the five troubled banks raised the alarm that a new set of examiners and auditors were sent to the banks raising new worries that the annual reports of these banks which may be released any time from now by the new management in place in these banks will raise the level of non-performing loans which will eventually erode share capital of the affected banks.

There is also the worry that these same non-performing loans upon which CBN had hinged its August 14 actionare currently being contested and  also the fear that the figures on Expanded Discount Window (EDW) and Interbank of these banks will be blown up to substantially impair Liquidity Ratio.

According to them “on  August 31, another set of CBN examiners was again deployed to the banks on what is called ‘Target Examination’. The mandate of this set is to produce another annual report to show figures that will tally with CBN’s position on Cash Adequacy Ratio (CAR), and Liquidity Ratio.

The new set of examiners, stakeholders say is the fourth the apex bank is deploying to the banks this year apart from the resident examiners sent earlier before the appointment of Sanusi as governor.

The examiners, accompanied by auditors, moved into the banks on August 31 for a fresh round of ‘target examination’ of books and accounts of the troubled banking institutions. There are indications that the current exercise is in preparation for the publication this month of the annual report and accounts of the banks which have been outstanding though the financial year end of some of them lapsed since February 2009.

Stakeholders expressed anxiety over the exercise which banking industry insiders feared may be a ploy that by CBN examiners were working to pre-determined figures.

This, they say, is as a result of the fact that CBN had rejected annual report and accounts submitted to it by the banks and in some cases withdrawing approval it had already given as in the case of Oceanic Bank.

Giving details of the unusual examination of the books of these banks, an insider said that resident examiners were sent by Prof. Chukwuma Soludo as CBN Governor in February 2009.

On the resumption of duty in June, Mr. Lamido Sanusi, was said to have met with them. They were said to have filed their report to the governor who turned them down.

According to bankers, in June, as soon as Sanusi took over, he sent his own team. This second team focussed mainly on provisions for bad loans.

After a lot of work and discussions of the reports with the management of the five banks, CBN was said to have approved the bad loan provisioning of the troubled banks as follows, Union Bank, N43bn; Oceanic, N41bn; Intercontinental, N38bn; Finbank, N22bn.

Vanguard gathered that on the basis this, Oceanic and Finbank’s annual reports were approved by CBN in June. Intercontinental, on its part, it was learnt, agreed to the provisions in July and turned in its annual report to CBN for approval.

But rather than approve, CBN deployed a ‘Joint CBN/NDIC Ad-hoc Assignment’ to the banks whose report was not made available to the management of the banks only for CBN to sack the chief executives and take over the banks based on this report.


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