By Omo Gabriel, Business Editor, Babajide Komolafe & Michael Eboh
LIKE few Nigerians who occupy sensitive public offices, Mallam Sanusi Lamido Sanusi, has been in the eye of the storm since he assumed office as Central Bank Governor. For carrying out an unprecedented cleaning of the augean stable in the banking sector, he received an unrelenting press attacks, at least for a while.

However,  the CBN governor’s actions may have been misunderstood or the motives behind them misinterpreted. Thursday last week, for over four hours, he fielded questions on virtually everything relating to the fall-out of the sack of some bank managing directors and insisted that their removal was not a Northern agenda.

A refrain that ran through his responses was the fact that his action was justified because the ex-bank bosses violated banking principles.

By the time he was through, not a few were convinced but there were those who were not. But the CBN governor left one impression behind; he is one who knows his onions. Excerpts:

Did you have investors lined up for these banks before you made the announcement because the controversy had been that there is an underlying agenda.

I wish I had investors for these banks today. When we do these things, we first ask ourselves, what is the motive — Money? When I got a report saying that Intercontinental Bank had bad loans of N300 billion and Oceanic Bank has bad loans of N200 billion, let me ask you, if I had called Mrs. Ibru and Akingbola to my office, how much do you think they would have paid me. If I were to compromise myself for an institution, I will not be seen as being honest.

I have seen it in some reports that I have lined up some investors, I still do not understand where that is coming from. I still have not seen the names of these investors that I have lined up, what country they are from, where we have the meeting, at what time. Did I know was going to be governor of the CBN and planned this thing a long time ago? Who are these investors in the international financial market that operate like that, that work with the governor of a Central bank to destroy a bank so that they can take over? Why?

It is an argument that I do not like to be dragged into and I do not like defending myself. Because any comment about my motives, about my agenda is not an argument. If I had these institutions where are they. Then, after the announcement that I have these institutions and when they did not turn up, a new story came up that their governments have told them not to come. Which government, where, where were these stories coming from?

My decision not to respond does not mean I do not care, It is because at the end of the day, I am a public officer and I have to be ready to take public attacks. And if that bothers me, I should not be a public officer. I will not allow something said about my person or allegations made about my motives or imputations that are unfounded to divert my attention from the substantial matter on ground, because I am not the issue.

A financial institution has been run aground — true or false? As governor of the CBN, do I have a responsibility to act or not? These are the issues. Do I have an agenda? There is no limit to what people can say. One advantage I have is that  no one can claim that I was bribed and nobody can claim that I was trying to extort money. Nobody can believe it. This is because I have built a reputation so long for those allegations not to stick. In all these things, nobody have ever talked about pecuniary motive. I have been in the industry for 25 years, nobody has come to say ‘this is an insider related loan that I gave. ’

People have been spending for the last couple of months to find out if I ever did any of these things. Giv me the names of the company — was it when I was in First Bank or UBA or Icon, any company that I lent money to that was my company or any loan that I took from any bank that I did not pay, or any money laundering act that I took part in. Show me and I will resign.

When people can not question your integrity, they impute motives to you. Who are the institutions that I would destroy Nigerian banks for, why would I ?

People believe that I am a Northerner that is why I’m doing it. I am a Nigerian and I am proud, I’m a Northerner, I’m proud, I am from Kano and I am proud, I am a prince, I am proud. If I have an agenda, it would unfold. at the end of these exercise, if these banks are owned by Mohammad Abubakar and Yusuf Sanni and some other sorts of funny names.  I do not know how that is going to happen, because I would need the Securities and Exchange Commission (SEC), I would need the Nigerian Stock Exchange (NSE), I would need all shareholders among others. In fact, I do not even know how that can be the subject of discussion in a serious environment.

But I do not have the right as governor of the CBN, and it would be a greater disregard for the people of Nigeria, for me to use a law made by the National Assembly and an office that is Federal, to serve a sectional or religious interest. I have never in my life done that.

I heard people in the North say the consolidation was against the North. Then you ask them, before consolidation, how many banks did we really have in the North? Out of the 89, let us start counting. Was it Bank of North that was owned by the state governments, was it Tropical Commercial Bank that was owned by Kano State government, out of the 89 that we have, how many were Northern banks? If we had 40 from the North and we ended up with only one or two from the North, then we could have said that it was an agenda against the North.

I can confess to you, I do not think that the North even had up to one, in fact, they did not even have a bank. I know for a fact that if Soludo had not given Bank of Northern forebearance, even Unity Bank would not exist.

I had a meeting with Northern Senators and leaders and I told them that if Soludo had not given certain privileges to Bank of North, they would not have got Unity Bank.

This crisis is not unique to Nigeria, the United States has it. I do not think anybody is blaming anyone for the crisis. No one is blaming the banks’ MD for the crisis. In other parts of the world banks MD were locked up in jail before this crisis. In every financial crisis, we have found out that banks’ MDs have gone to jail.

I have said that I would prefer a strong Nigerian institution that would acquire these banks. In the event of a foreign bank coming in, I would prefer a bank that is willing to share ownership with Nigerians, not a bank that wants 100 per cent. I would like to see diversification, to ensure that they are not coming from one geographical region, these are the broad guidelines that were given.

The biggest banks in Nigeria will for a very long time, certainly, remain in the hands of Nigerians.

All this noise about foreign acquisition that are being made by people, how many foreign banks have the money today to acquire  Nigerian banks? The world is experiencing an economic meltdown.

What is the CBN doing to protect depositors, to ensure that their money is safe in these banks, to restore the confidence of the people and to prevent a run on them(banks).

To us in CBN, when we talk about protecting depositors, we mean when you need your money, you are able to get it, that is what it means to us, that you do not lose your money.

Take Intercontinental Bank, for example, earlier in the year, the bank’s total assets were in excess of N1 trillion, by May/ June, the bank has lost over 30 per cent of its balance sheet, it was already down to about N600 billion.

The bulk of the loss on the balance, stems from a lot of liabilities and complete run down of liquid assets. The cash was gone, the figures were gone to pay up liabilities. If you were to look at the pace at which the banks were losing their balance sheet before we intervened and compare the rate, you will see a significant slow down and a complete turn-around and stabilisation.

You can not take this action and expect it to stop the day you are leaving. The reality, is that we have taken down the management of eight banks, yet you still do not have any complain of a single person who went to the bank to get their money and they could not get it. Give us credit for that, it has never been done anywhere in the world, never.

With what we have done,  we have shown the world that you can come out and speak the truth about a problem. We have matured as a country. The second audit we did, not an eyelid batted, because people have seen that we had brought down the management of five banks and the banks did not collapse, people did not lose their money. If we should announce next time that we are doing such things, we should expect no reaction, because the market have matured. People are not children. You don’t tell people there are no problems, you tell them there are problems. We have seen the problems, we have handled it and we are in control, that is what they want to know.

Now, is this in the long term sustainable, I have said this in previous  presentation — it is not. This is because, there is a limit you can keep a bank in limbo, I know that, as a risk manager. There is a limit to how long people will continue waiting and asking what is the next step with the banks. If after six months they see nothing, they are going to conclude that the banks are going to be handed over to the NDIC. So we have to move quickly in sending signals as to where the next stage is.

If the shareholders are talking to other banks, we have to ensure that is clear to all that shareholders of this bank are talking to shareholders of another bank,let people understand that there is something happening. If it is capital injection from abroad, let people know.

So our duty now, is to make sure that  we move them to the next stage. But, today, I can assure you that the banks are doing well — Oceanic Bank, for instance, recorded positive clearing, in spite of every thing. Intercontinental was losing a lot on a monthly basis, that has slowed down, no gap, it is still losing a little bit, but not much any more.

The liquidity position in almost all the banks have improved significantly. The customers have come to the realisation that they are not going to lose their money. The Managing Directors that  have been appointed are very strong people, especially in those first five banks where we have real issues. An example is Cyril Chukwuma of BankPHB, he is solid.

These are people that are known.  I, on my part, I talk to the ministers, the governors, the NNPC, none of them have told me, so far, that they are going to move their account. I also talk to my friends. These managing directors have been in the industry for a very long time, and can call on a company’s treasurer
and can tell them that they are the ones in charge of these banks and can assure them that their money is safe. We picked these people to protect these banks. It was not an arbitrary thing.

Every one of them was selected;  included in the consideration, is their relationship with the previous chief executives. We are not looking for people who will go their and do witch hunting. We want people who are also acceptable  to their environment.

How would you address the controversy surro-unding the possible conversion of the bail-out funds to shares in these banks?

I don’t know what the controversy is about. A convertible loan, by definition is convertible into something. Before we did this intervention, the banks had CBN’s money, but this money was short term — three months, one year and they are expected to pay back. What we then did was to give them long term facilities. At the time you are making that intervention, you want to make sure that you do not foreclose options.

When Northern Rock had a problem, the Bank of England put in money — gave them a loan, shortly after that, the Chancellor of the Ex-Chequer nationalises the bank. What happened is that it simply converted the loan into equity and paid off the loan to the Bank of England.

The legal document underlying the injection of fund has to provide us with that flexibility, which is not different from what the Minister of Finance said. In the event that money did not come in, despite our best effort, having determined that these banks need capital, that capital have to come from the government. And the only way that capital will have to come from the government is through the conversion of that instrument. One must remember that the Banking and Other Financial Institutions Act (BOFIA) gives the CBN governor powers that come into effect even where BOFIA conflicts with CAMA. And in the exercise of that powers, I must act in a manner that ensure that my ability and flexibility to act in the interest of that institution is constrained at any point in time.

If I put in a loan and I do not give the government, at least the option of converting it when it is time to convert, someone can challenge me legally and say that there was nothing in that loan that says it could be converted to equity or to preference shares or to a debenture. So, I have to give myself the option of converting into any security that the governor defines. But I have not yet converted it, so what is the controversy. I say it is convertible, but I have not converted. When I convert, then the controversy can arise, so let us leave that controversy for another day.

I know this is the last question, but there is one question that has not been asked, I thought it would be asked, I think I have to answer that too, because people have kept saying to me about the issue of communication. I think I have been too much in the press, and it is not that I have not spoken enough.

The second thing that I have been asked was that was there  no more subtle or more gentle way or different way of doing this. August 14 had to be done the way it was done, if it was going to be done at all.

There is no way a bank MD is going to sit down, when you give him notice that you are going to remove him, without getting an injunction. It is not possible. It is human nature. It is for that reason it has to be with the element of surprise and the element of shock.