William Adebayo is the Coordinator of Greenwich Shareholders Association. In this interview, he spoke on some market issues as well as punitive measures imposed on banks by the Central Bank of Nigeria (CBN), saying that while mandating banks to keep part of their deposits with the CBN in bad taste, fines, on the other hand, will keep the managers alive to their responsibilities.
SO far what would say about 2018 financial results of the companies, do you think they meet investors’ expectation?
So, far when you look at the results, especially from the financial institutions, it shows that apart from the fact that they are resilient, it also shows that they have seen hard times in the country. Three of the big banks that have held their Annual General Meetings, AGM, still maintained the dividend they paid in 2017 despite the hard operating environment. GTBank for instance, maintained its N2.45; Zenith maintained N2.50 payment. So also is United Bank for Africa (UBA) Plc, which maintained 65kobo per share dividend. Though this showed that not much progress was made by the banks during the period covered but, at least, they were able to achieve significant progress in rewarding their shareholders. Compare to the environment they operated in during the year, you will discover that they are investor friendly.
What is your view on the series of complaints by other investors on the level of charges and fines imposed by the CBN and National Insurance Deposit Commission on banks?
Coming to the issue of Cash Reserve Ratio, for me, it is not a good thing for the CBN to mandate banks to keep their reserve with it for over one year without paying interest on it. The money should be given back to the banks to do business with. If you look at the history of financial institutions in Nigeria, you discover that this thing actually started during the colonial era and when we gained independence, nobody cared to correct it. If these deposits that are tied down in CBN is left with banks, they will use it and dividends will be paid on the money. CBN should also pay interest on the money, even if it is two percent.
For the fines, it is good because it will put the banks on their toes. Nonetheless, I think the regulators should still find a way of reducing the level of penalties and concentrate more on regulation.
One thing you should also realise is that most times, the banks prefer to go against the law where the contravention will result in additional profit and pay fine at the end of the day.
What action should be taken against company’s management that deliberately by-pass laid down rules and regulations?
The truth is that banking business is so profitable that, at times, due to exigencies and profit the banks will make, they deliberately run into paying penalties. They don’t really care much about the penalties.