AS operators, regulators, customers and the public take stock of the fallout from the sacking of five banks chiefs, information The Guardian reports that the action did not actually enjoy the total backing of the apex bank’s helmsmen. A sharp disagreement was said to have emanated during meetings
summoned to agree on the action, which saw five banks’ chief executives lose their positions.
It was gathered that some of the apex bank’s deputy governors opposed the move, its timing and motive. But that might have cost the deputy governors, Mrs. Juliet Madubueze and Professor Akpan Ekpo, their own jobs, as they were dismissed from their positions to which they were appointed early this year, as recently reported, though the reports were silent on the real reasons for their removal.
As the dust began to settle during the week, fresh posers emerged as to whether the CBN actually followed due process in the banks chiefs’ sack, especially following the apex bank’s acknowledgement of some errors in the figures released, with many wondering why the announcement was rushed. Most of the figures released by the CBN, as debts owed the banks have continued to be faulted.
In some cases, others described as non-performing have been discovered to be actually performing, although CBN rose sharply yesterday to say only it can determine whether a loan is performing or not.
Another critical issue is that of one of the banks insisted that CBN actually okayed its accounts, only to now make a U-turn. In a related development, president of Association of National Accountants of Nigeria (ANAN), Mrs. Iyamida Gafa has faulted the manner the CBN has handled the crisis in the sector.
She said the piecemeal approach adopted would favour the banks yet to be screened by the apex bank. Addressing journalists at the Government House, Makurdi after a courtesy visit on the Benue State Deputy Governor, Mrs. Gafa stated that the CBN should have critically assessed all banks operating in the country and come out with a comprehensive report before making its findings known. “The step taken by the CBN at present is a bit one-sided.
The others which have not been given a clean bill of health, what becomes of them?” she queried. She noted that it would be difficult to follow the procedures that the CBN would use in assessing the remaining banks, fearing that the process could be compromised, since action had already been taken on the five banks, whose chief executives and directors were sacked. Mrs. Gafa said ANAN was not satisfied with the process adopted by the CBN, saying that the apex bank should have used a holistic approach, to provide a level playing field for all players in the industry.
The ANAN president called on accountants to play better roles as professionals to stabilise the economy. She added that if the external auditors of the affected banks had been playing their roles effectively, the rot in the banks would have been detected earlier. She suggested that no auditing firm should be allowed to audit a company or bank for more than five years, saying a situation where some firms audit one institution for more than five years could lead to cover up and fraud.
Meanwhile, the new management of Intercontinental Bank Plc, one of the banks whose chief executive was sacked last Friday, said it had recovered N4.8 billion out of the N210.9 billion alleged non-performing loans. Besides, the bank claimed not to have experienced any panic withdrawals, contrary to earlier expectations.
But the Acting Managing Director of the bank, Mr. Joseph Olusola Ajewole, was not forthcoming about the whereabouts of Mr. Lai Alabi, who was earlier announced as the acting managing director by the CBN governor, Sanusi Lamido Sanusi. Ajewole, at a pres briefing in Lagos yesterday, affirmed the solvency of the bank, courtesy of the N100 billion CBN injected into it and rising customers’ deposit level.
According to him, some good measure of success has been recorded in the bank’s loan recovery exercise. “I will like to inform you that we have recorded significant success in the area of debt recovery, as some of the delinquent debtors have started paying down. Many have visited us with satisfactory pay-down plans. “We, therefore, use this opportunity to call on the remaining ones to come forward and honour their obligation to the bank, as it is not our plan to embarrass any customer.
But we are out to replenish the liquidity stock of the bank, so that we will be able to do more business with them and effectively contribute our quota to the growth of our national economy.” He added: “The task of making the bank a favourite brand again has just begun and I can assure you that all hands are on deck to deliver results on all fronts.
I have been encouraged seeing how the various levels of the bank’s staff have risen to the challenges. “I have seen a clear demonstration of commitment and determination from all the staff of the bank in managing the immediate fall-out of the CBN intervention.
Ajewole was evasive about Alabi’s non-resumption of office, neither did he explain how he came on board as the helmsman in acting capacity. He however debunked fears that Alabi was indisposed or yet to be cleared by the security agencies, insisting: “I am only here for a limited time. Alabi is currently not available and we cannot understandably allow a vacuum to be created. I can confirm to you that Alabi has accepted the offer of heading the bank. He is not indisposed, neither is he awaiting clearance from security agencies. But if you have any information contrary to this or can confirm his whereabouts, please tell us.”
So far, only 10 banks have been audited, with CBN said not to have communicated its findings to any of them. The comprehensive report might not be ready until October, when auditing of the remaining 14 banks would have been completed.
But sources at the apex bank said it was ready to roll out sanctions against those found culpable any moment from now, ranging from sack of the boards and top management of the effected banks to forced mergers.
The offences of the affected banks are mainly on bad loans and capital adequacy. Some financial analysts said the CBN should make recommendations on resolution options and discuss with the Presidency and relevant authorities before implementation, due to sensitive nature of the issue. They are of the view that banks that have closed the year before the audit commenced should be allowed to publish their accounts, since the audit is ongoing and continuous.
They equally call for resolution of all outstanding issues on non-performing loans within the current financial year through provision in interim results, as many banks are already doing, rather than forcing cumulative provision that would crash banks capital adequacy ratios.
This, they noted, is to avoid negative insinuations that will trail a retroactive audit as working to an answer or witch-hunting. Because of the sensitive nature of power supply in the country, financial observers urge that companies involved in power and oil should be exempted till December, so as not to jeopardise the seven-point agenda of the government, as stopping work will cause social chaos and fuel scarcity.
To many bankers, it appears strange to profit and loss accounting and Balance Sheet auditing to ask a bank to provide for a performing loan because the customers’ account in another bank is not performing or ask a bank whose year, for instance, ended in December last year to provide for non-performing loans falling due in January this year.
They called for an orderly recovery, rather than disrupt the already ongoing process and probably give reasonable deadlines to reach certain threshold, fearing that some other debtors could disappear with the loans.
Rather than a take-over, they suggested that the owners of the banks should be given reasonable time to recapitalise, if it becomes necessary, insisting that forced merger has never worked anywhere in the world.
They stated that foreign governments supported their banks when they had problems and wondered why the case should be different in Nigeria, stressing that banking is more than risk management.
From THE GUARDIAN