Two Reports on Sanusi Lamido Sanusi's Statements During the Governor's Visit to Vanguard (Nigeria) Newapapers, October 23, 2009

LAGOS — THE Central Bank of Nigeria, CBN, has spelt out the guidelines for investment in any of the 10 troubled banks.

Governor of the bank, Mallam Sanusi Lamido Sanusi, speaking at during a visit to Vanguard Newspapers, in Lagos, yesterday said that the apex bank would not be involved in the recapitalisation of the troubled banks, adding, “we have developed guidelines for the exercise. The banks themselves will handle it and they would work with their advisers.”

The ten troubled banks which failed the CBN audit are: Intercontinental Bank Plc, Union Bank of Nigeria Plc, Oceanic Bank Plc, Afribank Plc and Finbank Plc.

Others are: Bank PHB Plc, Spring Bank Plc, Wema Bank Plc, Equitorial Trust Bank Limited and Unity Bank Plc.

According to Sanusi, “my own preference is 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 prefer those that have already shown interest and commitment prior to now, to one that is just trying to come in now. If it is possible, if they are more than one foreign bank, I would like to see diversification, to ensure that they are not coming from one geographical region, these are the broad guidelines that are given.

“I have made it very clear that we want an institution, we are not just looking for money, because we can raise the money. People can raise money from various means, like through money laundering — people who have stolen money and have gone to hide it and now want to use it to buy shares, money can be raised by anybody.

“What we want are people who are not just bringing in money alone, but who are bringing in corporate governance, structure and the ability to run the bank and to manage it.

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

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

“If I am in a position where I want to attract certain institutions, why would I want to close a door before it is opened? Open it up; let us see how many people are interested in these banks. At that spot where you think you are spoilt for choice, then you can start allocating.

“There is no need then announcing upfront that you do not want foreigners. What would happen, if foreigners don’t come and there is no capital in Nigeria, are you willing to have the government nationalise these banks?

“The Minister of Finance said if money did not come in, we will have to convert our money to shares, they now said the Minister said that the government wants to nationalise the banks.

“We have issued guidelines on how things should be and we are going to allow these banks talk to their advisers.

“However, we have a very good idea on how we want the industry to look like. We are not going to allow a bank, for instance, to be more than 20 per cent of the market. And I need to say this upfront, so, if a First Bank or a United Bank Africa or Zenith Bank want to acquire Union Bank, we will not agree.

“We cannot have a bank at 25 or 30 per cent of the market share. We have an idea of what kind of institutions we want to come in, we have an idea of what kind of structures we want to see put in place, we also think we need a healthy mix of local and foreign banks.

At the end of the day, we think all of these things will begin to unfold, but these things are clearly thought out and the national interest is paramount,” he said.

Second Report:

The Central Bank of Nigeria (CBN) has said that shareholders of the eight troubled banks it bailed out recently do not have ownership claim on the banks saying they have lost their capital.

Speaking during his visit to the corporate headquarters of Vanguard on Thursday, Sanusi said, “Shareholders need to understand what we are doing and we are merely being charitable when we talk about shareholders. Look, you’ve lost your money. If your capital is zero or negative, you no longer have a bank.

That is the truth people do not want to hear. Somebody says he’s speaking on behalf of shareholders. If we publish what we have, they will see; there is no capital, it’s been gambled away _ that is the truth. But we’re trying to have discussions so that the shareholders would still have something”.

Sanusi Lamido Sanusi said that it for this reason that the investment of the ordinary man on the streets have been lost that those responsible must pay.

According to him “People are complaining that we’re causing some rich people discomfort. These are people who believe in their mind that they are rich. What I get is not so much the rectitude of it but people feel scandalized ‘how dare you publish my name; how dare you say I should come and pay’. They must pay.

“People have got used to this mentality of when a bank is distressed, they go to NDIC for liquidation and that is all but this time it is different. People on the streets must know that their banks have been badly managed, that this bank does not have capital adequacy ratio. The act even says nobody who is not licensed by CBN should operate a bank.

Where are the people who took away the money, they come back and contest elections. We’ll ensure that the common man on the street gets protection, but you the big man who is trying to cause people pain, you will pay.

“Look, let me tell you, the same people whose name you see on the list of bad debtors are the same people messing up the polity, messing up the petroleum sector, messing up the power situation in the country, they are the same people who are going to rig elections so we have to deal with them. That is true. Is that the mandate of the CBN governor? It is not. But it is the mandate of Nigeria and I am a Nigerian” he stated boldly.

It will be recalled that on August 14 the CBN Governor had accused the troubled banks of huge non performing loans for which the Managing and Executive Directors of five of the banks were sacked and later three other banks were visited with the same treatment. According to Sanusi then the total loan portfolio of these five banks was N2,801.92 billion.

Margin loans amounted to N456.28 billion and exposure to Oil and Gas was N487.02 billion. Aggregate non-performing loans stood at Nl,143 billion representing 40.81 per cent. It is evident he had said that the five banks accounted for a disproportionate component of the total exposure to Capital Market and Oil and Gas, thus reflecting heavy concentration to high risk areas relative to other banks in the industry.

The huge provisioning requirements he stated have led to significant capital impairment. Consequently, all the banks are under capitalised 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%).

Thus, a minimum capital injection of N204.94 billion will be required in the 5 banks to meet the minimum capital adequacy ratio of 10m per cent.

First Report:

Troubled Banks: CBN's Governor Spells Out Guidelines for Investors

Second Report: