In what for want of better description I will call the “Good Friday speech” last weekend that is 14th August 2009, the newly inaugurated Governor of Central Bank of Nigeria (CBN) Mr. Sanusi Lamido Sanusi unleashed an earthquake of unprecedented dimension in the Nigerian Banking industry when he dismissed five managing Directors of some of the hitherto over advertised Banks in Nigeria for alleged dereliction of duty and professional misconduct. I choose to call the announcement a Good Friday speech because the intended result of that action is that the overriding public interest and the interest of depositors would be protected by the action of the Central Bank of Nigeria. In one of my previous editions of this column I clearly warned against the danger posed by deceptive advertisements to Nigerian consumers. With the sledge hammer slammed on the heads of these five Managing Directors of some of the most advertised Banks in Nigeria, it is clear that the Nigerian consumers of the products of these banks have all these while being deceived and the deceptions of unprecedented scale are ongoing not only in the banking sector but most especially in the telecommunications sector where the service providers have become gamblers even as quality of services received by consumers is declining at a historic speed.
The Central Bank Governor said he took the drastic action to save the banks from imminent collapse. But some analysts say the Central Bank’s action was selective.
In exercise of its power under Sections 33 and 35 of the Banks and Other Financial Institutions Act 1991, as amended, the individuals affected by the CBN hammer were Sebastian Adigwe of Afribank Plc, Erastus Akingbola of Intercontinental Bank Plc, Bartholomew Ebong of Union Bank of Nigeria Plc, Cecilia Ibru of Oceanic International Bank Plc and Okey Nwosu of Finbank Plc.
Sanusi said their huge exposure to the capital market and massive non-performing loans were the key factors that contributed to the liquidity problems in the affected banks.
He said when he became the governor of the CBN, he was alarmed at the quantum of exposure which some of the banks had.
As a result, he said the CBN asked for a special examination of these five banks which by the apex bank’s estimates were showing signs of distress given the length of time they spent at the Expanded Discount Window (EDW) introduced last September by the former CBN governor; Chukwuma Soludo to shore up their liquidity.
Sanusi said: “If we take the average exposure at the discount window every month, between October last year and July this year, these five banks accounted for 90 percent of transactions at the EDW”.
“The remaining banks accounted for 10 percent. This for me is an immediate sign of distress. We tested it further and closed the window and said on more money”.
“We then guaranteed inter-bank placements. If we didn’t guarantee the inter-bank market, banks will not lend to them”.
“But when we did this, we immediately saw the affected banks taking money from the inter-bank market to repay their exposure to the discount window”.
“This was clear evidence that they do not have cash at all. Their balance sheet had shrunk. The cash had gone. There were clear signs of banks going under.
On seeing these signals, we sent in special examiners. The idea was to go and find out the true position of things”.
The CBN governor said what they found was not so much of a surprise, “but I think the extent was alarming because I did not believe that there were banks that have up to 48 or 50 percent non-performing loans of their total loan portfolios”.
He said decisions by the management of the affected banks exposed them to the capital and oil markets and risked their depositors’ funds.
Sanusi added that once the decision was taken to inject capital into the institutions as a lifesaver, there is no way the CBN was going to allow the same team to manage the funds which belong to the public.
Sanusi disclosed that the CBN would inject N405 billion into the five banks because they urgently needed fresh bailouts.
Salutary as the action of the central Bank of Nigeria may be, he still has to tackle the rising trend of corporate prostitution in Banks in order to restore public confidence in the Nigeria Banking sector.
Thisday on Saturday of August 15th 2009 puts it succinctly; “It’s an undesirable path, but it seems that for many female bankers to keep their jobs, they have to take that dreaded route.
Since the consolidation of the banking sector, a rather negative trend has been evolving as regards the need for banks to maintain a reasonable amount of cash deposits and stay ahead of competition.
Unfortunately, according to Thisday, female bankers, bear the brunt of this deposits craze even as the Newspaper rightly reported that pretty and daring young ladies without much scruples about sexual morality, are target of banks who instruct them to generate hundreds of millions of naira within three to six months using ‘everything they have got’ to achieve this, failing which a percentage of the staff’s salary may be deducted while promotion and other emoluments are withheld. So desperate are some banks that they even distribute Condoms to their female staff ‘just in case’.
The Central Bank Governor was quoted to have told the Federal House of Representatives’ Committee on Banking and currency during a public hearing that corporate prostitution by female bankers in search for deposits exists and he promised to fight the trend.
According to Sanusi; “Yes, this thing is here, although in my over 20 years in the banking industry, I have not experienced where a lady was asked to go and sleep with a man to get deposits. I am sure no bank will say that”.
We know that the last part of Sanusi‘s statement amounted to being very economical with the truth, because some of us are eye witnesses to this despicable practice and if not for God’s intervention, yours faithfully would have fallen prey to one of these female banker prostitutes who pestered me to just make a deposit to her bank even if it is one hundred thousand naira.
The Central Bank of Nigeria must protect the human Rights of these ladies in the Nigerian Banking industry who are forced into prostitution for the sake of attracting huge deposits to these banks.
• Emmanuel Onwubiko heads the Human Rights Writers’ Association of Nigeria.