When our extremely responsible Sanusi was actually confirmed by the Senate as the CBN Governor, I in my closet went on my knees and thanked The Almighty God, the way I have not prayed before, for the opportunity thus given to our economy to continue to survive. I particularly thanked God for closing the eyes and blocking the memories of the President and our Senate to the fact that they were appointing a thorough, genuine and no-nonsense brain to take charge of the country’s banking system. They simply forgot him as being a ‘right radical’ and I just kept thanking God for this all day.
Sanusi then took over at First Bank after a successful turn around in that Bank. But First Bank was lucky to have appointed him at the time they did. It was at this time that the rest of the banking rogues were busy wantonly spending savings and deposits of poor Nigerians on luxuries in manners/levels never heard of. For the high moral standard set by Sanusi, First Bank never went foul of the EDW and was never a defaulter at the interbank discount window. A curious look at the liquidity ratios of First Bank up till now will show that somebody with sane brain and high respect for fellow human beings was/and were in charge at the bank.
All the tricks and ‘fake brain’ that predecessors at the CBN were playing to give enormous impression that Nigeria Banking system was unusually sound are going to play out sooner or later though I have the feeling that the person of Sanusi will try to avoid letting all terrible revelations be leaked out.
Suddenly, Nigerian capital stocks appreciated million folds and the rest of the world rushed to Nigeria to partake of the windfalls. This is not because the European/American/Asian investors are not educated to know that companies and business organization generally do not have the capabilities to add value on daily or weekly basis. Of course, it takes time for goods to be finally sold and paid for and mostly organizations do not publish the financial results of their operations on weekly or daily basis. But, we found in Nigeria, through the dubious manipulation of rogue bankers, a situation where the price of their shares was ever increasing on daily basis. Many economists know that this could only come about through fraudulent manipulation of stock brokers as Okolo and his rogue bankers.
I had no doubt therefore that our Sanusi was going to as a matter of urgency step in to stop the deceit of the stock brokers aided by otherwise unintelligent bankers.
It has been analysed by many minds, and we need only to think over it from time to time, that where bankers wantonly give out money to highly speculative courses (stock market and the oil alike) rather to productive lines, the bubble most burst one day/one time. People that earned super profits from stock marker manipulation are not going to return them to offset the huge set back in prices at the time those share prices busted. We expect that the smart European would have put provisions in their investment contracts that would guarantee that any loss will never be pass to them – this being again because they knew that the whole investment undertakings then were at the best artificial and temporary.
The results no doubt are the situation that the banks were putting the whole economy and it is this situation that somebody as sane as our present CBN Governor would never allow to go unchecked. Yes, it is the so much enlightened European/American that first gave our Central Bank Governor Pass marks. The only people that are complaining are the direct and indirect beneficiaries of the reckless and inhuman misappropriation of poor peoples’ deposits by heartless and shameless bankers. I am not surprised that a number of newspapers and journalists are writing all sort of unintelligent pieces and bringing into this matter issue of Northern or Southern agenda. It must be said that far many people are not interested in write ups or reports of diversionary natures. Nigerians know very well who the promoters/owners of such media houses are.
WHAT CBN GOVERNOR SHOULD DO NOW
It has been established that a number of the banks stole deposits entrusted to them in the name of “non-performing loans”. It is stated that the first batch of 5 banks that erred accounted for about 89% of the deposits in the system. This obviously is alarming and must no doubt have eroded the liquidity position of the banking system. The first appropriate option in restoring the liquidity of the affected banks is to try as much as possible to retrieve these deposits given out as loans. Were the loans given out appropriately in the first place, the fact that any portion of them goes bad would not have created any problem. To explain this is to say that loans/advances are given out only after a number of factors have been satisfactorily considered. One of these factors is that any new advance is granted only when it is certain that sanctioning such advance figure or amount (in total) will not affect the liquidity ratio of the bank(s) concerned. Rather than granting new advances, the bank would normally opt for calling in existing advances as much as possible before new ones are given. It is for this reason that the bail-outs given to banks and financial institutions in UK/America are tied to credit expansion. It follows therefore that our CBN Governor must now specifically find a way to tie the recent bail-outs (and any subsequent ones) to loans and advances by the banks concerned. The banks got into trouble because they gave out deposits as loans perhaps more than they should have done. Logically therefore, any money given to them, must be seen as a return of such excessive advances they gave. Secondly, the banks so concerned must thereafter be left to find and decide the way and manner by which they will repay the CBN for the bail-outs. If they like, they should turn to their own shareholders or the public for secured and preferential loans. Alternatively they could consider merging with other banks that could draw from their own shareholders’ fund to repay CBN and subsequently earn enough or raise funds to credit back their holding fund.
The emphasis here is that the CBN should not chart out the course of action to repaying bail-outs. It is understandable that the CBN did not liquidate the banks straight off to avoid a complete and damaging run on the system as a whole, yet the talk of looking for investors for these banks (if that is true) by the CBN is without doubt an act that must be deemed “ultra virus”. CBN should allow the banks concerned themselves to come up with repayment plans for CBN bail-outs.
However, should the Nigerian government herself be desirous of nationalising some or all of these banks, that would be fine and the government should do that in acceptable manner. After all, the UK recently did nationalise a bank but they must have got an act of parliament duly passed after inputs from all and sundries, I imagine. It would be wrong for our hitherto upright and honest Sanusi to be allowed to be used by any politics of the government. Sure our own Sanusi Lmido Sanusi will not and never act to pursue the interest of any group against the overall interest of a healthy Nigerian banking system - SANUSI WILL NOT.
I rest my case for now.
Kola Adeseun
B.Sc (Econ/Accounting) HUII
(Financial Manager/Security Services Consultant)
e-mail only ([email protected])
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