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
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
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
I would prefer those that have already shown interest and
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
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
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,
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
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
“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
“The Minister of Finance said if money did not come in, we will
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
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
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
unfold, but these things are clearly thought out and the national
interest is paramount,” he said.
Troubled Banks’ Shareholders Have Lost Their Banks
The Central Bank of Nigeria (CBN) has said that shareholders of
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
That is the truth people do not want to hear. Somebody says
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
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
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
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
“Look, let me tell you, the same people whose name you see on
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
It will be recalled that on August 14 the CBN Governor had
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
Margin loans amounted to N456.28 billion and exposure to Oil
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
The huge provisioning requirements he stated have led to
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.