Leadership (Abuja)
Iyobosa Uwugiaren
3 October 2008
The Chartered Institute of Bankers of Nigeria (CIBN) has assured of Nigerian banks' safety amidst the current global financial crisis.
"As the crisis appears to be escalating in the world's leading financial markets, it is natural for financial services consumers and the general public in other parts of the world to be concerned about the possible spill-over effect or impacts in the local markets," the professional umbrella of all banks in the country stated in a press statement signed by Erastus B O Akingbola, President/Chairman of Council, CIBN. "In the face of several questions being asked The Chartered Institute of Bankers of Nigeria (CIBN) has therefore deemed it necessary to explain the situation with our financial market here in Nigeria.
"The local banks in Nigeria are presently unaffected by the negative developments in the financial markets of the United States and Europe. The reason is that the crisis is driven by failed financial products that led to the systemic distress. Nigerian banks are not yet into the kind of exotic products that led to the problems of those institutions abroad".
The CIBN, however, said the industry operators are on the alert to avoid the type of investments and consumer lending that would put the system on tailspin saying: "The industry is also taking the development in the world financial markets as a wake-up call for refocusing the international expansion because if such crisis occurs in five years time many Nigerian banks may be affected just like other global players, as they would have been fully integrated into the global markets."
"It is also a wake-up call for a home-grown strategy and attention to risk management principles as business network and volumes grow. Again, the financial crisis is a wake-up call on banks' top executive management, especially the chief executives, to have eyes for details and be fully in charge of the key levers of the business. There is no room for absentee CEO, but one who is in constant touch with the realities on ground in the running of their organisations".
Meanwhile, the U.S. Senate has succumbed to public opinion and passed a $700 billion financial-market rescue package loaded with inducements for the House of Representatives to approve the measure following its rejection of an earlier version.
The legislation's approval came when, on a 74-25 vote, it authorised the government to buy troubled assets from financial institutions rocked by record home foreclosures. It contains two provisions favoured by House Republicans: One raises the limit on federal bank-deposit insurance; the other reiterates the authority of securities regulators to suspend asset-valuing rules that corporate executives blame for fueling the crisis.
The bill's proponents cited the record 778-point drop in the Dow Jones Industrial Average after the House's 228-205 defeat of the legislation September 29 as evidence of the urgency to stabilise the banking system. They suggested that the market reaction may spur some House Republicans to change their minds when the bill comes to a vote, likely this afternoon. "The big drop" in the Dow Index "really had a chilling effect on a lot of our members and a lot of their constituents," House Republican Leader John Boehner said on Fox News. With changes made by the Senate, the legislation "has a much better chance" of passage this time, he said.
Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, said he hoped the vote "will send a very strong signal even to the Asian markets and others."
The dollar rose against the euro, approaching a one-year high after the Senate approval, bolstering expectations the U.S. will act faster than Europe to address the seizure in credit markets. The dollar advanced to $1.3883 per euro at 12:46 p.m. in London, from $1.4009 late yesterday in New York.
Asian stocks and U.S. futures fell on concern the package won't be enough to avert a recession, with futures on the Standard & Poor's 500 Index falling 1.1 per cent and the MSCI Asia Pacific Index lost 1.3 per cent. Europe's Dow Jones Stoxx, 600 Index added 1.2 percent to 260.75 as of 12:46 p.m. in London.
'They only need 12 votes," Kansas Representative Todd Tiahrt, who voted against the bailout, said in an interview with Bloomberg Television. "If they put these few fundamental reforms in there," congressional leaders "would easily get enough votes to pass the legislation," he said before the Senate included those provisions in the package.
Democratic supporters of the bill are targeting lawmakers such as Bobby Rush, representing Illinois who twice changed his vote in the House roll call. Rush ended up being among the 21 members of the Congressional Black Caucus to oppose the legislation. The caucus scheduled a meeting yesterday to discuss the changes made by the Senate. Rush wasn't available to comment on his vote.
House Majority Leader Steny Hoyer told MSNBC News yesterday that no Democrats who opposed the measure earlier this week have pledged to back it. "We don't have any more Democrats at this hour," he said.
"The bill that they are going to send back is the same bill that I voted against two days ago," Representative Joe Barton of Texas told Bloomberg Television. "Why would I turn around and vote for it tomorrow evening or Friday?"
President George W. Bush had said in a written statement after the vote that "the bill the Senate passed is essential to the financial security of every American." He said the House should follow suit in approving the proposal.
Bush was slated to meet with U.S. business representatives yesterday morning, including members of the Chamber of Commerce and the National Association of Manufacturers, to urge their support in pushing for House passage, the White House press office said.
The bill was a bipartisan effort, with 40 Democrats, 33 Republicans and independent Joe Lieberman of Connecticut voting for it. The two presidential nominees, Democrat Barack Obama and Republican John McCain, returned from the campaign trail to vote for the plan.
The Senate also sweetened the measure for Republicans by authorising the government's purchase of troubled assets with a $149 billion package of tax breaks. They would spare 24 million households from a $62 billion alternative minimum tax and extend $17 billion in benefits to companies that produce alternative energy.
Yet Hoyer warned there was a possibility that some additional Democrats may oppose the legislation because of the tax breaks, which aren't offset with spending cuts.
"There are people who are upset that we are making the deficit worse as we try to stabilize the economy," he told reporters. Hoyer said he was "personally disappointed' by the Senate's decision to include the tax legislation in the package.
Twenty-four of the 44-member Blue Dog Coalition of fiscally conservative Democrats voted for the rescue package on Sept. 29. Four of them said yesterday they'll continue to back the bill, even though their caucus derided the Senate's tax measures as irresponsible as recently as Monday.
"I will vote for the package coming from the Senate," said Oklahoma Representative Dan Boren. Other members of the coalition who voiced support included Representative Jane Harman of California, Representative Jim Marshall of Georgia and Representative Jim Cooper of Tennessee.
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