Lagos — Eleven banks (names withheld) have reportedly scaled the latest round of the audit by the Central Bank of Nigeria (CBN). Three may have been indicted, however.

Fourteen were audited this time around, after the 10 audited last month, which led to the sack of five Managing Directors (MDs).

Sources said when the CBN reconciled the assets of the three banks that failed to scale the hurdle with their liabilities, they were found to be negative, an indication that they are insolvent.

All the three are new generation banks. One reportedly granted a non-performing loan worth about N17 billion.

The CBN is expected to release the result of the audit this month.

Another source argued that the CBN does not have powers to sell any of the banks or buy into them, it can only support them.

"That was what (CBN Governor) Lamido Sanusi's predecessor (Chukwuma Soludo) was doing through the Expanded Discount Window (EDW). The advantage of EDW is that it is tenured.

"What Sanusi has done is to shut that window by injecting N420 billion through ways and means which was why the CBN printed money," the source explained.

He expressed regret that what Sanusi has done has no tenure and there is no legal vehicle to exit (get the money back from the banks). For that vehicle to be created, the National Assembly (NASS) has to pass a law creating a Toxic Asset Management Company."

But CBN Deputy Director and Head of Corporate Affairs, Mohammed Abdullahi, insisted in a statement on Thursday that the N420 billion injected into the banks is a loan, not equity or a bailout.

He decried the "strenuous efforts" by some individuals to "deliberately twist information regarding the (CBN's) recent actions to sanitise the banking sector in order to malign and discredit the entire process."

He said the loan would ensure that they would continue to meet their obligations, and "will be paid back at a premium."

Sanusi himself reminded lawmakers on Wednesday that the CBN Act empowers it "to manage money supply in the economy through different mechanisms."

Abdullahi also denied reports that the plan to introduce Islamic banking is part of an alleged Northern agenda.

He explained that Islamic or non-interest banking, had already been approved by the CBN under Soludo, in line with the Banks and Other Financial Institutions Act (BOFIA).

He recalled that the former Habib Bank was given approval in 1992 to operate a window of Islamic banking which is still operational with Bank PHB (the merger between Platinum Bank and Habib Bank).

The "approval by the CBN under Soludo saw the emergence of the proposed JA'IZ Bank which has been working to raise the N25 billion capital base required. Islamic banking was already in Nigeria years before Sanusi became the (CBN) Governor."

Bail applications will be argued in court today for four of the five sacked bank MDs, seven Directors, and three stockbrokers, all charged with fraud and economic sabotage.

Justice Dan Abutu of the Federal High Court in Lagos will entertain submissions from counsel for former MDs Barth Ebong (Union), Sebastian Adigwe (Afribank), Okey Nwosu (FinBank), and Cecilia Ibru (Oceanic).

Seven of the Directors - Samuel Adegbite, Christopher Alabi, Sanni Adams, Hyacinth Enuha, Isyaku Umar, Bayo Dada, and Raymond Obieri - are of Intercontinental Bank, of which Obieri is Chairman.

One of the stockbrokers is Peter Ololo, owner of Falcons Securities Limited, who owes Afribank N58.9 billion. The other two are Opeodu and Henry Onyemem.

On Monday, the Economic and Financial Crimes Commission (EFCC) filed charges against the former MDs and Directors for incurring bad loans.

Nwosu was arraigned on 11 counts, including failure to take all reasonable steps to ensure the correctness of FinBank monthly return to the CBN between October 2008 and May 2009.

He also allegedly failed to give a true and fair view of the state of the affairs of FinBank to the CBN by incorrectly importing N47.6 billion commercial papers under the Expanded Discount Window in FinBank's statement of assets and liability.

The offences are punishable under Sections 28 (3) and 50 of BOFIA.

Adigwe was docked alongside Ololo and his company, Falcons Securities, for allegedly granting reckless loans worth billions of Naira.

The loans, according to the charge sheet, were approved for eight companies between October 2008 and April 2009 without adequate security, contrary to acceptable practice.

Besides, the charge sheet said he allegedly failed to keep proper books of accounts to wit: classification of commercial papers as contingent liabilities of Afribank.

In the EFCC's charge against Ololo, his company, Falcon Securities, and Adigwe, borrowed N58.9 billion from Afribank without security between 2008 and 2009.

According to the EFCC, the breakdown showed that Ololo conspired with Adigwe to obtain a loan of N29.5 billion, and another N15 billion through Falcon Securities between September and October 2008.

He allegedly got N14.2 billion loan from Afribank in April 2009 in violation of banking regulations, and was granted N200 million between 2008 and 2009.

Ibru was arraigned on 25 counts, among them for allegedly granting N100 billion bad loans, including non-performing ones to seven companies, and another to Edesiri Onateji Ibru without security.

She also allegedly granted over N25.5 billion without the approval of the CBN, contrary to the regulations.

The Intercontinental Bank Directors are accused of granting over N32 billion bad loans to companies in which they have vested interests without security.

The EFCC said they took $10,000 as holiday allowance - in contravention of the code of conduct for banks issued by the CBN - and ensured that the balance sheet of Intercontinental distorted the state of affairs of the bank with regards to non-performing N87.6 billion loans.

Ebong was accused of granting over N150 billion bad loans, and Adigwe also of granting over N91 billion loans without collateral.

All the accused pleaded not guilty to the charges.

However, the anticipated legal action against the take-over of Oceanic by the CBN was not filed at the Federal High Court in Lagos on Thursday.

Lawyer for the bank's shareholders, Ajibola Oluyede, told reporters that it will be filed today.