Daily Champion (Lagos)
Clement Nwoji
4 November 2009
Abuja — THE Central Bank of Nigeria (CBN) in a continuous move to stabilize the banking sector yesterday revealed that the prosecution of those with non-performing loans and indebted to the eight banks whose Chief Executive officers and Executive directors were sacked would commence this month by the Economic and Financial Crimes Commission (EFCC).
Also, the apex bank will be presenting its bill seeking for the establishment of the long awaited Assets Management Company (AMC) to the National Assembly next week which it hopes would fast track the bill's passage into an enabling law to enable the company to take off not later than next month.
It further urged that the names of the Nigerian officials alleged to have taken bribes in the minting of the polymer notes should be disclosed for investigation.
The CBN Governor, Mallam Sanusi Lamido Sanusi disclosed these yesterday while briefing Journalists on the outcome of the Monetary Policy Committee (MPC) meeting held yesterday.
He said explained that the bill which is currently with the Attorney General of the Federal is very important to the stimulation of activities in the capital market apart being important for the strengthening the balance sheets of banks.
According to the CBN Governor, "the AMC will provide us with opportunity for the distributing the losses that had resulted from the collapse in the capital market, among bankers' borrowers and government with the hope that since we are putting that for a long term, government will recover any premium placed on these assets and therefore not lose anything.
"So, we think that the AMC is critical deflation point and necessary for the growth of the capital market and we believe that with cooperation from the National Assembly, we should be able to do these. My hope is that before 31st December, we would have been able to effect the first stage of the AMC which is the acquisition of loans related to stock market exposures".
Sanusi further said that the MPC resolved to leave unchanged the Monetary Policy Rate (MPR) at six percent but introduced "an asymmetric corridor of interest rates around the MPR" with rate on the standing lending facility remaining at 200 basis points above the MPR while the rate on the standing deposit facility will be 400 basis points below the MPR.
He explained that with these, it is still MPR plus two, that is six plus two but the deposit facility is MPR minus four meaning that if the banks leaves their money with the CBN over night, they will get two percent per annum/ four percent per annum.
The idea, he said is that the higher rates will give the banks incentives to keep their money over night with the CBN rather than lend it to their customers. He added that this will encourage them to lend it prudently and look for higher returns.
The MPC also resolved that quantitative easing to bridge the gap currently estimated about N500 billion between the levels of current monetary aggregates and the bench mark levels for 2009, explaining that the modalities for the quantitative easing include investments in bonds to be issued by AMC.
Sanusi said "Purchase of loans by banks under the AMC will be based on terms at strengthening the balance sheets with a focus on asset quality, improving liquidity and capital adequacy as well as on reducing debt overhang relating to the stock market in order to stimulate activity in the capital market.
"With effect from November 16, 2009, the temporary ban placed by the CBN on the use of bankers Acceptances (Bas) and Commercial Papers (CPs) will be lifted", he said adding that one percent general provision on performing loans contained in the existing prudential guidelines had been waived for the year 2009 as a countercyclical measure.
On the alleged corruption in the minting of the polymer notes, he said the bank has not set up any committee to probe the alleged bribing of top Nigerian government officials in order to secure the contract. He said no specific name had been mentioned and until then the apex would not dissipate energy on the allegation.
In his words: "On the polymer notes, I did not set up any committee. What I have said is that at this point in time we do not have any Nigerian who is supposed to have received the bribe in connection with the polymer transaction.
"As newspapers have reported that bribes were given in connection with the contract given in Nigeria, all the names mentioned were foreigners but in the event that we get any information on any Nigerian who was involved in this exercise, I am sure that the EFCC will investigate the matter to its logical conclusion.
"But at this point in time, it will be premature to start investigating since we do not have any name. They said Nigerian officials; they did not even say the Central Bank officials. So until we know who exactly is being alleged to be the recipient of this bribe, an investigation is premature. But we are not averse at all to any kind of investigation".
On key macro-economic and financial development, the Committee noted that some banks took recourse to standing deposit facilities with sharp increase in the middle of the month, adding that no bank accessed the standing lending facilities during the same period.
The foreign exchange reserves stood at $43.34 billion as at end of September, 2009 which is an Improvement of about $1.64 billion over August mainly due to the receipts of the Special Drawing Rights allocation.
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