Leadership (Abuja)
By Golu Timothy
4 November 2009
Abuja — To consolidate on the gains of the ongoing banking reforms, the Federal Government may review some aspects of the reform provisions as a way of strengthening it, a source told LEADERSHIP last night.
This review, without prejudice to the autonomy of the Central Bank of Nigeria, is as a result of the increasing pressure on the President to save local investors and shareholders from losing their banks in its entirety.
A Presidency source revealed that President Umaru Musa Yar'Adua, inundated by appeals from major shareholders of the eight affected banks, is favourably disposed to the call of the shareholders to allow them recapitalise their banks, albeit without jettisoning the ongoing banking reform and the EFCC's drive to recover non-performing loan and the prosecution of the erstwhile management for infractions and sundry abuse of office amongst other misdemeanors.
The top Presidency official who pleaded not to be named said, "This option is considered by Presidency to be in tandem with the rule of law mantra, which is the underlying principle guiding the policy of the Yar'Adua administration."
In the aftermath of the August 14 intervention in the banks by the CBN over issues of liquidity, capital inadequacy and corporate governance in eight banks, namely Intercontinental, Oceanic, Afribank, Union, FinBank, BankPHB, Spring and ETB, there have been a lot of questions regarding the fate of shareholders and the shareholding structure of the banks.
This has led to a lot of disquiet in the banking sector as no clear-cut policy has so far been adopted by the CBN on the future of the banks and the investment of the shareholders.
The source further stated that this option, which is gaining support in the Presidency, is intended to draw a line between the infractions allegedly committed by the management of the banks and the investors and shareholders of the banks and to dispel insinuation that the government is solely out to remove the banks from their owners and dilute the ownership that will prevent a single individual or family to own overwhelming control of any bank with a market share of over 5 per cent.
The CBN has been in a quandary over what to do with the eight banks currently under its appointed management. Just immediately after sacking the management of the first tranche of five banks at a road show in London, the governor of the CBN, Sanusi Lamido Sanusi, hinted on the possibility of foreign investors coming over to take over the banks; also while answering questions at the just concluded annual meeting of the World Bank and International Monetary Fund in Istanbul, Turkey, Sanusi rationalised the possibility of nationalising the banks, saying that may happen by default because there is a limit on how long a bank can be kept on loans.
This new thinking of the presidency is a welcome relief to promoters of the affected banks as some of them have expressed readiness to inject the requisite funds into the banks.
The CBN has earlier adopted the proposal by Chief Michael Adenuga to recapitalise Equitorial Trust Bank by injecting in the first instance a whopping $150 million.
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