3 May 2012

Nigeria: Sanusi - CBN's Negligence Caused Capital Market Crash

Photo: CBN
Central Bank of Nigeria.

Lack of effective supervision on the part of various regulatory agencies including the Central Bank of Nigeria (CBN) was responsible for the near collapse of the Nigerian Capital Market, the apex bank's governor Malam Sanusi Lamido Sanusi has said.

Testifying before the House of Representatives ad-hoc committee on the near collapse of the capital market yesterday in Abuja, Sanusi said the CBN failure to supervise commercial banks which engage in insider trading and margin loans led to the stock market crisis.

"We accept blame as institution not as individuals because I joined the CBN in 2009 so also the governor who came in June 2009," Sanusi who was represented CBN's Deputy-Governor in-charge of Financial System Stability Dr. Kingsley Moghalu said.

On whether the apex bank will prosecute those found wanting, Sanusi said that institutional responsibility of supervision is not a criminal offense but "a management short-coming. For the failure of regulations that took place in this country in the last few years do you save the house which is on fire or you go after the rats and rabbits?"

The CBN boss disclosed that the decision by international fund managers and investors to exit the Nigeria market due to increased risk aversion and the need to shore up their home countries' economies which had heavily eroded in the wake of the global meltdown leading to the withdrawal of $15 billion exacerbated the crisis.

Sanusi however, justified the injection of the sum of N620 billion to bail out some ailing banks in the country. The hearing continues today.

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