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In: CBN2 Mar 2010
Over the weekend, the CBN Governor gave a speech on what went wrong with the banking system in Nigeria. You can download the paper below. He listed 8 main factors namely, macro economic instability caused by large and sudden capital inflows; major failures in corporate governance at banks; lack of investor and consumer protection; inadequate disclosure and transparency about the financial position of banks; critical gaps in regulatory framework and regulations; uneven supervision and enforcement; unstructured governance and management process at the CBN and weaknesses in the business environment in the country.
<a href=”http://www.vanguardngr.com/2010/03/01/banking-reform-what-went-wrong-%E2%80%94-sanusi/”>Vanguard Newspapers</a> has a brief account of the speech:
CBN Reelases Template/Guidelines For Minimum Information To Be Disclosed In Financial Statements
The <a href=”http://www.cenbank.org/”>Central Bank of Nigeria</a> last week announced the names of 5 new members of the Monetary Policy Committee. They are listed below with their areas of specialization:
1. Dr. Adedovin Salami – Macroeconomic Policy
2. John Oshilaia – Financial Markets
3. Prof. Chibuike Uaochukwu Uche – Banking and Finance
4. Dr. Shehu Yahaya Development Economics
5. Abdul-Ganiyu Garba Monetarv & Fiscal Policies
<strong>Dr. Adedoyin Salami</strong> is a Senior Lecturer and full time member of the Faculty of the Lagos Business School, Pan African University. He is the Head of Research at the Lagos Business School. His academic interest includes Macroeconomic policy and risk management and is a consultant to DFID, World Bank, UNIDO, etc. He is also a member of the National Economic Management Team. John Oshilaja is an expert in Public Finance and Financial Markets Developments in Emerging markets. His working experience spans over 25 years and include Latin America, Eastern Europe, Middle East and Africa. He also possesses significant experience in Public Sector debt restructuring in Brazil. Mexico, Kenya and Nigeria.
<strong>John Oshilaja</strong> is an expert in Public Finance and Financial Markets Developments in Emerging markets. His working experience spans over 25 years and include Latin America, Eastern Europe, Middle East and Africa. He also possesses significant experience in Public Sector debt restructuring in Brazil. Mexico, Kenya and Nigeria.
<strong>Prof. Chibuike Uche</strong> is a Professor of Banking and Financial Institutions and full time lecturer in the Department of Banking and Finance, University of Nigeria, Enugu Campus. He is a fellow of the Institute of Chartered Accountants of Nigeria (FCA). His research interest includes Bank Management, Financial Institutions and Markets.
<strong>Dr. Shehu Yahaya</strong> is currently an Executive Director in African Development Bank and possesses rich and varied experience in development economics, macroeconomics and international economics. He was previously Head of Research Department and Head Projects and Corporate Finance at ADB. He also has valuable experience in banking policies as well as project and program implementation, and previously served as an Executive Director in NEXIM. He brings to the Committee important policy contribution from ADB.
<strong>Prof. Abdul-Ganiyu Garbo</strong> is a Lecturer in the Department of Economics in Ahmadu Bello University, Zaria and has taught economic theory and econometrics. He has also conducted research in several aspects of monetary & fiscal policies and trade and exchange rates. Prof. Garba is a member of African Economic Research Consortium (AERC), Nairobi-Kenya, Nigeria Economic Society and has over 60 publications, locally and internationally. He has participated actively in several conferences and seminars organized by the Central Bank.
The Central Bank of Nigeria released new guidelines for the tenures of bank CEOs. Here are the new guidelines:
1. Chief Executive Officers, CEO of banks shall serve a maximum tenure of ten years.
2. All CEOs who would have served for ten years by July 31, 2010 shall cease to function in that capacity and shall hand over to their successors.
3. Where a bank is a product of merger, acquisition, take-over or any other form of combination, the ten–year period shall include the pre and post combination service years of a CEO provided that the bank in which he previously served as CEO was part of the new bank that emerged after the combination.
4. Any person who has served as CEO for the maximum tenure in a bank shall not qualify for appointment in his former bank or subsidiaries in any capacity until after a period of three years after the expiration of his tenure as CEO.
5. The Governor/Deputy Governors of the CBN and the Managing Director/CEO and Executive Directors of the Nigeria Deposit Insurance Corporation, NDIC shall not be eligible for appointment in any capacity in banks until after the expiration of five years from the date of their exit from the CBN or NDIC as the case may be.
6. The Departmental Directors of the CBN and the NDIC shall not be eligible for appointment in any capacity in banks and their subsidiaries under the supervision of the CBN and NDIC until after the expiration of three years from the date of their exit from the CBN or NDIC as the case may be.
7. Henceforth, all banks shall reflect the provisions of these guidelines in the terms of engagement of their CEOs.
You can download the CBN release <a href=”http://www.cenbank.org/Out/2010/publications/pressRelease/GOV/Tenure_Guideline19012010.pdf”>here</a>.
Early last week, CBN released statements on the Disengagement of workers from banks and CBN’s stand, Appointment of directors to 3 of the banks, Guarantee of interbank lending and foreign credits, and Rules for banks on disclosing bank rates.
Here are the main points from the different releases:
1. Banks are henceforth required to submit on weekly basis to the CBN their average deposit and lending rates in line.
2. The Central Bank of Nigeria has never directed commercial banks to sack staff or rationalize branches as reported. Banks are private enterprises and the decision to engage or disengage staff is best left to the management and boards of the institution. These decisions are taken on the basis of business imperatives.
3. The Central Bank remains committed to
guaranteeing all foreign credit lines and interbank exposures up to
December 31, 2010.
You can download them below.
CBN Press Release - Appointment of Directors For Banks (164)</br>
CBN Press Release - Guarantee of Lending (151)</br>
CBN Press Release On Bank's Disengagement of Workers (140)</br>
CBN Rules On Bank Rates (149)
Here is the CBN statement on the stunning CBN losses released last Friday: PRESS RELEASE ON THIRD QUARTER (Q3) RESULTS RELEASED BY DEPOSIT MONEY BANKS In line with the Central Bank of Nigeria’s new disclosure standards which are central to the Bank’s ongoing banking sector reforms, all deposit money banks (DMBs) in Nigeria have announced [...]
Here is the communique from the MPC meeting held on Nov 4th 2009:CBN Communiqué No. 66 of MPC Meeting - Nov 4th (200)
From the CBN regarding Equitorial Trust Bank:
Following the Special Examination of all banks operating in the country, and the subsequent actions by the CBN, the shareholders of Equitorial Trust Bank Limited requested the permission of the Central Bank of Nigeria to be allowed to rectify lapses identified in the bank. In pursuance to that, the shareholders executed a Deed of Covenant, the specific terms and conditions of which included the following:
i. The willingness of the shareholders to recapitalize the bank by way of injection of additional capital latest by June 30, 2010;
ii. Restructuring, diversification and enlargement of the capital base of the bank either by way of a public offering of shares, securing a core investor or merger with a local bank within one (1) year period;
iii. Addressing the corporate governance issues in the bank which were mainly ascribed to the previous Executive Management team in the bank;
iv. Reconstitution of the Board of Directors of the bank through the retirement of two non-executive directors and the appointment of four new non-executive directors, including Dr. Mike Adenuga Jnr. (CON), an erstwhile member of the board, subject to the approval of the Central Bank of Nigeria; and
v. Convening a general meeting of the bank’s shareholders to ratify, through a resolution all the nominated appointments to the bank’s board.
Download the full statement here.
The <a href=”http://www.cenbank.org”>Central Bank of Nigeria</a> on Wednesday, released the list of debtors with non-performing loans to the banks that were recently taken over (Bank PHB, Equitorial Trust Bank, and Spring Bank). Here is an excerpt of <a href=”http://www.tribune.com.ng/15102009/news/news10.html”>Tribune Newspaper’s</a> report:
<blockquote>IN its ongoing sanitisation of the nation’s banking sector, the Central Bank of Nigeria (CBN), on Wednesday, released another list of individuals, corporate organisations, parastatal agencies and state governments owing five banks whose audit reports were released recently.
The total amount owed the five banks, according to the release, is N346,408,028,581.04, excluding the sum total of non performing loan of Wema Bank, which could not be ascertained at press time.
The non performing loans of the banks as at June 30, 2009 and October 5, 2009 respectively revealed Bank PHB topping the list with N170,073,403,358.39, followed by Spring Banks (N95,594,989,430.06), Equitorial Trust Bank’s (N46,154,945,774.44) and Unity Bank (N36,585,690,018.15).
As usual, names of politicians, businessmen and contractors topped the list. These include the former Managing Director of Wema Bank Plc, Mr. Adebisi Omoyeni whose Independent Securities Ltd owes N5 billion and Barrister Jimoh Ibrahim whose total loan is put at N5 billion also.
Others include Femi Otedola of Zenon Petroleum Gas Limited (N5,154,041,716.86), Peter Ololo of Petosan Oil & Gas Company Limited (N4,548,125,091.02), Chief Oyewole Fasawe (N7,874,801,592.84) and Kola Daisi of National Sports Lottery Ltd (N4,821,060,327.76).</blockquote>
You can download the report below.
CBN-Bank Debtors - Oct 14th 2009 (310)
The Central Bank of Nigeria recently released the economic report for the month of July 2009. You can download it below. Here is the summary:
Here is a document dump of different reports and news stories on the banking crisis and the actions taken by the CBN.
Vetiva provides some details on the CBN’s presentation/road-show in the UK in late August. The noted that:
- All write-downs are to be taken in the current quarter (i.e. quarterly results to be released for September ending will feature total provisions for non-performing exposures)
- Results not to feature high profitability margins
- GTBank and Diamond Bank have already accounted for losses as at second quarter of 2009 (i.e. Q2’09 ended June 30, and Q1’09 ended July 31 respectively), so their results in Q3 are expected to be much better than the average performance of most other Banks
- Fourth quarter (ending December) should be strong for Nigerian Banks in general because earnings will no longer be eroded by Non-Performing Loans
Vetiva - Sanusi's Meeting With CNBC Africa - Aug 28th 2009 (391)
One of the most explosive revelations of this entire exercise was the news report by Vanguard in March about the plans to “level” the ground in the banking sector to favour the Northerners and how 5 banks were going to be taken over.
Vanguard March 23, 2009 - The Plan to take over 5 banks (383)
Standard Chartered also prepared an analysis of the events. The pointed out that:
-CBN prints money to fund the initial cost of the bank bailout
-Given the current environment, and the contraction in broad monetary aggregates already underway, this is unlikely to be inflationary
-A diverse range of funding options are open to the authorities
-The hope is that the CBN’s capital injection will be recovered following future private-sector investment in Nigeria’s banking system
Standard Chartered - Nigeria – Paying for the bank bailout - Aug 25 '09 (692)
Proshare NG also provided some analysis:
CB - Dissecting the problems with Nigerian Banks (2615)
Fronteria Post of 4 out of the CBN (308)
Here is the communique for the September 1st 2009 meeting of the Monetary Policy Committee from the CBN. The summary is:
This blog is dedicated to informing users on the latest business and economic news news from the CBN and Nigerian Stock Exchange. Happy reading!