Sanusi Refutes 'Nigerian Banks Are Gambling Houses' Statement

ABUJA, July 10, (THEWILL) - The central bank has refuted media reports credited to the CBN Governor, Mallam Sanusi Lamido Sanusi alleging that Nigerian banks are gambling houses.

In a signed statement made available to THEWILL in Abuja today, Mr. Mohammed M. Abdullahi, Head Corporate Affairs of the CBN said emphatically that the Governor did not in anyway state such. From all intent and purposes, the news report was deliberately misrepresented for sensationalism, he said.

He said the CBN Governor at the first Distinguished Lecture of the Professor Sylvester Monye Foundation in Asaba, on Friday July 9, 2010 had in his paper, titled, ‘The Economy in Perspective: Consolidating the Gains of the Banking Sector Reforms,’ provided further clarification on why the CBN had to intervene in 2009 in the banking sector.

"In throwing more light on how the rescued banks eroded their capital base and jeopardized depositors’ funds, he likened what transpired at that period to gambling by those, who as professionals, ought to know that their actions would impact negatively on the financial system."

He quoted the Governor as saying that the management of some of the rescued banks during the period did not entirely raise fresh capital, but deployed depositors’ fund through collusion with some stock brokers in buying their respective shares in the stock market and manipulating the prices, thereby creating a bubble which would eventually burst with dire consequences - a situation he alluded to as similar to what operates at the Casinos.

The Governor disclosed that it was in order to save depositors and investors that the CBN took those far reaching measures of August 14, 2009 and subsequent others to save the financial system from total collapse.

Mallam Sanusi reiterated that with the reforms, Nigerian banks have stabilized with many of them back to profitability. According to him, "our banks today are in better shapes than many of the European banks although there are still challenges that are being addressed."

Speaking further on the immediate impact of the reforms, the Governor said there is increased confidence in the financial system as shown by the increased exposure of Exim Bank, IFC and European Investment Banks to Nigerian banks, the significant moderation of inter-bank rate and other key money market rates, capital market development, stability of exchange rate, and steady decline in various measures of inflation among others.

He then stressed the need for a robust and liquid capital market and strong pension and insurance institutions to attract long term finance for economic development and financial system stability.

Mallam Abdullahi called on the media to de-emphasize sensationalism in their reportage of such sensitive issues that might send wrong signals to the market with negative repercussions on the economy.