CBN Moves To Defend Banks
By Ayodele Aminu,
The new managing directors of the five banks whose management teams were axed over the weekend by the Central Bank of Nigeria (CBN) have assured their customers that they are ready to meet their respective obligations.
The CBN has, meanwhile, been working throughout the weekend, pulling all the stops to prevent a crisis of confidence in the affected banks as well as the entire industry.The apex bank has worked on key steps to protect the industry from systemic crisis in the aftermath of the shake-up in the banks, THISDAY has learnt.The CBN has provided cash in all its branches across the country to ensure that the banks do not run out of cash, following fears that there may be a run on the banks by customers who may be panicking over last Friday's action by the CBN. Any customer who needs his or her money is to be paid instantly by the banks.
The apex bank has also directed all its clearing arms to ensure that no cheque is returned as long as the accounts are funded by the operators.Major depositors of the affected banks have also been called by the CBN to assure them that there was no cause for alarm as the situation is firmly under control.
THISDAY was informed last night that the CBN governor, Mr. Sanusi Lamido Sanusi, has called state governors and heads of Ministries, Departments and Agencies (MDAs) and asked them not to move their deposits from the banks, intimating them with the measures in place to protect their funds.The CBN has also directed the new MDs to assure customers of the safety of their deposits.The affected banks are Union Bank of Nigeria Plc, Intercontinental Bank Plc, Oceanic International Bank Plc, Afribank Plc and FinBank Plc.The new helmsmen of the banks who spoke were John Aboh (Oceanic Bank), Joseph Olusola Ajewole (Interconti-nental Bank), Susanne Iroche (FinBank) and Nebolisa Arah (Afribank).
Addressing journalists in Lagos yesterday in company with the Deputy Director, Banking Supervision Department, CBN, Oceanic Bank's new helmsman said he has a mandate to halt the deteriorating liquidity level of the bank arising from bad loans, embark on aggressive loan recovery and also grow the bank's
Aboh said CBN had injected fresh N100 billion as long term loan into Oceanic Bank, adding that with the money, Oceanic could continue to meet obligations to her numerous customers.
The new Oceanic Bank MD said: “Permit me to use this opportunity to assure the bank's clients, customers and stakeholders that the change of guard at the management level does not call for panic. I assure customers and other clients that their deposits are safe and they need not entertain any fear whatsoever.”
Aboh pointed out that the purpose of CBN's intervention was not to shut the bank but to strengthen it, adding that Oceanic Bank would remain open for business and also meet all customers' requests.
The new Oceanic Bank management, according to Aboh, will be meeting with the officials of the Nigerian Stock Exchange (NSE) today to decide on how best to protect the shares of the bank in view of the recent developments.
He further stated that a meeting of the board would hold tomorrow to take a decision on the bank's Annual General Meeting (AGM) that was initially fixed for Thursday this week. Sources within the bank said the AGM would be put off indefinitely owing to the sudden change in management and issues therein.
The CBN intervention, Aboh pointed out, did not mean government had taken over or nationalised the bank, adding that it was to avoid such that the CBN offered loans to the affected banks rather than equities.
Ajewole, the Acting Managing Director of Intercontinental Bank Plc, said customers' deposits are safe.
He was responding to customers' enquiries last weekend shortly after his assumption of duties at the corporate headquarters of the bank in Lagos when he briefed the management of the bank.
He said all that had happened was a change in leadership and that the change was positive in the light of the circumstances surrounding it. He reiterated the position of the CBN Governor that the change had improved the stability and safety of the bank.
Ajewole therefore enjoined customers of the bank to remain steadfast with the bank as CBN action was principally to protect them, adding that with the current backing of the CBN, the bank's customers' deposit have been guaranteed.
The new Managing Director of FinBank Plc, Iroche, confirmed that she took over last Friday after a smooth transition with the former executive management team.
She said: “I confirm that effective Friday 14th August 2009, the Central Bank of Nigeria injected a long term loan of N50 billion into the bank, which has been classified in the books of the bank as Tier 11 capital. This inflow has significantly strengthened the bank. “I wish to reassure our customers, all stakeholders and the general public that FinBank Plc remains a strong going concern and can emphatically confirm that the bank is in a strong position to meet all its liabilities and obligations. We therefore assure our customers that the safety of their deposits is in no doubt. Customers are requested to transact their normal businesses with the bank as the new management is committed to the safety of their deposits. We will continue to provide leading edge service delivery, which the Bank is known for.”
She said the new management would work towards the recovery of non-performing loans, entrench strong corporate governance and robust risk management framework. Arah, the new Group Managing Director/CEO, Afribank, said the objective of CBN's intervention was to ensure that Afribank remains a strong financial institution with capacity to meet the expectations of stakeholders. He said he would take the bank to greater heights and leverage on the resources within the institution to achieve the desired result.
He also assured the banking public that there was no need to panic as the bank remains solvent with capacity to discharge its obligations to them. He said Afribank has no doubt grown to become a household name in the banking industry with rich history and culture of quality banking services.
Key Measures
1. Cash made available at all CBN branches for affected banks to meet demand
2. All cheques from funded accounts to be honoured
3. States and MDAs asked not to move deposits