CBN to fire Bank PHB MD, other heads set to roll

The Managing Director/ Chief Executive Officer of Bank PHB, Frank Atuche, will be dismissed later today by the Central Bank of Nigeria, highly placed sources told NEXT last night. Mr. Atuche's sacking is said to be a direct result of the failure of the bank

he heads, to pass the CBN stress audit. The bank is among the second batch of banks that the CBN audited.

The Central Bank is reported to have offered the board of Bank PHB a chance to replace Mr. Atuche with an executive of their choice, but Mr. Atuche doggedly refused to resign thereby forcing the CBN's hand. All attempts by NEXT to reach Mr. Atuche proved futile.

Four other banks, ETbank, Unity Bank, Wema Bank and Spring bank are reported to have also failed the CBN's stress audit. In all cases, it is expected that their chief executives will either resign or be relieved of their jobs by the CBN.

Our source also says the Central Bank will pump N200 billion into the banks to stabilise them. The Central Bank is shopping around for capable hands to run the banks during this emergency situation. It is not clear if the banks will be allowed to stand alone or be forced into the hands of more robust institutions.

NEXT investigations reveal that the problems of Bank PHB centre around non-performing loans . ETB on the other hand is in trouble not for lack of money but a total lack of corporate governance, according to our source. Spring Bank was described as a shell, while Unity Bank is believed to be broke.

Two weeks ago, the Central Bank in a communiqué confirmed that it had completed the audit of 11 more banks, and was continuing work on the audits of the last three. The communique said: "The CBN wishes to confirm that examiners have concluded their audit on 11 out of 14 banks not included in the first exercise. They have also made significant progress on the remaining three banks and these are Citibank, Stanbic IBTC and Standard Chartered."

The Nigerian banking sector has been in a state of flux since August when the then new CBN Governor, Sanusi Lamido Sanusi, in one fell swoop, got rid of, the chief executives of five banks, namely Oceanic Bank, Union Bank, Afribank, Fin Bank and Intercontinetal Bank. When he announced the sacking, Mr. Sanusi said "these banks were unable to meet their maturing obligations as they fall due without resorting to the CBN or the inter-bank market. As a matter of fact, the outstanding balance on the Expanded Discount Window of the five banks amounted to N127.85 billion by the end of July 2009, representing 89.81% of the total industry exposure to the CBN on its discount window, while their net guaranteed inter-bank takings stood at N253.30 billion as at August 02, 2009. Their Liquidity Ratios ranged from 17.65% to 24% as at May 31, 2009. (Regulatory minimum is 25%)."

Once the dust settled, it became quickly clear that the banks had weak risk management frameworks and poor corporate governance, which resulted in the depletion of their capital and overexposure to marginal loans in the downstream sector of the oil and gas industry.

The five banks that were affected by the sackings have since seen a sharp drop in share price. Speculators believe their market value may drop to the nominal value of 50 kobo. The CBN has so far injected N420 billion into the five banks for emergency capitalisation. The Central Bank also continued its cleansing action with the publishing of the over 200 debtors, owing more than N740 billion.

By Oluwaseyi Bangudu (Culled from 234Next)