By Kunle Akogun

The Central Bank of Nigeria (CBN) has recovered 200 houses in the United Arab Emirates, United States and South Africa belonging to the chief executive officers of the failed commercial banks in Nigeria.

Making the disclosure Wednesday at an interactive session with members of the Senate Committee on Banking, Insurance and other Financial Institutions, CBN Governor, Malam Sanusi Lamido Sanusi, said the houses were recovered when operatives took offshore its searchlight for the assets of the deposed bank chiefs.

Although, he did not give further details regarding the recoveries, Sanusi, in an apparent reaction to the criticisms of shareholders against the intervention of the apex bank in the former banks, queried: “Where were the shareholders when over N300 billion of depositors’ funds were being stolen? These are the shareholders that we are talking about, where were they?”

Giving further impetus to the apex bank’s role in nationalising the three banks in September, said his primary responsibility was to defend the interest of depositors and not shareholders.

He said: “It is my job to protect depositors. If you go and buy shares, you are taking a risk. The banks paid dividends, you took the dividends. Share prices went up; you sold and tripled your money. Those that sold made money. Those that didn’t sell lost. It is a risk you took.

“The depositor did not go to lose money. We told them don’t put your money in the pillow, go and put it in the bank. Whoever puts his money in the bank expects to get that money on demand.  My obligation is to make sure that every depositor gets his money. I have no obligation to the shareholders. It is not my job.

“I am serving depositors. Shareholders are not happy with me. I understand that and I accept it. I am happy that they are not happy because that means that I am doing my work.”

Sanusi said when he set the September 30 deadline for banks to recapitalise; many critics said it was not possible, adding, however, that he insisted because of his realisation that “in many cases, this would have been concluded earlier”.

He accused the shareholders of the liquidated banks of “playing games”, saying: “You are a shareholder; you appoint a board and management; your management throws away bank assets, giving bad loans and losing the money. We (CBN) seized the bank; we find your partner by going to court to take all sorts of injunctions.”

The CBN boss, however, said that now that the banks had been rescued “some shareholders are talking about their rights, not about the right of the depositors”.

He told the senators that his business as the boss of the apex bank was not to protect shareholders who lost millions of naira in investment in the failed banks.

Also at the interactive session with the lawmakers, Sanusi appealed to the Senate to back the proposed bill seeking the injection of additional N500 billion to the Assets Management Corporation of Nigeria (AMCON).

He said the intention of the proposed funds to AMCON was to empower the corporation to be in a position to adequately recapitalise any ailing bank to restore confidence in the banking sector.

By Odidison Omankhanlen and Chris Agbambu, Abuja, with Agency Report

The Central Bank of Nigeria (CBN) has raised the alarm over the cost of managing cash in the country, stressing that it may increase to N192 billion by 2012. The implication, according to experts, is that bank charges may rise.

Speaking during a sensitisation programme on the proposed cashless policy for Muslim community in Lagos on Wednesday, the CBN Deputy Director, Currency Operations, Mr Albert Ikmseedun, said it was absolutely a waste to still keep managing cash, urging the residents of the state to embrace the cashless policy.

According to him, while the total cost spent on cash-in-transit as of 2009 was N27.3 billion, cash processing stood at N69 billion, adding that a cashless policy would engender a robust economy.

Ikmseedun said the policy did not mean that cash would no longer be in existence in the country, but that it was aimed at moderating the volume of cash in the system.

According to him, the disadvantages of transacting business with cash outweighed its advantages.

He said the apex bank decided to introduce the policy to stem the incidence of robbery, high cost of processing cash, revenue leakages, inefficient treasury management, among others, adding that the policy had assisted rapid economy development in the developed countries.

He noted that the decision to use Lagos as the take-off city was because of its commercial status, while urging the people to support the policy.

Meanwhile, the CBN has started another round of forensic investigation in seven commercial banks, over alleged round tripping of foreign exchange.

Round tripping is the practice of selling foreign exchange sourced from the CBN at the black market, to make gains.

Sources at the CBN told the News Agency of Nigeria (NAN) in Lagos, on Wednesday, that the investigation would be the second round of the CBN examination of the banks.

NAN learnt that the investigation, which started on Tuesday, involved FCMB, Sterling Bank, Skye Bank and Equatorial Trust Bank (ETB).

Others are Diamond Bank, Fidelity Bank and Ecobank Plc.

According to sources, the second batch of inve-stigation was part of plans by the CBN to sanitise foreign exchange transactions in commercial banks.

NAN gathered that the investigation, scheduled to last for three weeks, would pave the way for the third and last round of forensic investigation in the remaining banks.

It was learnt that the apex bank had already spelt out punishments that would be meted out to banks involved in round tripping and other viola-tions of foreign exchange transactions at the end of the exercise.

It was also gathered that unlike previous investi-gations, the CBN intended to publish the outcome of the exercise.

Banks that faced the CBN searchlight in Sep-tember were Standard Chartered Bank, Stanbic IBTC Bank and United Bank of Africa (UBA).

Mr Abdulahi Moha-mmed, CBN Head of Corporate Communica-tions, confirmed the inve-stigation, but declined further comments.

In another development, in its quest for a more credible public service society, the Ministry of Finance is to initiate new policies from time to time, that would affect their old ways of doing things.

The Minister of State for Finance, Dr Yerima Lawan Ngama, who disclosed in a paper presented at the Nigerian Army Finance Corps Biennial Training conference 2011 in Ibadan, said the Nigerian Army must not relent in its effort at supporting the Federal Government in achieving its goals.

The minister noted that the future of the country was in the hands of professionals like them, hence they could not afford to fail the country at this time.

By Yemie Adeoye, Kunle Kalejaye, Bolaji Ajala & Christian Olise

The Federal Government has expressed concern over the huge capital flight in the oil and gas sector which has been blamed largely on several years of dependency on foreign products and services, costing the nation about $300 billion.

This came on the heels of government’s public disclosure, Thursday, that it had concluded plans to sell the 17 PHCN successor companies for $100 billion.

This was the position of the Minister of Petroleum Resources, Mrs Diezani Alison-Madueke and her counterpart in the Power Ministry, Prof. Barth Nnaji, while delivering their addresses at the 2011 annual conference of the National Association of Energy Correspondents, NAEC, in Lagos.

Madueke said the oil industry currently needed $20 billion annually even as upstream gas production for the domestic gas market alone has been receiving a dedicated spend of between $1.5 billion to $2 billion annually from the Federal Government.

She said major operators had not helped matters by relying on the importation of goods and services from abroad without making the provisions to develop sustainable capabilities within Nigeria that would support life cycle operations in the country, “instead more emphasis have been placed on speedy achievement of first oil, generation of revenue without paying attention to actions that add value to the economy.”

The Minister, who was represented by Executive Secretary of the Nigerian Content Development and Monitoring Board, NCDMB, Dr. Earnest Nwapa, noted that the challenge was for government to create an enabling environment that allows capital to flow inwards and get retained for economic growth and development.

She said: “I want to assure Nigerians and our international partners that the government has taken firm steps to address these concerns in a structured and sustainable manner.”

PHCN bidders

Prof.Barth Nnaji, who was represented by his Special Adviser on Media, Mr. Cydon Adinuba, said the National Council on Privatisation, NCP, had approved and shortlisted potential bidders after receiving the 331 Expression of Interests.

He said 105 bidders had made payments of $20,000 each, adding that 40 firms had been shortlisted to bid for the concessioning of the hydro stations, 87 shortlisted for the thermal stations and 80 for the electricity distribution companies, bringing the total number to 207.

Nnaji said in spite of the global economic crisis and the reported decline in foreign direct investment, there had been a remarkable growth in international investor confidence in Nigeria’s power sector in the last one year.

He said: “A Brazilian company, for instance, has offered to buy the Federal Government’s stake in the 17 PHCN successor companies for $100 billion, and with the inauguration of the Electricity Bulk Trading Company Board last Tuesday, the investor’s confidence has been further bolstered.”

“The Bulk Trader which enjoys the World Bank Partial Risk Guarantee, PRG, exists to give comfort and confidence to generation companies by guaranteeing power generating companies payment for all their products and will cease to exist when the distribution companies mature enough by being creditworthy.”

By Obinna Chima

More rescued banks risk nationalisation if their shareholders refuse to approve their Transac-tion Implementation Agree-ments (TIAs) with prospective investors at extraordinary general meetings, the Asset Management Corporation of Nigeria (AMCON) has warned.

The corporation said it is determined to protect depositors by all means.

Afribank Plc, Bank PHB Plc and Spring Bank Plc have already suffered a similar fate as their licences were withdrawn by the Central Bank of Nigeria (CBN) after they could not reach recapitalisation agreements with investors.

The Nigerian Deposit Insurance Corporation (NDIC) subsequently took over the defunct banks and created three bridge banks which were immediately acquired by AMCON.

Explaining this on Monday in an interview with THISDAY, the Managing Director/Chief Executive Officer(CEO) of AMCON, Mr. Mustafa Chike-Obi, said he hoped that the few shareholders still resisting the recapitalisation of their banks by new investors would be sensible enough to approve their acquisitions.

Failure to do so, he explained, would mean that the five affected banks would have their licences revoked by the CBN and handed over to NDIC, after which the bridge banks created from the exercise would be acquired by AMCON.

Following a joint stress test undertaken by the CBN and NDIC in 2009, the apex bank had intervened in 10 banks, whose capital bases were discovered to have been eroded through the mismanagement of the institutions by their former executive management teams.

The banks were Union Bank of Nigeria Plc, Oceanic Bank International Plc, Intercontinental Bank Plc, Unity Bank Plc, Equatorial Trust Bank (ETB) Limited, Bank PHB, Afribank, Finbank Plc, Spring Bank and Wema Bank Plc.

The new interim management teams brought in to run eight of the banks and their shareholders were given specific timelines by CBN within which they were expected to recapitalise the banks. The first deadline was June 30, this year, but was pushed forward to September 30 by the CBN.

By the end of July, four banks – Intercontinental, Oceanic, Finbank and Union Bank - had executed TIAs with potential investors interested in acquiring their banks, while ETB signed a TIA with Sterling Bank last week.

The five banks are currently working towards getting a court-sanctioned order for their acquisition and approvals from both the shareholders of the institutions and the Securities and Exchange Commission (SEC).

However, Afribank, Bank PHB and Spring Bank could not reach agreements with potential investors, compelling the CBN to revoke their licences two weeks ago and hand them over to NDIC, which immediately created bridge banks that were bought over by AMCON.

Commenting on the five banks that have TIAs in place, Chike-Obi clearly stated: “If the shareholders don’t approve it (the TIAs), CBN will have to revoke the banks’ licences and the NDIC will bridge the banks.

“If the NDIC bridges those banks and if NDIC approaches AMCON to recapitalise those banks in the interest of depositors and employees, AMCON will do it again. So it is up to the shareholders to approve it. They can get something or they (the banks) go through the bridging process.”

He said that he was aware of several of the comments being made by shareholders and that AMCON was being made to appear unsympathetic to their plight.

He, however, added that without being sentimental “those banks would have been liquidated two years ago. NDIC has liquidated many banks in Nigeria in the past and shareholders had lost all their investments in the liquidated banks”.

“But in this instance, the CBN and NDIC thought they could keep the banks alive, so that the shareholders could recoup all their money back in the future. That went on for two years and they were given two years to recapitalise.

“But they failed to do so. In fact, the initial deadline for them, when I came was June 30. The CBN extended the deadline to September 30 and still, investigation was made by appropriate authorities that those three banks could not make it,” he said.

Chike-Obi said by procrastinating over the recapitalisation of the banks, the shareholders had lost their investment because the regulators had a fiduciary responsibility to protect depositors of the banks and employees.

“If we had waited till September 30 and they failed to recapitalise, what do you think would have happened. There would have been a run on the banks by September 15, and the banks would certainly have been liquidated, which is worse for depositors and employees of the institutions who we have to protect,” he explained.

The “bad bank” boss argued that AMCON also suffered losses in the defunct banks from their nationalisation, saying that AMCON was the largest shareholder in Afribank, Spring Bank and Bank PHB.

He said AMCON had over 80 per cent stake in the defunct Spring Bank Plc, over 45 per cent in Afribank Plc and also had about 14 per cent stake in Bank PHB Plc, which according to him, was the largest single shareholder.

“So we have all lost our investments. But we are happy to say that depositors didn’t lose their deposits and the employees didn’t lose their jobs. When companies fail, shareholders generally lose their investments. It has happened before, it has happened again.

“When Bears Stearns failed in the United States of America, shareholders lost their money. So in this instance, once the banks were bridged, the shareholder lost all their investments.

“I challenge any shareholder group, to bring the money AMCON put into those banks. And if they do and they are cleared by CBN, they can have the banks back.

“I am more than happy to sell it back to them at any point in time, if they meet CBN requirements. But they had two years to recapitalise those banks, but they made no progress and everybody is complaining that we didn’t give them six more weeks,” Chike-Obi stated.

He also revealed that the corporation would from next week, start interviewing financial advisors for the three recently nationalised banks, so as to facilitate their sale to new investors.

He stressed that the corporation took thorough legal advice before taking the decision on the banks, adding that the Attorney General of the Federation (AGF), was fully involved in the process.

According to Chike-Obi, the mandate given to the newly appointed managements of the three new banks was to run the financial institutions and make them successful, “so that AMCON can sell them as soon as possible and recover as much money as it can”.

C. Thisday