Governor of Central Bank of Nigeria Say;
AFTER several weeks of about the sale of Nigerian banks to foreign investors, the governor of the Central Bank of Nigerian (CBN) Mallam Sanusi Lamido Sanusi has revealed that foreign investors had actually been eyeing Nigerian banks as early as last October, when the stock market started crashing.
He reiterated his position that the five banks have not been tabled for sale and explained that it was not just the five banks, whose CEOs were sacked on august 14) that had attracted investors' attention.
In an interactive session with the media, at the Marriot Grosvenor Hotel, on Wednesday, Sanusi said "we 're aware that a number of Chinese, South African and British banks had previously made enquiries in some banks - not just the five banks, but in other banks as well."
On whether, or not, the foreign banks had insider information on the health of the banks, Sanusi said: " No. But you must remember that the situation in Nigerian banks kept declining after October, when the stock market started crashing. They (Chinese and others) had always been interested in Nigerian banks because the potentials were there. On top of that, they thought that the banks were over valued and the valuations were becoming attractive by October and November, when some banks got sick."
Despite the suitors banging on the door, he made it clear that CBN has not given the green light to any potential buyer. " We have not encouraged anyone to come forward at this time," because the "priority at this time is the stability of the financial institutions. But we've made it clear that at the appropriate time, interests will be welcome. The priority right now is to make sure that the institutions are stable and returned to the path of competitiveness."
When a foreign journalist asked him if his brief was to sanitise the banks, Sanusi disclosed that President Umaru Musa Yar'Adua had actually lost confidence in his predecessor, Professor Chukwuma Soludo." I do know that the President did say that for a long time now, he'd been concerned about the health of the financial system and that the stock market had crashed.
"He was getting reports of banks giving ridiculous interest rates and remember, that the President used to be on the board of a bank, so he understands the signals of a distressed bank." Moreover, " he's heard reports of the rates some of the banks were offering and he has heard of pressure people were under in order to raise deposits."
Also, "he had seen what happened to the stock market; so, he believed he wasn't getting a true picture of the situation. He was also getting signs from foreigners he spoke to that there's a feeling of lack of confidence and that people did not believe the numbers being published."
So, "I do know that he had a few concerns and he really wanted to get to the bottom of that, as part of the responsibility of whosoever was going to take over the Central Bank.
"I know he did say at one time that I don't mind getting bad news," but the president felt he was being deceived then. " I don't want to sit here as President and not know what is really happening in the banks." So, "he said let's know what the bad news is and let's know what we're going to do about it.
"Naturally, "the initiative we took on August 14 was discussed in great detail with him and he gave us every assurance of support. And so far, we've had that support, because he understands that the issue at hand wasn't just about re-capitalising the banks, but that we also needed to clean up a very important sector of the economy and make sure that we lay a strong foundation for getting things right in the future."
Asked for his comments on reports that foreign banks were refusing credit facilities to Nigerian banks, Sanusi described it as untrue.
"It's not true, it's not true. To my knowledge, no bank has reduced it's lines. In fact, they have increased their lines. I mentioned Commerze Bank (during his speech) because their representative was here and he could confirm that they actually increased their lines."
Of course, "there was a degree of uncertainty, because people didn't know what was going on." But after the exercise, "we reached out to correspondence banks and told them what had happened. So, to the best of my knowledge, no bank has reduced it's lines."
The shareholders need to know that on seeing the reports (of the examiners) we had a number of options; we could have withdrawn the licences of the banks or could have handed them over to NDIC (Nigerian Deposit Insurance Corporation) and liquidated the banks." So, "the steps we've taking are to add value to shareholders," because , not only do "they still have the banks , we've put in money to save the banks, put in management to correct some of the mistakes and we're working with EFCC (Economic and Financial Crimes Commission) to recover their loans ."
Sanusi revealed that "we've recovered about N92 billion and all is going back to shareholdres' funds. That was capital eroded." He promised that CBN will " continue to act in the interest of creditors and depositors, and be transparent with all stakeholders.
Asked if the downgrading of Nigeria was justified?, Sanusi disagreed." The downgrade came from S &P , not from Fitch or other rating agencies. I personally don't agree with the rating and I've told them." Reasons being, " It came at a wrong time, at a time the oil price was going to $70. It came at a time oil production was going to 2 million bpd; it came at a time the transparency of the banks were being addressed."
He argued that ," at the very least, a rating agency should have waited until things settled down." To justify his position, he said," I don't think that anyone agrees with S&P, because I've looked at analysts reports, the banks themselves," more importantly, " the market itself has not reacted one bit, which means the market itself does not agree. If you remember, it was the same S& P that increased Lehman Brothers rating to A+, only for the bank to crash three days later (in Sept 2008). I don't think the market has forgotten that; so, this is another one they're getting wrong."
Guardian Newspaper(Nigeria)
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