The city is awash in reports that Cecilia Ibru will fight her dismissal as chief executive of the ailing Oceanic Bank by Central Bank governor Sanusi Lamido Sanusi.
But the erstwhile “First Lady of Banking” is not saying.
Mrs. Ibru has for the moment gone underground, keeping her power dry as the new CBN-appointed chief for the bank she built reports to work today at the bank’s Lagos headquarters, to begin cleaning up the gigantic mess Mrs. Ibru has left behind.
When we contacted her on Sunday, Mrs. Ibru simply referred our correspondent to a spokesman.
Her son and heir apparent, Oboden Ibru, who also was fired as an executive ofthe bank, also would not comment on his mother’s plans. “I am only a member of the board of directors in the bank,” he said, modestly.
The man appointed by the CBN as interim chief of Oceanic, John Aboh, reports for duty today, as do the four other members of the cleaning crew sent to take charge of the distressed banks, which include the venerable old Union Bank, Intercontinental, FinBank, and Afribank. They will work, for now, with the non-executive directors of the banks until the CBN decides what to do.
The CBN’s cleansing of the banking industry is not stopping with the banks alone, as the financial services regulator also makes major changes in its own board and management. Tunde Lemo, the powerful deputy governor for banking supervision, was shifted yesterday to head the less significant operations department. Just last night Mr. Lemo was at dinner with Mr. Sanusi in Lagos, and he has been at his side in public all week. His removal was confirmed yesterday by Abdullahi Mohammed, a CBN spokesman.
New board members
In line with the internal restructuring at the CBN, President Umaru Yar’Adua also approved the appointments of Stephen Oronsaye and Nebolisa Arah as members of the board of the bank. Kingsley Moghalu, was appointed as a deputy governor, Risk Management, to replace Mr. Lemo, subject to ratification by the Senate.
Tunde Lemo’s redeployment
Mr. Lemo’s removal came hours after the CBN removed five CEOs of banks on account of poor risk management framework and weak corporate governance. A total of ₦400 billion has been injected into the five banks, while new CEOs have since been appointed to take over the banks in a bid to save depositors’ money and restore confidence in the institutions.
Mr. Lemo’s removal is seen as an indictment as the financial accounts of the indicted banks were approved by him. Until now, each of the banks posted stellar performance, which earned them good ratings.
The five indicted CEOs were considered great performers based on the results approved by Mr. Lemo’s department. Banking sources said the inability of Mr. Lemo’s team to discover the discrepancies between the accounts submitted by the banks and the reality on the ground is responsible for the current state of the banks.
As deputy governor, financial sector surveillance, Mr. Lemo was in a position to do a thorough scrutiny of the banks’ operations and raise concern where necessary.
The CBN governor, Mr. Sanusi has added the duty of financial sector surveillance to his portfolio. This is an indication that he is prepared to put banks under closer watch and restore sanity to the system. As a risk management expert, his appointment of another deputy governor in charge of risk management shows the path he wants to toe.
Mr. Lemo joined the CBN as deputy governor in January 2004, after serving as managing director of Wema Bank Plc from 1999.
Mr. Oronsaye’s appointment was announced in Abuja on Sunday by Olusegun Adeniyi, the President’s spokesman, according to the News Agency of Nigeria.
“Oronsaye is the current Head of the Civil Service of the Federation and he is to serve on the board in his personal capacity to replace Mr. Akpan Ekpo, while Mr. Arah who was the pioneer Managing Director of Fidelity Bank is to replace Mrs. Juliet Madubueze.
“The appointments of Samuel Olofin, Dahiru Muhammad and Joshua Omuya, to the CBN board had also been renewed by the president. All the board appointments are subject to confirmation by the Senate,” Mr. Adeniyi said.
Mr. Adeniyi also announced President Yar’Adua’s nomination of Kingsley Moghalu for confirmation by the Senate as a Deputy Governor of the CBN.
He said the nomination of Mr. Moghalu was meant to strengthen the bank for effective and efficient performance.
“Moghalu, 46, holds a doctorate degree from the London School of Economics with experience in corporate governance, risk management and strategy. His appointment is expected to complement the collective strength of the CBN board and management.
“President Yar’Adua has also approved the nomination of Adedoyin Salami, John Oshilaja, Chibuike Uche, Shehu Yahaya and Abdul-Ganiyu Garba for confirmation as members of the Bank’s Monetary Policy Committee,” Mr. Adeniyi said.
‘We want to restore public confidence’
Three of the new bank chiefs who reported to work on Friday in line with the CBN directive, told their staff that their major preoccupation was to restore public confidence in the banks.
They also said they will increase efforts to recover the huge outstanding loans owed by their creditors, mostly oil marketing companies, and solicited for staff support to restore the lost glory of their banks.
The three are John Aboh of Oceanic International Bank Plc; Olufunke Osibodu of Union Bank of Nigeria Plc and Suzanne Iroche of Finbank Plc.
Mrs. Iroche told Finbank staff that her major concern was to “restore customers confidence,” adding that her programme of action would be made known to all in a meeting holding on Monday (today).
Mr. Aboh, at a press conference on Sunday said that the success of the newly appointed CEOs would depend on their ability to recover the huge outstanding loans and return the banks to profitability.
In particular, he said the CBN intervention would address the liquidity gap and enable Oceanic bank to meet all its financial obligations to customers with a view to stabilising it by easing the existing liquidity constraints.
“The reason for this intervention is primarily to halt the deteriorating liquidity level of the bank arising from bad loans, embark on aggressive loan recovery and grow the bank’s businesses,” he said.
Mr. Aboh noted that the weak loan recovery laws of the country made it possible for bank debtors to deliberately flout payment agreements even when such persons are capable of paying.
“We have a recent example where it (bank) had to resort to confrontation before the debt was paid,” he said.
CBN’s intervention
Explaining the rationale behind the CBN intervention, Mrs. Osibodu said the action was to safeguard the banks’ corporate reputation and to rekindle public confidence in their brands.
“The change is to create strong enabling environment for growth of the bank, whilst enhancing several of the transformations going on within the bank. As with all changes, there will be questions and fears by all stakeholders. You have my assurances that the change and the additional funding will positively enhance the bank,” she said.
“With the CBN injection, the bank will open on Monday (today) for business and is now in a position to meet all its obligations to customers. There is no need to panic. The bank is strong and safe,” Mr. Aboh said of Oceanic’s share of the ₦400 billion.
Need for the fund injection
Mr. Sanusi defended the injection of the fund. He said: “The Central Bank has a responsibility to act to protect all depositors and creditors and ensure that no one loses money due to bank failure. The Bank also needs to move decisively to remove this principal cause of financial instability and restore confidence in the Banking system.”
According to him, the fund injection became necessary, “given the extent of the asset quality problem leading to liquidity stresses, and the variety of stress points on the banks’ balance sheets, failure to act to secure the financial health of these banks will clearly place the system at risk.”
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