Inside sources in the banking industry have confirmed a notable movement of funds between Nigerian banks this week.
The sudden transfer of funds is coming after the Central Bank’s declaration last Friday that some banks were in a grave situation and couldn’t continue business as usual, without the regulatory body’s intervention.
Sanusi Lamido Sanusi, the Central Bank governor, explained to journalists on Friday that: “Having reviewed all the reports of the examiners and the comments of the Directors and Deputy Governors, I am satisfied that these five institutions (Oceanic Bank, Afribank, Fin bank, Intercontinental Bbank and Union bank) are in a grave situation, and that their management have acted in a manner detrimental to the interest of their depositors and creditors.”
Mr. Sanusi, who ordered the removal of the managing directors and executive directors of the banks, also stated that: “The CBN is injecting a total of about ₦400 billion into these five banks, for stability.”
According to a source at Intercontinental Bank Plc, “there was a notable panic withdrawal in the bank on Monday, following events from the Central Bank on Friday. By Tuesday, however, things were returning to normal.
The Managing Director of the bank had to send a mail/text messages to every customer of the bank. People were apprehensive initially, but when they understood that the Central Bank was pumping money into the banks, people started relaxing.
In the branch I work, we lost about ₦16 million just on Monday, to unexplained withdrawals by customers. The level of withdrawals eased a bit on Tuesday and has been getting better,” the source said.
Another source at United Bank of Africa (UBA), explained that the bank, along with the other banks that survived the Central Bank’s audit, have been recording an increase in depositors’ funds since Friday’s remarkable event.
“Yes now, though I can’t be specific on the others, there has been a noticeable increase in depositors’ funds in the bank. The advantage of this is that some other banks that have not been audited and have a stress on their capital level would make use of this cash inflow opportunity.”
A staff of Finbank also said that, despite the Central Bank’s intervention, she has transferred her funds to another bank.
A finance analyst, who is also a top official in the banking industry, explained that customer reaction might create a temporary transfer of funds among the banks. He also said that it would take a while before institutions that would have benefitted in the long term can be identified.
According to him, “I might not be able to know exactly what these banks may have gotten or lost already, but what you would expect in times like this is called ‘flight to safety’.
It is the immediate reaction of customers in panic. Some customers may just withdraw their money and take to another bank, while some may choose to stay due to loyalty. It’s still too soon to know who the actual beneficiaries would be in the long run. What is happening is only natural; it is consumer behaviour,” he said.
A customer of Oceanic Bank Plc, Kola Micheals, a contractor, explains that he would rather wait a while to see the general response by the public and the industry’s regulatory authorities, before deciding on what to do. “I will be going to make enquiries at the bank personally,” he said.
No need to panic
According to Mr. Sanusi, customers need not panic. “Let me reassure especially the customers of the affected banks and all the banks in general, that there is no cause for alarm.
They should continue to transact their normal business in the banks where their accounts are domiciled, as this exercise is meant to further strengthen the banking industry and recapitalisze the affected banks.
“I should also state at this point that the scope of the Special Examination was widened to cover all 24 banks. So far, we have concluded the audit of 10 banks. We have also commenced the next batch of 11 banks. All in all, we expect to conclude the audit in mid-September,” he said.
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