A return to rational banking

The sack, on Friday, of three bank chief executives finally brought to an end the long expected liquidity tests of the banking sector.

The sacked executives are those of Bank PHB Plc, Equitorial Trust Bank Plc and Spring Bank Plc.

The action ended several weeks of speculations about the fate of the remaining 14 banks after the Central Bank of Nigeria sacked the CEOs of five banks on August 14.

Sanitisation measures

With the latest sacks, the total of dismissed bank chiefs is now eight.

In the first set of dismissals, the executives of Intercontinental Bank, Oceanic Bank, AfriBank, FinBank, Union Bank lost their jobs when their banks failed the audit. In the second batch of banks audited, nine banks passed the CBN’s test while five were found wanting.

However, only three CEOs were sacked. The chief executives of Unity Bank and Wema Bank escaped the CBN’s hammer. Both banks were asked to recapitalise by June 30, 2010.

A CBN statement said Wema Bank was spared because it was under a new management which has been making efforts to stabilise the bank.

“Wema Bank Plc came under new ownership and management in June 2009, who took over a bank already in a grave situation and should not be held responsible for the present condition of the bank. The CBN will work with the Bank to ensure a successful completion of the recapitalisation exercise.’’

On Unity Bank, the CBN said it was “adjudged to have insufficient capital for its current level of operations but was adjudged to have a healthy liquidity position and with no indication of poor corporate governance practices.’’

Injection of more money

In August, when the five chief executives were removed, the CBN injected N420 billion into the five banks. The CBN governor, Sanusi Lamido Sanusi, was, however, summoned by the House of Representatives to explain the propriety of injecting the funds into the banks without the approval from the National Assembly.

The central bank boss told the House that the action was in fulfilment of the bank’s role as banker of last resort.

The central bank announced on Friday that it will inject a fresh N200 billion into four banks, including Wema Bank to help it stabilise while they pursue recapitalisation.

Fate of the CEOs

It is not clear what would become of the three CEOs. Attempts to speak to Muhammed Abdullahi, the CBN’s spokesperson, wereunsuccessful, as calls to his mobile phone did not get through.

Similarly, attempts to speak to Femi Babafemi, the spokesperson for the Economic and Financial Crimes commission failed.

Conditions around the banks

When NEXT visited the head offices of Bank PHB and Equitorial Trust Bank (ETB) on Friday afternoon, armed mobile police officers were present.

There was, however, no significant security presence at the head office of Spring Bank on Ahmadu Bello Way in Victoria Island, Lagos.

The presence of the security personnel did not disturb business activities as customers and staff were seen moving freely in and out of the buildings. No one was willing to talk to the press.

The beefed security did not last as the police officers had vacated the Bank PHB premises when NEXT visited again by 4pm.