‘We will not allow any bank to fail'- Sanusi

While it is reassuring to hear that no bank will be allow to fail the step been taking is like killing an a fly that perch on ones nose with a sledge hammer, the fly may die but the assailant will also walk away with a bloody nose if he/ she is lucky not to be maim. CBN has set itself for war, the process of auditing this banks is wrong how on earth did they arrive at the first 10 banks to be audited? So what happen to the rest they have been given them a head start, is that not so? What happen if Stanbic and Standard Chartered is stressed? wil CBN remove their CEO'S too? bearing in mind that the majority shares of this company are held by foreigners. What happen if there is a revot by the shareholders? after all, all these banks are publicly quoted unlike Wema that have disputed shares. What happen to the reputation of the industry that has been battered further by this excersice? Questions, Questions, Questions for the Risk Expert that is creating more risk

Sanusi is creating more confusion than strengthening the industry, what will happen if either Stanbic or Standard Charttered are found wanting will he remove their CEO too despite that majority of their shares are own by foreigners?

@ OSu Akande, yes he has a right to remove the CEO's of the company because they filled out a form to get operating License in Nigeria. And part of the rules is that the banks falls under the CBN. He obviously was forced to come out now before the "big men" in Nigeria form a group and raise money to force him to stop the removal of this people. Did you not hear of intercontinental bank CEO who ran to Obasanjo last night to stop sanusi

Osu, I think you are ignorant of the law concerning the powers of the CBN. The CBN has wide powers under the law to act the way it did. The appointment of Bank CEOs by the Board of Directors is subject to CBN approval and they can equally sack the CEO, senior management or even the the entire board of any registered bank in Nigeria. The ultimate power by CBN is the revocation of banking licence.

Osu, CBN can sack any bank CEO or its entire board under BOFIA

Sanusi is definitely not intelligent enough for the responsibility he is saddled with, His action shows no depth at all. You cannot cut of the head because of a headache. Why will he audit 10 bank and dismisss those "indicted" without concluding the entire exercise. This man is definitely daft, this is a man in a hurry to avenge and repay those that stood on his way at a time. He will succeed in crashing the Stock Exchange further, possibly causing a run on the bank and liquidate this our fragile economy. God must come and save us from the hands of Yar Adua and his ethnocentric appointments... this man does not have what it takes to run CBN at least not at times like this

We saw this coming all along and this has lent credence to the fact that all that glitters is not gold.This is also a further testament to the analysis of the African report magazine - July 2009 edition that gave us an insight as to the actual state of this so called 'big' banks.No sooner than the report was published than critics went to town hollering that it was not a reflection of the actual situation on ground.Who is right or wrong now? The CBN Governor should spare no bank at all in his quest to rid the system of these rapacious and reckless Chief Executives and their cohorts.Posterity would judge him well.God bless Lamido Sanusi.

That is why the banking system in Nigeria is retarded i understand that the bank have the authority but the manner is rather too crude, Tunde and Deola do you remember Societe Generale and Savanna we are back to square one on that, so wait until the law suit start flying in

Nedu you really get the drift, by the way leaving the rest till the end of August mean that they have been given undue advantage

The CBN should not be faulted for taking this action. That the banks were troubled institutions was clear from their excessive use of the discount window. Not all banks needed to be audited at the outset, as not all banks fell into this category. Capacity issues alone would have suggested a need to prioritise the audit, and be more selective. (Interestingly, by making excessive use of the discount window, an element of self selection by the troubled banks themselves was already underway). By allowing for the recapitalisation of essentially failed institutions, the CBN has protected depositors who might otherwise have lost everything. The injection of capital by the authorities makes these banks MORE, not less, sound. Shareholders should not complain about dilution. The alternative would have been to hold shares in a bankrupt institution, with their shareholding conceivably worthless once the true state of affairs was revealed. At least this way, the banks are allowed to continue to operate as going concerns. As for the management teams of these banks, who clearly mismanaged these institutions, there would have been huge moral hazard in letting them remain in place. Ultimately, the cost of acting now is far less than the potential cost to the banking sector and the wider economy had this action been delayed. Who benefits? Just about everyone. Well done to the CBN for taking this decisive action, even in the face (apparently) of a strong lobbying effort to discourage the cleanup. Nigeria should be proud.

if its possible that all nigerian banks miscalculated as a result of margin and downstream loans,fairnes require the 24 banks ought to be assessed and indictment/affirmaion given on the same day.selecting only 5 and indicting them, is unjust...a society pursuing the path of the unjust is bound to decay and die...sanusi, also remember that on the day of judgement u will account for being unjust on this and the deepest part of jahannama is reserved for the unjust,ALLAH SA AGANE

@ Osu what undue advantage? Are you trying to say a bank will change all its statement in a matter of a week or two? Come on now. Nine out of the 10 banks that have been audited knew what the CBN was looking (concerning audit), after the CBN audited the 1st bank (First Bank of Nigeria). Most of the banks that have not been audited, it does not mean the information and statements the CBN needs has not been collected. It just means the auditors have not started to audit those statements and do interviews. The CBN might have all the statements they need already.

There has to be a method to this madness!!!

@ Abdul, all 24 banks are going to be audited. The CBN has completed 10 and the remaining 14 are on going. How is that been selective?

Finally a regulator who has decided to do his job faithfully without becoming a crony of the CEOs and lining his own pocket and all we can do is criticise. This explains why we don't progress in this country, the few who have the courage and boldness to do the right things are treated with disdain and constantly harangued. GO Sanusi, do you job and fight for the common man without access to Ota. Insha Allah, you will succeed in cleaning up this mess.

Debola it is selective bcos undue advantage of two weeks to put their house in other.

@Deola, they will not be able to change their statement but like Bman said there is need to have method to this madness so what happen if the remainning 14 banks are absolve? do you think those that are in the first batch will be feel that they were shortchange.

I hope people won't see the CEOs being sacked from the Religion point of view as all the MDs are christian. Some people are already commenting in that line, i hope and pray Sanusi did his home work well before the pronouncement. Is it true that Intercontinental Bank spent 30million naira when they sponsored the last Convention of RCCG on HiTV?

@ osu, It is not selective. because they cannot change their records in just 2 weeks. You can use the same argument that the nine backs will have known what the CBN asked for from the first bank that was audited. The CBN audited the first 10 banks because they are the largest and they pose a systematic risk to the economy and Nigeria. If the 14 banks are absolved, it showed they did not give loans that put the banks or economy at risk. What of the 5 out of 10 banks that were absolved? FBN and UBA were the first two be audited, and they were absolved. The thing is all the banks know what the CBN is looking for and they cannot change their statements. Its not possible. The CBN will know when money is coming or leaving the banks because the keep track.

Where is Baba?!?!!

I think this is a good development for Nigeria. the MDs of Nigerian banks have been carrying on as if they are not accountable to anybody even forgetting that they are Managing Public Limited Liability companies and not their Bedrooms. This is a step in the right direction. From hence forth i will never be business as usual. I believe the ations taken will benefit us all in the end. God bless Sanusi.

The CBN Governor has done a good job.I am surprised that it took a long time in coming.What is needed is more stress audits. You can call it forensic audits. The banking industry in Nigeria has been the generator of evil in our society. Rather than lend to the real sector of the economy, they thrive in margin loans for quick profits.Rather than pull together funds to finance a refinery, they prefer giving loans to importers of PMS where they can make a quick profit. Nigeria is now reeping the benefits of college and university graduates (who are uneducated). These are the individuals running her economy. The ones that passed their school certificate exams via expo and secured college and university admission through IM. The trouble is just begining.

@ Osu, I don't know what your profession is but I can assure you that even if the CBN did not collect the necessary financials and records from the remaining banks before today, the banks cannot "put their house in order" within two weeks. You cannot produce a balanced account that makes sense within two weeks. Come on guys, the affected banks are banks that have been rumoured to be in trouble for awhile, can you honestly say that you are surprised? Please read Sanusi's speech. @ Nedu, I think you are very rude, you can speak your mind without being mean, why not proffer a solution and let us judge and see if it makes sense. I agree with Emeka, anyone who says they didn't know the affected banks were having liquidity issues since last year is not being honest, remember the issue, last year, of the text message warning on these same banks? Guys, I know we don't have the best govt and we have gone through a lot as a nation but I believe we should applaud any move by govt to be transparent. Remember how we complained about EFCC during Obasanjo, give me the old EFCC now, yes some people were protected but then some were exposed. I would rather something be done than nothing at all.

@ Debola, how did you Know that those 10 banks were examine first bcos they are the biggest, do you have inside knowledge? and @Tired Lagosian i can assure banks can put their house in order in two weeks in Nigeria, for them to do it properly is another issue. it is in these same manner that Savannah and Societe Generale was close down, my assertion is that CBN is openning its flank to litigation and some "lawyers" or "liers" will exploit this loopholes. This process could have been handle better also nobody seem to be paying for these at the CBN, this is where the heads should have started rolling

for whatever reason(s) this measure is too drastic, the industry is so volatile and this will increase the loss of confidence in the industry so when are we going to get the large unbanked to bank, when're we going to achieve a cash less society when people keep their cash at home, how are we going to mgt the run on the banks and the investor confidence - the stock exchange market deteriorates deeper. Nobody is saying bank should be allowed to die but for crying out load he calls it systemic risk while can't we adopt systemic measures. For God’s sake, who is looking into what CBN and it executives/officials are doing. I believe this will stiffen the economy more and .....

@ Osu, Sanusi said it himself and from the 10 banks audit you will realize they are the big banks that have most of the deposits, loans, assets, etc. in his interview with FT-London, he said that First Bank of Nigeria will be the first (it is the largest bank in Nigeria in terms of asset and deposit). And I stand by mine opinion and as someone with an accounting degree, you cannot put your house in order in two weeks. All your transactions are known to the CBN which they can use to cross check.

And what about the external auditors who are paid by shareholders to confirm trueness and fairness of Banks financial statements? It is now common knowledge that corporate governance is in shambles, a case in mind is that of Bunmi Oni of Cadbury. With all accolades received by him, he was eventually shamed by reality. We need to sue the likes of PWC, KPMG, DELOITTE! Their use of fresh graduates to gather data from sophisticated bank officers and executives must stop. They need to start hiring bankers within bank audit teams. And what about CBN? When is the axe going to fall? These now available information were all too popular but for money it was wise to keep quiet. Soludo and company should be called to question, as we need to set the records straight with Nigeria the better for it. Well done sanusi and yaradua for providing support, however, won't this feeble economy collapse in the face of opening excessive can of worms....? Time will tell!

Lets get this straight is the CBN governor really after the bad loan granted by these Bank CEO'S or it is for his own personal interest and his group in the NORTH is it becos the banking sector is being dominated by people who he cannot control. fine he injects 400 million into the five banks he sacked there MDS.These are the question i will like any close friend of Sanusi to ask him can't these Bank CEO;S & MD'S SOURCE for the money to their bank they open over decades ago Intercontinential bank and other banks av succeded in leading their bank till this very age,i believe that bank that has over 400 branches will av financial problem....i am not on anybody sides but what i am insinuating is that the veto power would have been used in a different way to make the CBN governor look responsible..Soludo reform Nigeria banks and we are up to international standard now but with the emerging of Mr sanusi,i believe he needs to put his babies their to make himself look like he has plans which will flop in a matter of time. i heard from a colleague of mine that the CEO'S has been the CEO'S of there business since inception before they became PLC and were disgraced by the CBN Governor.. Pls let be sincere with ourself Gov Sanusi was unhappy when his father was forced out of the palace and now he did same thing to these people who use there brains and sweat to setup there banks pls ask sanusi can he float a bank ? Sanusi made lots of offer whereby this finacial guru beat him on so many occasions he is only taking his pound of flesh back....

@Nedu. Not only is the CBN governor certainly not 'daft' (a fact obvious to anyone with a semblance of intelligence), but it beats the imagination how you can refer to banks so overleveraged as suffering from a simple 'headache'. Perhaps you work for one of the five banks, are a shareholder, or close to people who are. Whatever the case, now is the time for objective reasoning, not silly remarks. Sanusi had the courage to do the right thing, and I thank him for it.

@Nedu. Not only is the CBN governor certainly not 'daft' (a fact obvious to anyone with a semblance of intelligence), but it beats the imagination how you can refer to banks so overleveraged as suffering from a simple 'headache'. Perhaps you work for one of the five banks, are a shareholder, or close to people who are. Whatever the case, now is the time for objective reasoning, not silly remarks. Sanusi had the courage to do the right thing, and I thank him for it.

Mallam Sanusi Lamido Sanusi (SLS) has carried out a regulatory action against commercial banks, which will curb other mal-practices in the banking industries, especially the way they grant loans to influential people in Nigeria, rather than focusing on other sector of the ecnonmy like agricultural sector and manufacturing sectors, kudos to SLS for taking such critical action.

@Deola, as for today 28/09/09 have you now agree that perception is different from reality and far awwy from scenarios. Degrees do not have anything to do with this, those who are creating these problems have numerous one, Nigeria have a perculiar culture and theirs is Nigeria factor that i normally calll Factor Z( anything can happen). So lady anything can happen

i love the ideology behind this exercise but do not agree with the way it was implemented.All the 25 banks should have been audited altogether before bringing out the result.Though i heard that if this is done,information as to results would have gone to others.This should not be the case as there are ways to guide against such practices.