The Banks

[eniyanman]

Originally Posted by supaways

hhhmmm there are 25 banks, audit concluded on 10 banks and five MDs sacked! It is stated that the remaining audit will be concluded by end of August or mid september - why the rush to axe and not wait for the full audit in order to have a holistic view of the entire situation. Guys - pls remember Societe Generale and Savannah. More importantly, this is NAIJA, this is 9JA. Where there is no bank that looks like Habib bank or Inland Bank or Intercity Bank again. I'll definitely watch the unfolding drama. Though, I will become extremely poorer because half of my holding is stucked in Oceanic but surely I will come out more wiser and more intelligent!!!!!

Whether it is Northern agenda or southern agenda does not bother me. Sanusi, in my view, is on the right track. He has my 100% support. The only question I ask is "Is it good for Nigeria?", if yes, then it's good for me!

[nosa2]

Originally Posted by zainabusman

I know this discussion will lead to this. So this is a Northern Agenda? Why do we tend to believe that there is always an ethnic interpretation to government actions?

Nigeria cannot move forward if we continue to interprete things along these lines. It saddens me that we are this way.

i dont think its a north south thing, thou i do think there has been very gross incompetence that can border on criminality

[eniyanman]

Originally Posted by waaan5

I used to work in the bank myself and how you treat illiquidity is simple - ask them to beaf up their CBN balancese failure for which you throw them out of clearing, or invoke other clauses in the policy. Not sacking their MDs for illiquidity. Yea I know they have up to a year to clean up their act, but were they given a deadline to so do? And what a coincidence that it was just after a day or two when Intercontinental went public with the cause of their ill-liquidity in line with the message of openness by SLS, that their board was punished? And until now, what we have for the reasons for their punishment are speculations and a promised tommorrow's newspaper write-ups.

I have little holdings in the 5 banks in terms of shares (mainly legacy certificates). My anxiety stem from the belief that some people would want to destroy the economy (and by extension the country) for selfish reasons. And I have staked a lot in this project called Nigeria.

Apparently, this has been a recurring problem for them... They failed to meet statutory requirement.. They were causing systemic issues. You sell assets if you have liquidity problems, why didn't they sell? Why did they invest short-term funds in long-term assets? Why were they chasing asset growth at all cost?
We also need to understand that there is a social implication (sending out young ladies to source deposits at all costs) to the actions of our banks. Some banks have to learn that being small isn't bad afterall.

[supaways]

Guys - pls see attached for SLS address removing the MDs and the reasons for removing them stated.

Consequently, having reviewed all the reports of the examiners and the comments of the Directors and Deputy Governors, I am satisfied that these 5 institutions are in a grave situation and that their Management have acted in a manner detrimental to the interest of their depositors and creditors. Therefore, in exercise of my powers as contained in Sections 33 and 35 of the Banks and other Financial institutions Act 1991, as amended, and after securing the consent of the Board Directors of the CBN. I hereby remove the Managing Directors and the Executive Directors of the following banks from office with effect from Friday, August 14, 2009.

Yes I agree they are valid reasons but that still does not remove the fact that this is 9JA. this NAIJA.

[supaways]

Guys - what could be the implications for investors?

[supaways]

the sacking has the blessing of Yaradua

"Contrary to insinuations that the sacking of the five CEOs were done unilaterally, Mr Sanusi, explained that his actions had the blessing of President Umaru Musa Yar'Adua."

[eniyanman]

Originally Posted by supaways

Guys - pls see attached for SLS address removing the MDs and the reasons for removing them stated.

Consequently, having reviewed all the reports of the examiners and the comments of the Directors and Deputy Governors, I am satisfied that these 5 institutions are in a grave situation and that their Management have acted in a manner detrimental to the interest of their depositors and creditors. Therefore, in exercise of my powers as contained in Sections 33 and 35 of the Banks and other Financial institutions Act 1991, as amended, and after securing the consent of the Board Directors of the CBN. I hereby remove the Managing Directors and the Executive Directors of the following banks from office with effect from Friday, August 14, 2009.

Yes I agree they are valid reasons but that still does not remove the fact that this is 9JA. this NAIJA.

Thanks for this...

No one seems to be asking why Soludo did nothing if these problems had been obvious since October 2008. The myth about Soludo is gradually unravelling.

These banks need to make provision of N539B (I think that's almost equal to their combined market cap). Investors are going to get seriously wiped out.

[babe!]

Originally Posted by waaan5

I used to work in the bank myself and how you treat illiquidity is simple - ask them to beaf up their CBN balancese failure for which you throw them out of clearing, or invoke other clauses in the policy. Not sacking their MDs for illiquidity. Yea I know they have up to a year to clean up their act, but were they given a deadline to so do? And what a coincidence that it was just after a day or two when Intercontinental went public with the cause of their ill-liquidity in line with the message of openness by SLS, that their board was punished? And until now, what we have for the reasons for their punishment are speculations and a promised tommorrow's newspaper write-ups.

I have little holdings in the 5 banks in terms of shares (mainly legacy certificates). My anxiety stem from the belief that some people would want to destroy the economy (and by extension the country) for selfish reasons. And I have staked a lot in this project called Nigeria.

why are you so lenient? is it esprit de corps or you just prefer the status quo? those banks are said to be on the brink, that a systemic collapse could result and yet u asked "were they given a deadline?"
may be it was intercontinental's MD that was trying to bring others down with him with the publication after he got wind of the sack. quite frankly thisday had talked about a rumored sacked about 4 days earlier. in all likelihood their actions was after the fact.
yes, it's very certain that soludo was complicit in all this.

[Monwowo]

Originally Posted by waaan5

Thanks but that is not enough. I want to see the stress test results. If the boards were disolved based on the capital adequacy ratio, I want to see how the banks stack up.

Waaan5, there is time for everything, when the time comes we would all see the results which CBN based the decisions on. I want to believe that this is good for the economy. Most of us have something to lose in the short term but my hope is that long term we would all be ok.

[zainabusman]

Originally Posted by supaways

Guys - pls see attached for SLS address removing the MDs and the reasons for removing them stated.

Consequently, having reviewed all the reports of the examiners and the comments of the Directors and Deputy Governors, I am satisfied that these 5 institutions are in a grave situation and that their Management have acted in a manner detrimental to the interest of their depositors and creditors. Therefore, in exercise of my powers as contained in Sections 33 and 35 of the Banks and other Financial institutions Act 1991, as amended, and after securing the consent of the Board Directors of the CBN. I hereby remove the Managing Directors and the Executive Directors of the following banks from office with effect from Friday, August 14, 2009.

Yes I agree they are valid reasons but that still does not remove the fact that this is 9JA. this NAIJA.

Thanks for this. Although i dont think it is an official CBN release considering the gramatical errors and other errors. For example the statement is likely incorrect:

"This injection is insufficient to resolve and stabilise all the institutions and enable them continue normal business."

Perhaps the correct version is..."This injection is sufficient..."

Be that as it may, i believe some of the questions raised earlier have been addressed. I believe an official release will be available on CBN website in due course.

[Monwowo]

Originally Posted by waaan5

One motive for sacking the MDs is the doctrine of pre-emption. The action puts fear in the hearts of the other MDs who may not be tempted to follow the path of intercontinental for full disclosure of the IDs of their debtors.

The speed used in sacking them just a day after intercontinental's revelation is astounding. And the fact that there is still no prepared stress test results show the desperation of the move.

Which one comes first, the chicken or the egg? how are you sure Inter did not start their revelation when they realized sack is coming?

[Monwowo]

Originally Posted by zainabusman

I know this discussion will lead to this. So this is a Northern Agenda? Why do we tend to believe that there is always an ethnic interpretation to government actions?

Nigeria cannot move forward if we continue to interprete things along these lines. It saddens me that we are this way.

It is unfortunate, but we have been created to have ethnic allegiances and now our "genetics" is already screwed up with this North/south thing...this will not change anytime soon. Let people express frustrations to feel better. This is definitely a big event unfolding....

[zainabusman]

Originally Posted by Monwowo

Waaan5, there is time for everything, when the time comes we would all see the results which CBN based the decisions on. I want to believe that this is good for the economy. Most of us have something to lose in the short term but my hope is that long term we would all be ok.

My hope is also that in the long term this will be good for all and the system.

Frankly i was hoping to enjoy my vacation and then this bomb! I recall Peter Lynch writing in one of his books that while he was on vacation the market took a tumble but that he was "caught with his pants up". I can almost say the same since i exited completely Oceanic not that long ago and have no holdings in any of the other 4. Ckenneths is looking like a genius! (He cashed out of the market a while back).

However, i suspect our staying power will be tested in the next couple of weeks. As if we have not sufferred enough! I suspect we will all suffer some losses whether we own the 5 banks or not. However, there is no need to join the panic. This might indeed be a good opportunity to buy some good stocks at bargain prices. The bargains disappeared a few months bank but they may reappear.

There are some non bank stocks that have posted good half year results that are worthy of a look should the price drop 20% or more. There goes my vacation!

[supaways]

Originally Posted by zainabusman

Thanks for this. Although i dont think it is an official CBN release considering the gramatical errors and other errors. For example the statement is likely incorrect:

"This injection is insufficient to resolve and stabilise all the institutions and enable them continue normal business."

Perhaps the correct version is..."This injection is sufficient..."

Be that as it may, i believe some of the questions raised earlier have been addressed. I believe an official release will be available on CBN website in due course.

Zainabusman - why do you think the correct version should be "This injection is sufficient..." The doc says they'll need NGN539B inorder to make provision. thus, NGN400B is not up to NGN539B!!!!!

Anyway - wen you think of what goes on in 9JA you cannot but be saddened. I understand the inter man has a very harsh policy for staff who grant defaulting loans

[Monwowo]

Originally Posted by zainabusman

My hope is also that in the long term this will be good for all and the system.

Frankly i was hoping to enjoy my vacation and then this bomb! I recall Peter Lynch writing in one of his books that while he was on vacation the market took a tumble but that he was "caught with his pants up". I can almost say the same since i exited completely Oceanic not that long ago and have no holdings in any of the other 4. Ckenneths is looking like a genius! (He cashed out of the market a while back).

However, i suspect our staying power will be tested in the next couple of weeks. As if we have not sufferred enough! I suspect we will all suffer some losses whether we own the 5 banks or not. However, there is no need to join the panic. This might indeed be a good opportunity to buy some good stocks at bargain prices. The bargains disappeared a few months bank but they may reappear.

There are some non bank stocks that have posted good half year results that are worthy of a look should the price drop 20% or more. There goes my vacation!

Does that mean you are starting analysis right away? Keep us informed...

[babe!]

but one has to immediately start questioning sanusi's transparency.

the first thing is that those bank suffered on account of 3 main parameters;

1. non performing loan(NPL)
2. capital adequacy ratio(CAR)
3. amount owed at the expanded discount window.(EDW)

however the figure quoted for those three parameters were at different dates. no date was given for the NPL, but CAR and EDW was as at May and July respectively. how come we can't have the latest figure say as at August 1st. as far as we know those values/figure may have changed now. one of the banks had a CAR of 24%. this might have changed now.

secondly, the bulk of the amount owed at the EDW has been paid. from N256B when sanusi came in to the current N140B. the question then is: were some banks discreetly warned to repay quickly? don't lets be naive there must have been a reason for some banks to repay a total of N110B to CBN in less than 2 months!

lastly, the CBN itself is not given enough disclosure. for instances it only gave absolute figure of the 5 banks net guaranteed inter-bank indebtedness(N253b). this is almost meaningless if u can't express it as a % or compare it with any other parameter.

i may totally be wrong.

[iluvstocks]

I am always wondering why the boards of Nigerian publicly traded companies just never fire any CEO. Atleast with this action of the CBN gov we are seeing some firing but the question is how did this scale through 5 boards. I can understand just one bank CEO getting fired but 5 is a tad much. Are these boards really doing anything? If not, why? Don't the board members care about their investments?

[supaways]

Originally Posted by iluvstocks

I am always wondering why the boards of Nigerian publicly traded companies just never fire any CEO. Atleast with this action of the CBN gov we are seeing some firing but the question is how did this scale through 5 boards. I can understand just one bank CEO getting fired but 5 is a tad much. Are these boards really doing anything? If not, why? Don't the board members care about their investments?

in banks - there are some loans that needs the exclusive approval of the board before it can be approved! m not sure it is only the MDs that approve those loans that went bad especially the inter guy!

[wanaj0]

Originally Posted by zainabusman

An interesting point to note is that both Funke Osibodu and John Aboh are ex Citibank Nigeria staff.

And Ex Ecobank and First Bank staff

[wanaj0]

Originally Posted by babe!

but one has to immediately start questioning sanusi's transparency.

the first thing is that those bank suffered on account of 3 main parameters;

1. non performing loan(NPL)
2. capital adequacy ratio(CAR)
3. amount owed at the expanded discount window.(EDW)

however the figure quoted for those three parameters were at different dates. no date was given for the NPL, but CAR and EDW was as at May and July respectively. how come we can't have the latest figure say as at August 1st. as far as we know those values/figure may have changed now. one of the banks had a CAR of 24%. this might have changed now.

secondly, the bulk of the amount owed at the EDW has been paid. from N256B when sanusi came in to the current N140B. the question then is: were some banks discreetly warned to repay quickly? don't lets be naive there must have been a reason for some banks to repay a total of N110B to CBN in less than 2 months!

lastly, the CBN itself is not given enough disclosure. for instances it only gave absolute figure of the 5 banks net guaranteed inter-bank indebtedness(N253b). this is almost meaningless if u can't express it as a % or compare it with any other parameter.

i may totally be wrong.

My thoughts exactly. Need to know the role of DG (Tunde Lemo) in this.

How did Wema Bank escaped this? What of Spring Bank? Why not wait till the result of ALL the bank is out?

How did Union Bank got on the list? Many many questions. Now not sure what Osibodu, Alabi and Aboh will do. How were those guys picked? Old boys network?

Not against the sack though.

Definitely the Inter advert ruffled feathers and that must have being the last straw to break the camels back.

Next week will surely be interesting.