Sanusi Lamido Sanusi Nearly two years after Sanusi Lamido Sanusi, the Central Bank of Nigeria (CBN) Governor fired the executive managements of eight banks for running their banks into a hole, a new chapter in the tussle over the banks’ recapitalisation was opened last Friday with the CBN Governor personally signing a public notice fingering “a small number of shareholders...purporting to be acting in the interest of the wider shareholders but most likely at the instance of some vested interests”.
Sanusi alleged that unnamed interests blocked four MoUs which would have brought restoration to the affected banks. He also served notice that the CBN was “re-evaluating the options available to it under the Nigerian law”, with an ominous warning that the apex bank would not allow itself to be tied up in endless litigation with persons who have no stakes in these institutions.” Earlier, the CBN had set September as deadline for the recapitalisation of the rescued banks.
The CBN Governor’s frustrations with the relatively slow progress are not entirely without some justification. After all, no one could have expected that the process of restoration of the banks will take this long. Nigerians ought to be alarmed that the eight affected banks aren’t even anywhere getting out of the financial hole (the least is said to have a negative asset value of N27 billion while the highest has N330 billion), 15 months after the CBN appointed management took over the banks.
For us, however, the greater alarm is the indication that the CBN may not even be able to pull the recapitalisation exercise through, given the multiple litigations that have bogged down the exercise. That explains the resort to the threat of the final solution of liquidation.
Of course, we consider the threat to liquidate the banks unnecessary. After shelling out N620 billion to bail out the banks, anything short of managing the process through would be disastrous – a monumental failure on the part of the CBN. Here, any suggestion that the apex bank failed to anticipate the challenges can only lead to the conclusion that it did not do its homework thoroughly in the first place.
There are clearly two sides to the current tango between the shareholders and the CBN on the recapitalisation exercise. Much as the apex bank would prefer to heap the blame on the so-called intransigent shareholders, its magisterial bearing, and one-sided settlement have certainly not helped the process any bit. The failure to distinguish between the delinquent managers responsible for running the banks aground and the thousands of passive shareholders who saw opportunity and invested in the banks has certainly not helped in promoting confidence between the two stakeholders.
Would anyone blame the shareholders for going to court to protect what they consider their group interests? As it is– not once or even twice has the CBN Governor pronounced that the shareholders have technically lost their investment. Why should they fold their arms while awaiting the crumbs that would eventually fall from the table of the new investors – without putting up a fight? That seems to us as the crux of the matter.
The CBN needs to go back to the drawing board if only to find a better strategy to accommodate the interest of these shareholders in the planned recapitalisation. We see nothing in the interest of both parties that is irreconcilable. The CBN desires stable, financially sound institutions that embraces global best practices; the investors want to be part of the process. They are as much victims of the crass mismanagement of the former executives as the depositors that the apex bank desires to protect. Pressing to be accommodated in the emerging structure of the banks is not asking for anything extraordinary. It is late in the day to resort to drastic measures.
Re-edited by Odedeyi Abiodun (Don Pedro)
Culled from The Nation Newspaper
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