CBN Sacks Another MDs of Banks… Removes Mike Adenuga as Non-Executive Director

By Economic Confidential

The Central Bank of Nigeria (CBN) has finally released the result of the Special Examination of the remaining 14 banks which invariably indicates that the books and affairs of all 24 banks in the Nigerian banking system have been examined.

From an official statement obtained by the Economic Confidential from the CBN 4 banks were found to be in grave situations. The banks are: Bank PHB Plc; Equatorial Trust Bank Plc; Spring Bank Plc and Wema Bank Plc.

The remaining 10 other banks were adjudged and found to have adequate capital and liquidity to support the level of their current operations and future growth. One of them which is Unity Bank was nevertheless adjudged to have insufficient capital but not in grave situation because it has a healthy liquidity position.

The nine banks that successful scaled through the examination are: Access Bank Pl, Citibank Nigeria Limited, Ecobank Nigeria Plc, Fidelity Bank Plc, First City Monument Bank Plc, Skye Bank Plc, Stanbic IBTC Bank Plc, Standard Chartered Bank Limited and Zenith Bank Plc.

Unlike the previous release that had names of bad debtors, only the name of Dr. Mike Adenuga jnr, was mentioned who was removed as a Non-Executive Director of Equatorial Trust Bank Plc.

The CBN has taken some measures against the four banks that are in grave situations. The measures include:

- The removal of the Managing Directors of Bank PHB Plc, Equitorial Trust Bank Plc and Spring Bank Plc;
- The removal of All the Executive Directors in Bank PHB Plc, Equitorial Trust Bank Plc and Spring Bank Plc.

The CBN has also appointed new Managing Directors for these three banks, namely:Mr. Cyril Chukwumah for Bank PHB Plc; Mr. G.O. Folayan for Equitorial Trust Bank Plc; and Mrs. Sola Ayodele for Spring Bank Plc. New Executive Directors will be appointed for the banks in due course.

Please see the Full statement from this link:

Final Result on 14 Banks

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CENTRAL BANK OF NIGERIA

PRESS STATEMENT ON OUTCOME OF SPECIAL

EXAMINATION OF 14 BANKS

In furtherance of the Central Bank of Nigeria’s statutory duty to ensure a sound financial system in the country, the Governor of the Central Bank of Nigeria (CBN) ordered the Special Examination of all the 24 banks operating in Nigeria. The result of the Special Examination of the first set of 10 banks was made known on 14 August 2009. The CBN wishes to announce that the joint CBN-NDIC examination teams have completed the Special Examination of the remaining 14 banks— and as such the books and affairs of all 24 banks in the Nigerian banking system have now been examined.

The Special Examination primarily focused on assessing the health of the banks with particular focus on liquidity, capital adequacy and corporate governance. After a review of the findings of the Special Examination report in respect of these 14 banks, the CBN has come to the following conclusions:

The following nine (9) banks were found to have adequate capital and liquidity to support the level of their current operations and future growth:

1. Access Bank Plc

2. Citibank Nigeria Limited

3. Ecobank Nigeria Plc

4. Fidelity Bank Plc

5. First City Monument Bank Plc

6. Skye Bank Plc

7. Stanbic IBTC Bank Plc

8. Standard Chartered Bank Limited

9. Zenith Bank Plc

The 10^th bank – which is Unity Bank—was adjudged to have insufficient capital but not in grave situation because it has a healthy liquidity position.

The remaining four banks were found to be in a grave situation:

1. Bank PHB Plc;

2. Equitorial Trust Bank Plc;

3. Spring Bank Plc; and

 4. Wema Bank Plc.

After a careful consideration of the matter, and in exercise of the powers conferred on him by Sections 33 and 35 of the Banks and Other Financial Institutions Act 2004, the Governor of the CBN, by order in writing, has taken a number of measures aimed at arresting the grave situation of these four banks.

The measures are:

a) The removal of the Managing Directors of Bank PHB Plc, Equitorial Trust Bank Plc and Spring Bank Plc and the appointment of new Managing Directors for these three banks, namely:

1. Mr. Cyril Chukwumah for Bank PHB Plc;

2. Mr. G.O. Folayan for Equitorial Trust Bank Plc; and

3. Mrs. Sola Ayodele for Spring Bank Plc.

b) The removal of all Executive Directors in Bank PHB Plc, Equitorial Trust Bank Plc and Spring Bank Plc. New Executive Directors will be appointed for these banks in due course.

c) The removal of all Non-Executive Directors in Spring Bank Plc.

d) The removal of Dr. Mike Adenuga, jnr., CON, as a Non-Executive Director of Equitorial Trust Bank Plc.

e) The order to the board of Wema Bank Plc to recapitalise by 30 June 2010. It is noted that 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.

f) The provision of a total of N200 billion by the CBN as liquidity support and long term loans for the four banks adjudged to be in a grave situation to enable them continue normal business, while pursuing recapitalisation options.

g) The order to the board of Unity Bank Plc. to recapitalise by 30 June 2010. It is noted that Unity Bank Plc 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. The CBN has therefore exercised its powers under Section 13.3 of BOFIA to order the Board of Unity Bank Plc to recapitalise by the said date and the CBN will continue to monitor this situation.

In addition, the CBN will assist the five banks with insufficient capital in their loan recovery efforts, just as it did with the previous five. The CBN is happy to report that as at 25 September 2009, the five banks had recovered more than N110 billion of previously non-performing loans.

The CBN reiterates its commitment to stand by all Nigerian banks and work with their respective boards, management and other stakeholders to restore the stability of the financial system and thus ensure that our banks are able to effectively play their role in economic growth and development.

In furtherance of the commitment of the Federal Government to the growth and stability of the financial system, His Excellency the President of the Federal Republic, President Umaru Musa Yar’ Adua has directed the Honourable Minister of Finance and the Central Bank Governor to liaise with the Attorney General of the Federation, the National Assembly and other relevant stakeholders with a view to fast-tracking the process of establishing an Asset Management Company.

The formation of this company should facilitate an improvement in banking sector liquidity, protection of the earnings of banks from further erosion and a reduction of the debt overhang on the capital market and its participants. This should provide a much-needed fillip for the revival of the Nigerian Capital Market.

With the conclusion of the bank audit exercise, we have come to the end of the first phase of the process of restoring financial sector stability. Ongoing action will focus on building capacity within the regulatory regime; fast-tracking the implementation of risk-based, consolidated and cross border supervision frameworks; easing the flow of credit, particularly to the real sector of the economy; improving governance structures and practices in the financial services sector; and improving confidence in the economy in general.

HEAD OF CORPORATE AFFAIRS

CENTRAL BANK OF NIGERIA

Robot  # 1 | 02.10.2009 17:54

...Read the full article.

bobocarl  # 2 | 02.10.2009 18:41

hmm, a careful study of this latest big brother action by CBN requires a deeper look, some banks found to be healthy are those i have a big problem with. Howsaid, we are still waiting to see the next step.

Lucent  # 3 | 02.10.2009 23:28

".....One of them which is Unity Bank was nevertheless adjudged to have insufficient capital but not in grave situation because it has a healthy liquidity position.........." This is becoming ridiculous...or rather hilarious! Does this not summarize everything? The proponents of Sanitization who said the whole exercise had no political/tribal undertone now have to read between the lines. Why has Unity bank got the 9-month grace period to re-capitalize and others have not? The flimsy reason: "...Unity Bank Plc 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...." This Sanusi guy obviously has a hidden agenda. Why was the MD of Equitorial Trust Bank sacked? If all the 25 banks were to be ranked in order of their risk portfolio, I can authoritatively state that Equitorial Trust Bank will be the last to have liquidity issue in Nigeria's Banking system. Because of my stint in the banking industry, I know for a fact that ETB DOES NOT lend indiscriminately. I am really suprised to hear from Sanusi and his team that they are "undercapitalised" and "illiquid". I strongly believe this man is just acting out a script that was written by the northern oligarchy. I believe God will fight for those who have been unjustly deposed from their positions.

Araba  # 4 | 03.10.2009 02:13

Sanusi does not fool me. I wanted to write a long essay, but I will shorten it. The North will never let Nigeria progress. They are the bane of that country's progress. If you have money to invest, go to Ghana or any other stable West African country and then attempt to break into the Nigerian market. Until something happens to Southern Politicians when they wake up and smell the coffee, this is the kind of treatment entrepreneurs and investors will continue to get. The Chinese,British and South African vultures that Sanusi is waiting for to take their pick are more important than Southern Banking Entrepreneurs. Of course Unity Bank won't be touched. The owners speak the language of Umaru Yar'adua, Lamido Sanusi, Mansur Muhtar, Shamsudeen Usman,Taminu Abubakar. Please let me go find something better to do with my time....

chanchaga  # 5 | 03.10.2009 04:19

Nigerian issues are very difficult to understand. The whole country has been scripted from independence. We always blame the northerners but we know that they cannot operate alone. The southerners also dance to the same tune. The whole country is in disarray. The so called northerners are the poorest and the most under developed people in Nigeria. The rich people are the elites from both north and south. Whatever the agenda is, the bank chiefs have given the CBN gov the excuse to have them removed from office. If they were upright, they will display their evidence that they were victimised. How on earth can you give loans worth billions without security in Nigeria? Please lets see sense rather than sentiments. That was what people complained about Ribadu. The bottom line is that people were exposed and dealt with. If you decide to deal with every situation in Nigeria, we will not finish till 2020. It is good to deal with as many people as possible so that it will deter the others who feel they can be irresponsible.

abdulmumin  # 6 | 03.10.2009 08:27

=Lucent;392389>".....One of them which is Unity Bank was nevertheless adjudged to have insufficient capital but not in grave situation because it has a healthy liquidity position.........." This is becoming ridiculous...or rather hilarious! Does this not summarize everything? The proponents of Sanitization who said the whole exercise had no political/tribal undertone now have to read between the lines. Why has Unity bank got the 9-month grace period to re-capitalize and others have not? The flimsy reason: "...Unity Bank Plc 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...." This Sanusi guy obviously has a hidden agenda. Why was the MD of Equitorial Trust Bank sacked? If all the 25 banks were to be ranked in order of their risk portfolio, I can authoritatively state that Equitorial Trust Bank will be the last to have liquidity issue in Nigeria's Banking system. Because of my stint in the banking industry, I know for a fact that ETB DOES NOT lend indiscriminately. I am really suprised to hear from Sanusi and his team that they are "undercapitalised" and "illiquid". I strongly believe this man is just acting out a script that was written by the northern oligarchy. I believe God will fight for those who have been unjustly deposed from their positions. You speak of Unity Bank but conveniently forget that the same treatment was meted out to Wema Bank. The CBN has selected 9 new CEOs and 9 out of 9 are southerners yet there still is a northern agenda. Out of this 9, only 1 is a muslim. Somehow, not much is been said anymore about an attempt to impose Islamic Banking on Nigerians.... ETB does not lend indicriminately so long as the borrowing company is not Conoil, Globacom or any of Adenuga's shadow companies. When a regular customer takes a facility from ETB, its a sure bet that such a facility would be fully collaterised with landed property. However if the company is Conoil, charges are dropped indiscriminately and the lending is sometimes done at zero interest rate! Is that banking? In your opinion, ETB was adequately capitalised?! Please!!! The issue of capitalisation is not one of opinion but fact. The fact is that ETB had dodgy capital and also had no form of corporate governance. Deposits were treated not as guaranteed principals belonging to the public but like the property of one man. This is common industry knowledge hence I am surprised at your perspective.

Mikky jaga  # 7 | 03.10.2009 13:52

After all these grammar, please, let those in charge ensure that none of the banks go down with my few thousand Naira in their possession. That is when I will join to shout Ole, Barawo and the whole world will hear.

Lucent  # 8 | 03.10.2009 14:20

=abdulmumin;392444>You speak of Unity Bank but conveniently forget that the same treatment was meted out to Wema Bank. The CBN has selected 9 new CEOs and 9 out of 9 are southerners yet there still is a northern agenda. Out of this 9, only 1 is a muslim. Somehow, not much is been said anymore about an attempt to impose Islamic Banking on Nigerians.... ETB does not lend indicriminately so long as the borrowing company is not Conoil, Globacom or any of Adenuga's shadow companies. When a regular customer takes a facility from ETB, its a sure bet that such a facility would be fully collaterised with landed property. However if the company is Conoil, charges are dropped indiscriminately and the lending is sometimes done at zero interest rate! Is that banking? In your opinion, ETB was adequately capitalised?! Please!!! The issue of capitalisation is not one of opinion but fact. The fact is that ETB had dodgy capital and also had no form of corporate governance. Deposits were treated not as guaranteed principals belonging to the public but like the property of one man. This is common industry knowledge hence I am surprised at your perspective. @ abdulmumin Your comment obviously shows how uninformed you are about the banking sector in Nigeria. I do not comment on articles I don't know so much about because I have a lot things to do with my precious time. You have only picked on ETB because you are hating on them. Mind you, I have not questioned why Dr. Adenuga was removed from the board. My query is the rationale behind the sack of the MD and the reason why they are said to be in a "grave" situation. Lemme educate you. 1. "You speak of Unity Bank but conveniently forget that the same treatment was meted out to Wema Bank." The Management/board of Wema Bank has since been axed. They are only having this recapitalization grace under a new set of administrators. Why wasn't the board of Unity Bank ever axed? Answer for yourself. 2. "The CBN has selected 9 new CEOs and 9 out of 9 are southerners yet there still is a northern agenda. Out of this 9, only 1 is a muslim. Somehow, not much is been said anymore about an attempt to impose Islamic Banking on Nigerians..." Considering the sensitivity of our country to political/tribal issues and all the uproar about the ongoing "reform", it is only a fool that will sack an Erastus Akingbola and put an Abdullahi Gwarzo as the MD. You don't have to be an evil-genius to know that you have to put a stooge southerner who would do your bidding. This argument of your is illogical. 3. "When a regular customer takes a facility from ETB, its a sure bet that such a facility would be fully collaterized with landed property." You are forcing a false analogy between a regular customer and blue chip/ big companies. Why would a 5 million Naira loan being sought by an individual not be collaterized? And to shock you, individual loans like these are one of the most difficult loans to recover if they aint colaterized. A lot of individual borrowers do not have the character of paying back even if they have the means to. This I also say from experience. 4. "However if the company is Conoil, charges are dropped indiscriminately and the lending is sometimes done at zero interest rate! Is that banking?" The issue dropping charges can be done for any customer/account - as long as your turnover justifies it. While I was in the industry, I managed a lot of accounts like that with zero COT (No charges). It is all about trade-offs. What a bank seem to loose on COT can be recovered on float income as long as the customer leaves a huge credit balance in the account most of the time. As you also know (or might not know), interest rates are negotiable - be it for term deposits (brought by customers) or overdrafts/loans (given by the banks). You seemingly also do not understand the definition of a security/collateral. You only understand the layman definition of it - Landed property. Come to think of it: Won't it be very ridiculous if blue chip/big companies like Cadbury, NB, Conoil or Globacom came to request for a 10 Billion Naira facility from a bank and they are being asked for a "Landed Collateral"? How many acres of land will that be? Facilities like that have a peculiar form of collateral. Depending the kind of business the money is to be used for, the collateral might be Domiciliation of the payment of the contract or business with the bank giving the loan, a bank guarantee from another bank - promising to pay off the loan in case the borrower defaults, or a lien on the equipment that is being purchased - which means the property belongs to the bank as long as the loan is not fully paid so that they can sell it off and recover their money in case of a default - or any other type of collateral for these peculiar cases. Anyways, time will reveal that Sanusi and his northern cohorts have an axe to grind.

abdulmumin  # 9 | 03.10.2009 14:59

=Lucent;392509>@ abdulmumin Your comment obviously shows how uninformed you are about the banking sector in Nigeria. I do not comment on articles I don't know so much about because I have a lot things to do with my precious time. You have only picked on ETB because you are hating on them. Mind you, I have not questioned why Dr. Adenuga was removed from the board. My query is the rationale behind the sack of the MD and the reason why they are said to be in a "grave" situation. Lemme educate you. 1. "You speak of Unity Bank but conveniently forget that the same treatment was meted out to Wema Bank." The Management/board of Wema Bank has since been axed. They are only having this recapitalization grace under a new set of administrators. Why wasn't the board of Unity Bank ever axed? Answer for yourself. 2. "The CBN has selected 9 new CEOs and 9 out of 9 are southerners yet there still is a northern agenda. Out of this 9, only 1 is a muslim. Somehow, not much is been said anymore about an attempt to impose Islamic Banking on Nigerians..." Considering the sensitivity of our country to political/tribal issues and all the uproar about the ongoing "reform", it is only a fool that will sack an Erastus Akingbola and put an Abdullahi Gwarzo as the MD. You don't have to be an evil-genius to know that you have to put a stooge southerner who would do your bidding. This argument of your is illogical. 3. "When a regular customer takes a facility from ETB, its a sure bet that such a facility would be fully collaterized with landed property." You are forcing a false analogy between a regular customer and blue chip/ big companies. Why would a 5 million Naira loan being sought by an individual not be collaterized? And to shock you, individual loans like these are one of the most difficult loans to recover if they aint colaterized. A lot of individual borrowers do not have the character of paying back even if they have the means to. This I also say from experience. 4. "However if the company is Conoil, charges are dropped indiscriminately and the lending is sometimes done at zero interest rate! Is that banking?" The issue dropping charges can be done for any customer/account - as long as your turnover justifies it. While I was in the industry, I managed a lot of accounts like that with zero COT (No charges). It is all about trade-offs. What a bank seem to loose on COT can be recovered on float income as long as the customer leaves a huge credit balance in the account most of the time. As you also know (or might not know), interest rates are negotiable - be it for term deposits (brought by customers) or overdrafts/loans (given by the banks). You seemingly also do not understand the definition of a security/collateral. You only understand the layman definition of it - Landed property. Come to think of it: Won't it be very ridiculous if blue chip/big companies like Cadbury, NB, Conoil or Globacom came to request for a 10 Billion Naira facility from a bank and they are being asked for a "Landed Collateral"? How many acres of land will that be? Facilities like that have a peculiar form of collateral. Depending the kind of business the money is to be used for, the collateral might be Domiciliation of the payment of the contract or business with the bank giving the loan, a bank guarantee from another bank - promising to pay off the loan in case the borrower defaults, or a lien on the equipment that is being purchased - which means the property belongs to the bank as long as the loan is not fully paid so that they can sell it off and recover their money in case of a default - or any other type of collateral for these peculiar cases. Anyways, time will reveal that Sanusi and his northern cohorts have an axe to grind. You have labelled me a layman about the banking industry so let me respond by setting the records straight. My banking career commenced from Nigeria International Bank (now known as Citibank) 16 years ago and I have remained in the Nigerian banking industry ever since. I currently function in the senior management cadre of a bank in Nigeria and one normally doesn't attain such status by being an ignoramus. My professional calling however necessitates some discretion on my part as I cannot bring some of the things I know for a fact about ETB (and I should know, for I had a brief stint there) to this forum. Enough said!

Igboamaeze  # 10 | 03.10.2009 15:21

------------ I have always said that Sanusi deserves benefit of the doubt insofaras his intentions are. However, I must say that his action (or inaction) re-Unity Bank smells of bias. For the avoidance of doubt, Unity Bank is dead! A visit to most of their branches will confirm this without wasting public funds on any audit. What's more, Unity Bank parades the most incompetent staff you can find in any bank. Early this year I was in one of their major branches to obtain an info, a simple info and it took over two hours and several phone calls and seeing over three managers to extract an info that is as simple as ABC. None of them had any idea what it was. The info in question is by no means confidential. As for their healthy liquidity, there is an unwritten rule that most Federal govt ministries and agencies have an account with Unity Bank (guess why?). But that should not be the reason for treating them differently. Their capital adequacy should be the real issue. As for sound management, tell that to the marine. The Ribadu style has started in earnest: always starting from the south while protecting the north. I hope that you're all watching...

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