|
N25
billion capitalisation: Banks mislead investors - CBN
By Esan Sunday
Snr
Finance Correspondent, Lagos
Banks,
especially those seeking funds to shore up their capital base, do misinform the
public on their level of performance, rate of returns and status, the Central
Bank of Nigeria (CBN) has alerted.
To
ensure that all financial houses provide verifiable and authentic information,
it has set up a committee to examine existing fraudulent cases and come up with
a position paper to be worked on.
Sources
said CBN is peeved by the misleading statistics dished out by banks and that it
will discuss the matter at the Bankers Committee meeting scheduled for
tomorrow in Lagos.
Some
banks are very economical with the truth in relation to their status, he
stated, and that the CBN has resolved to check the deceit by either rebutting
their claims in the media or by sanctioning their chief executives.
Another
issue that rattles the CBN is the deliberate attempt by some banks to sell off
their assets without its approval.
To
forestall this and frustrate attempts by some chief executives to loot their
banks through asset stripping, it recently constituted a team of experts to
verify the banks’ level of compliance with its directive on asset
stripping.
A
circular signed by CBN Director (Banking Supervision) Ignatius Imala said:
“The attention of the Central Bank of Nigeria (CBN) has been drawn to
possible insider abuses, including fraudulent conversion and assets stripping,
as an unintended consequence of the on-going restructuring/consolidation
efforts in the banking system.
“The
CBN is obviously concerned about such developments and therefore seeks to
remind all officers and directors of banks of their fiduciary responsibilities
and the provisions of the code of conduct for directors of licensed banks.
“Furthermore,
the attention of all directors and chief executives of banks is drawn to the
provision of Section 20(2)(f) of Banks and Other Financial Institutions Act
(BOFIA) and relevant sections of the Economic and Financial Crimes Commission
Act. Accordingly, any sale or transfer of any bank’s assets shall be
subject to the prior approval of the CBN in writing.
“Consequently,
the chairmen and chief executive officers of banks shall be held liable and
would be appropriately sanctioned, including prosecution under the Economic and
Financial Crimes Commission (EFCC) Act, 2004 for the sale or transfer of any
bank’s asset without due authorisation from the CBN”.
Explaining
the scourge of asset stripping, CBN Deputy Governor (Financial Sector Surveillance)
Tunde Lemo said: “It has always been part of the CBN regulation that you
cannot deal with your asset without obtaining CBN’s approval. We are only
bringing this to the fore. It is a pre-emptive move that we are taking.
Usually, for a bank that has been run down through bad management and what have
you, you have some hidden reserves in some of the assets and those who plunder
the company might quickly sell off and go, so that by the time a resolution is
taken against the bank, there will be no surplus to pay the vulnerable
depositors and other claimants.
“So, it is not impossible that while we are embarking
on these, some of the folks who know that the game is up might begin to tamper
with those assets, not because they want to use them to shore up the capital
but they want to encash whatever they think they want to do before regulation
time. That is what we want to avoid”.
|
