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CBN to Denounce Misleading Adverts By Banks
By Ayodele Aminu and Linda Elueme, 12.15.2004
The Central Bank of Nigeria (CBN) said it will start denouncing investment advertisement which cannot be substantiated by the banks putting them out. CBN Director, Banking Supervision, Mr. Ignatius Imala who dropped this hint in Lagos shortly after the 276th edition of the Bankers Committee meeting also confirmed that some of the advertisements placed by some banks in a bid to raise funds contain half-truths. �You must have been seeing the newspapers, television and people talking about the potentials of the institutions they want you to invest in. �Well, to use the governor�s words, some of these contain half-truth so to say in the sense that if you want to look at the figures as they are and do your computation depending on where you�re coming from, you want to say the percentage people quote is right or wrong? �For instance, someone says he is undertaking private placements which is not suppose to be made public and what you find out is that a flyer or sort of advert is tucked into a newspaper. This is an irregular thing and it was discussed extensively today and the governor reminded the bankers that it has the duty of denouncing or making a statement to the public that the facts contained are not credible or should not be accepted,� he said. Imala who addressed the press alongside the Managing Director of Standard Trust Bank Plc, Mr. Tony Elumelu, his counterparts in National Bank of Nigeria Limited, Mr. Kola Ayeye and the Inland Bank, Alhaji Lamba Zanna, said the CBN is currently reviewing the developments. �The CBN has the responsibility of looking after the financial system but when it comes to the issue of capital market it is the responsibility Securities and Exchange Commission. And that does not remove the concern. That is why we are reviewing some of these developments. �As we enter into 2005 more things will be coming up and we hope that the operators and the press will not say we are going back to the era of over-regulation,� Imala said. Explaining why some of the investment adverts/flyers were published without the knowledge of the CBN, Elumelu who chaired the press briefing said the apex bank relaxed its control on the advertisement because it felt that Nigerian banks are matured. �Initially all adverts have to pass through the CBN but because it felt that the banking system is matured, banks were given the latitude to publish their adverts without recourse to the CBN. �But in a bid to over-sell one�s institution, people are not being as careful as they ought to be. People can be a lot more economical with facts that they present to the public. That is a major concern here and I think bankers have noted it. Well, I am sure there will be tremendous improvement," he added. Commenting on the credit bureau which will initially be sponsored by Standard Trust Bank and Accenture, Elumelu said once the bureau begins operation, banks will be in a position to roll out more consumer credit to their customers. Speaking on the fate of African International Bank, African Express Bank and Societe Generale Bank that have remained out of clearing for several months, Imala pointed out that the CBN is not going to shut any bank. He said such action will create more problems in the system. �If we remove any bank from the system we are going to cause a lot of problems and that will not be better for the customers. With the on going consolidation efforts it is very likely that some of these banks will be acquired. �People do phone me to ask about all these banks whether CBN will give any concession to enable them acquire them. When that happens, what it means is that they would have acquired both the assets and liabilities including customers. �If any bank acquires any of these distressed institutions, there will be concessions granted. I am sure most institutions are making efforts now to utilize that type of incentive and that will be good for the system,� he added. �Accenture and STB are the sponsors, but that does not mean that they are the owners and sole investor, others are going to be involved. It is supposed to serve all the sectors of Nigerian economy not just banks, even the securities operatives will use it too. �It is for the entire system and it is all embracing. Once it is implemented and running very well, banks will be able to roll out more consumer credit to their customers,� the STB boss said. Elumelu also said the Bankers� Committee has decided to review the Small and Medium Industries Equity Investment Scheme (SMIEIS) with a view to making sure that banks disburse 100 per cent of the funds they have set aside. The National Bank boss spoke on the efforts of the Bankers Committee to reduce the incidences of dud cheques and said a website which will state the names and particulars of cheque offenders has already been opened. �This would reduce the incidences of fraud since the perpetrators will be easily identified since we now have a very active website where offenders are being posted so that banks can have access to a better credit culture,�� he said.
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