Daily Independent Online.
*
Thursday, July 08, 2004.
Senate summons CBN governor
• Bankers differ on new capital base
By Mojeed Jamiu,
Esan Sunday (Lagos)
Sanya Adejokun,
Adetutu
Folasade-Koyi
and Chesa Chesa
(Abuja)
Governor of the Central Bank of Nigeria
Charles Chukwuma Soludo would soon appear before the Senate to explain the
rationale for raising the capital base of banks by 2,400 per cent, from N1
billion to N25 billion.
Vice chairman of
the Senate Committee on Banking, Insurance and Financial Institutions, Farouk
Bello-Bunza, disclosed this in Abuja on Wednesday.
Bello-Bunza also
stated that since an earlier proposal of N10 billion capital base was made to
the CBN in January, it behoves it to inform the Senate about the new ceiling of
N25 billion, even though it will take effect from December 2005.
He spoke in support
of the new capital base, adding that it would engender development as no bank
in Nigeria today supports
long-term projects, but rather each one prefers to finance short-term projects
not exceeding three months.
Bankers and other
operators in the financial system have reacted differently to the proposal.
Some of the bank
executives said there should not be a blanket capital base for all banks, others
threw their weight behind the plan, describing it as desirable for the growth
of the sector.
Mr. Akin
Kekere-Ekun, Managing Director and Chief Executive Officer of Habib Nigeria
Bank, said: “It is not strange and I can tell you that there is a lot of
options open to banks to meet this new target which can even take nine
months”.
However, another
bank chief who does not want his name in print argued that CBN is only trying
to force the merger option on banks whether it is feasible or not.
The immediate past
President of the Chartered Institute of Bankers of Nigeria (CIBN), Ugochukwu
Unegbu described the proposal as a good one that would ultimately benefit both
the banking industry as well as the economy in general.
CIBN Registrar and
Chief Executive Esan Ogunleye insisted that the proposed N25 billion capital
base is desirable for the banking sector.
His words:
“It is already a prescription. The issue is how to get there rather than
unnecessary fears and apprehensions. Agreed, there is need for mergers in the
industry to give room for stronger banks and the only way to get big and strong
banks that could compete favourably with others in the globe is through
mergers. So, the proposal is a good one and it is highly desirable”.
Other bank chief
executives do not find the new rules funny and are said to belobbying
politicians and top civil servants to thwart the move.
According to a top
CBN source, the bankers commenced their move against CBN Governor Charles
Soludo even as he was still addressing them on Tuesday.
Many of the bankers
we learnt, pleaded with him not to make the 13-point agenda open to the press
until everything was finalised.
“Soludo gave
them the assurance that it would be kept secret but I don’t know when it
was again decided that you people should be given copies of his speech,”
the source said.
Particularly, the
bankers are worried over clauses (ii), (v) and (x). In the second clause,
Soludo announced that as from this month the CBN would commence a phased
withdrawal of public sector funds from the banks.
In paragraph fifth,
he outlawed falsification of data/information rendition/reporting, declaring
that chief executives of banks who run foul of this decree would be removed
from office and prosecuted.
Again Soludo said
he would now enforce dormant laws, especially those on the issuance of dud
cheques and the vicarious liabilities of the board members of banks in cases of
failings by the bank.
Bankers are complaining that the new focus on mergers and
acquisition would reduce the number of banks, leading to a worsening the
unemployment situation.
