|
 Daily Independent Online.
* Monday, July 26, 2004.
Banks capital base:
Conflicting signals from the Senate
By Adetutu
Folasade-Koyi
National Assembly Correspondent, Abuja
It was almost a
fait accompli. Weeks
before the appearance of the Central Bank of Nigeria Governor, Professor
Charles Chukwuma Soludo, before the Senate Committee on Banking,
Insurance and Financial Institutions last Monday, bookmakers could
almost, with near-accuracy, predict the outcome of that encounter. For
those bookmakers who expected a shift from the CBN, the hope fell flat.
Those who assumed that the
main gladiators of the meeting between the apex bank and the Committee
would be either Soludo or Senator Farouk Bello-Bunza were disappointed,
for the meeting threw up new whiz kids on the block—Senators Ama Iwuagwu
and Victor Ndoma-Egba.
Iwuagwu is as sound as any
professor from the International Monetary Fund (IMF). A graduate of
Finance from the prestigious Harvard, Iwuagwu would pass by so
unobtrusively that you would be pardoned if you thought he is just a
happy-go-lucky fellow just out for fun. Ndoma-Egba on the other hand is a
lawyer who has put in more than two decades at the Bar. These men may not
be vociferous in the Senate Chambers, but they are as sound as any in
their chosen fields.
Join these gentlemen with
Bello-Bunza in the same committee and you would understand that they were
well prepared for the onslaught called Soludo. For the sake of not arming
the ‘other side,’ suffice it to say that the Monday meeting was not a
mismatch. Soludo brought his deputy-governors while the committee had its
own men too at the ready. Fireworks were displayed and this reporter was
reliably informed that Soludo nodded more than speaking.
When the meeting ended, after
newsmen had kept a religious four-hour vigil, Tony Ede, the burly man in
charge of CBN’s corporate affairs, made to shield his boss from speaking
with newsmen. They would take no for an answer. Neither was Soludo intent
on walking away without dropping a hint or two of what was discussed
behind closed-doors. That was when Soludo disclosed that the new
directive was tabled before the committee while consultations would hold
with stakeholders. He left thereafter.
When it was the turn of the
committee chairman, Senator Sunday Zik Ambuno to address Senate
reporters, he goofed. Unaware that Soludo had lifted the veil over what
was discussed, the chairman said government’s NEEDS programme and other
sundry matters were discussed. That was enough to make reporters, who had
endured more than four long hours of vigil and who had been at their
tethers end, to snap. Even when the chairman was informed that Soludo had
disclosed part of what was discussed, the chairman said the N25 billion
was meant to be shareholders’ funds. Reminded that what he had just said
remains a right of the bank, the committee chairman stuck to his guns.
The media went to town and it took just that for the chairman to attempt
to correct what he believed was a wrong impression of the meeting via
another press briefing. The chairman stopped short of calling Soludo a
liar, but he did admit that the CBN breached a ‘gentleman’s agreement’ by
spilling a little of the meeting details to the press. How the chairman
expected journalists to believe him that NEEDS and shareholders’ fund
were discussed behind closed doors is, indeed, baffling. No one believed
him. Instead, the inference deduced from the briefing was that the
committee, despite its posturing in the pervious, failed to sway the CBN
on its directive.
The story changed on Wednesday
when Senate Chief Whip, Senator Victor Kassim Oyofo joined the fray. To
him, banks have detracted from the statutory role they were originally
designed to play. With unrestricted access to government funds, he said
banks in Nigeria have learnt to depend on government patronage for survival.
Increasing the capital base would make them sit up and pursue the very
basis for which a bank is set up. More than that, the larger the capital
base, the better for industries and small-scale enterprises as they would
have access to capital.
His words: “There’s nothing to
argue about. The position of the CBN is the correct. Those that will
swallow a bitter pill are those who want to remain managing directors and
general managers of banks. We (here, meaning the National Assembly) must
assist systematic growth. We understand that there are people who have
different interests to protect. This is a plural society and they cannot
speak or have the same views. The Senate leadership would do those things
that can advance the interests of Nigerians. Why are people floating
banks? Why can’t they set up industries? It is because they have access
to free funds. These banks are always hanging around government for free
funds. Elsewhere, banks are not getting smaller.”
The senate whip dismissed the
Banking Committee’s planned review of the CBN/BOFIA ACT immediately the
Senate resumes. More than that, Oyofo queried the committee’s right to
unilaterally review the ACT. If anything, the Senate Whip said the ACT
would be strengthened, adding that, “as lawmakers, if there’s any
loophole in the CBN ACT, that doesn’t strengthen it, then we will”.
But for now, what is still unclear is that while the
CBN insists that, “no matter the categorisation (of bank, presumably),
the barest minimum is N25 billion,” the committee, according to
Bello-Bunza, is that the directive remains, for now “a proposal.” It is
imperative that the CBN clear the air over the categorisation because it
would be unfair for a mortgage bank to have the same capital base as a
commercial bank.
|
