Do you approve of President Olusegun Obasanjo's handling of Nigeria's economy?
Soludo: Banks Resort to Round Tripping
From Kunle Aderinokun in Abuja, 11.18.2004
Governor of the Central Bank of Nigeria (CBN), Professor Charles Soludo, yesterday alleged that banks, in desperate bid to meet the N25 billion capitalisation requirement, are now engaging in foreign exchange malpractices otherwise called round tripping and other unwholesome practices. Soludo who declined to mention names of the offending banks, warned that, if caught, such banks will have their forex dealership licences revoked. Addressing participants at the opening ceremony of the fourth Annual Monetary Policy Conference inside the ultra-modern auditorium of the CBN headquarters in Abuja yesterday, Soludo said, "we've gotten some reports, some disturbing signals of some banks and I will say some probably minority of banks that have become a little bit much more desperate with a bid to want to make it alone or so and consequently engaging in some kinds of unwholesome practices including foreign exchange round tripping." "And I must say it very, very seriously, we are going to take very, very stringent measures once we are able to pin down any one of them. We are going to invoke the rules including the revocation of the foreign exchange dealership licences of any bank that we find infringing. Our people will soon be in the banks to examine them and any banks we find offending this particular rule, we'll have to apply the maximum sanction. This will not be tolerated in any way or shape," he added. He also warned that the asset stripping by banks through financial re-engineering as a result of the on-going consolidation of the industry, contrary to the laid-down guidelines and rules, will also not be tolerated. According to him, "the guidelines are clear and this we have discussed publicly and our role is to ensure strict adherence to this guidelines, which we have approved." While recalling that the CBN announced the consolidation package on July 6 this year, Soludo said the programme envisioned a new banking system in the context of a new economy. "We are confident that we have begun well, towards a sound and steady progress to achieve that goal but the CBN will not achieve it alone. "All stakeholders need to work in tandem to be able to achieve this and I employ all of you, all of us, all Nigerians to work together with the CBN to ensure that we have a very successful consolidation of the banking system. And I think this is doable, it is achievable and we are on course to doing it," he added. He reiterated that the CBN embarked on the banking reforms because of the fragile nature of the sector and also to be part of the global economy. He said it was more fundamental to prevent boom and bust cycle and ensure a sector that investors can rely upon and go to sleep. He said "we needed to recapitalise comprehensively and fundamentally the banking sector. This is part of the national consensus. So far so good. We have noticed 10 memoranda of understanding (MOUs) signed or about to be signed. We have seen massive inflow of investment, the return of Nigeria's money stashed abroad. It has also resulted in credit being extended to the private sector." He disclosed that the apex bank has completed the preparation of the bill on asset management. He also noted that the team of consultants were ready to offer services to the banks. Already, he said the Central Bank has embarked on restructuring. "We are moving aggressively towards our own restructuring and strengthening. We have consolidated from 23 to 17 departments," he stated. Soludo pointed out that the goal of the reform was to "replace the wall in the banks and banking industry with transparent glasses. There is no place to hide." While assuring that CBN has put in place contingency plans to respond to emergency cases that may arise from the consolidation of the industry, he said "the goal of the CBN is to ensure that no bank is left behind. We are working together to ensure that all banks make it. We are not targeting any specific number of banks." In his special address, Secretary to the Government of the Federation (SGF), Chief Ufot Ekaette, said the consolidation of the banking industry will widen its financial base to accommodate competition as well as large-scale and long-term investment lending. Ekaette who was represented by Mr. Boye Ilori added that "this is the medium of rebuilding our middle income class, promoting growth and development. By the time the middle income group in this economy is enlarged, aggregate demand will increase thus enhancing gross output. This will surely grow the private sector of the economy. The availability of funds and the competition among banks that are healthy will ultimately reduce interest rates." He said the private sector in Nigeria has remained weak whereas the Federal Government strategic development plan was to build a private sector-led economy. The CBN governor therefore expressed the belief that, to reverse the situation, "the reform initiative will encourage co-operation among banks, institute corporate governance and discourage one-man or one family bank ownership." "The broad base financial characterization of the proposed feature will embolden the private sector to invest and produce at a scale to fulfill desired growth and development of the private and productive sector of the economy. If the country uses earned foreign exchange predominantly from oil to import finished goods into the country as the banks tend to encourage now, we will definitely continue to support other economies in the world to develop," he said. The seminar with theme "Consolidation of Nigeria's Banking Industry" attracted top notch participants including chief executives and top officials of banks; members of the board of directors of the CBN; managing director and executive director of Nigeria Deposit Insurance Corporation (NDIC); captains of Industry and members of the National Assembly, amongst others.
Axiom PSI Yam Festival Series, Iri Ji Nd'Igbo the Kola-Nut Series,Nigeria Masterweb
Norimatsu| Nigeria Forum |
Biafra | Biafra
Nigeria | BLM | Hausa Forum
| Biafra
Web | Voice of
Biafra | Okonko Research and Igbology| | Igbo World | BNW | MASSOB | Igbo
Net | bentech | IGBO FORUM
| HAUSANET (AWUSANET) | AREWA FORUM
| YORUBANET | YORUBA FORUM
| New Nigeriaworld | WIC:World Igbo Congress
