CBN tightens noose, puts N100m debtors in new list

To enable it compile a comprehensive list of this category of borrowers, the CBN at the weekend directed all the banks to furnish it with the list of individuals and corporate organisations with non- performing loans from N100 million and above.

The Presidency yesterday rose in defence of the sanitisation of the banking sector by the CBN, saying that the reforms had nothing to do with the enthronement or promotion of “the so-called Northern agenda” as alleged in some quarters.

The aim of the policy, the Presidency insisted, was to salvage the sector from imminent collapse.

Presidential spokesman, Segun Adeniyi, said Aso Rock was aware that the CBN measures would trigger possible shock and hiccups as well as negative actions from those affected, including very powerful interests.

The Guardian learnt that most of the banks rose to the challenge last weekend by working round the clock to meet the apex bank’s demand.

Sources in the industry said figures to be captured in this list were loans of six months, one year and above tenor and others adjudged as non-performing.

Currently, the collation of the figures has kicked off in most branches of the banks, from where the amount will be sent to the regional offices and the head offices for onward transmission to the CBN.

When contacted, a CBN official said the management of the apex bank wants to have a clear picture of the bad debtors in the banking system, adding that when the list gets to the CBN, it might be forced to publish it in the newspapers.

He pointed out that CBN governor, Sanusi Lamido Sanusi, had always maintained that more lists would be made public if they (debtors) fail to pay up, stressing that “there is nothing wrong in borrowing but it is also very important to pay up based on the terms of agreement.”

The official said: “The emerging trend in the banking industry is for people to regard banks’ funds as national cake which they must partake in without a thought of paying back.

“This wrong impression is what we are out to correct as the funds in the banks belong to Nigerians both small and big and must not be allowed to be carted away by the privileged few.”

Sanusi, about two weeks ago, removed five banks’ chief executives, citing high level of non-performing loans, which he attributed to poor corporate governance practices, lax credit administration process and poor credit risk management practices.

According to him, the percentage of non-performing loans to total loans ranged from 19 per cent to 48 per cent while the five banks would, therefore, need to rake N539.09 billion to remain on course.

Sanusi explained that the total loan portfolio of these five banks was N2.9 trillion, margin loans amounted to N456.26 billion and exposure to oil and gas was N487.02 billion while aggregate non- performing loans stood at N1.2 trillion, representing 40.81 per cent.

Adeniyi said the same thing happened when Sanusi’s predecessor, Prof. Chukwuma Soludo, initiated the consolidation exercise in 2004.

He declared that neither President Umaru Musa Yar’Adua nor his government would be moved by such claims.

Adeniyi stated that the perceptions or insinuations by some Nigerians that the sanitisation policy was aimed at weakening the stronghold of the southern part of the country on the economy was “laughable.”

He said if the action of the apex bank was targeted at removing the so-called hold of the South through the promotion of a northern agenda, the same apex bank would not have resorted to empowering the banks through pumping over N420 billion to save them from possible collapse.

Adeniyi said: “I am aware there will be a few initial shocks and hiccups with Sanusi’s reform like it happened during Soludo’s consolidation exercise; and that those affected will fight back and we are talking of very powerful vested interests here. But the President is convinced it is the right course of action by the CBN to avert what could turn out to be a national catastrophe in the financial sector and that is why Sanusi has his unwavering support,” he said.

“When people don’t want to address the real issues in Nigeria, they resort to cheap talk about some Northern or Southern agenda; are you saying that these bankers were distributing their money with southerners? I recall that when Prof. Chukwuma Soludo came up with Banking Consolidation in 2004, there was also an outcry by some bankers who were losing out with the campaign that Soludo was pursuing Igbo agenda. But looking back today, assuming Soludo had not consolidated the banks then, we would not even be talking of any banking sector today.”

He continued: “To come back to the point, if we were to assume Sanusi took the action he did in promotion of a so-called Northern agenda, then we should ask some questions: Why would CBN pump in about N420 billion to bail out the five banks owned by people we have identified not as Nigerians but Southerners? Why would he appoint Southerners to replace the ones he removed? Why would he use our collective wealth as a nation to stabilise the savings of people who, if we buy the current argument, are Southerners? The ongoing reform is a national agenda being carried out in the interest of depositors, which ever part of the country they come from, because we cannot continue to live a lie. Nobody has disapproved the fact that there were serious holes in those five banks and in any case, it was already common knowledge that at least three of those five banks were in serious crisis before Sanusi moved in.”

Also yesterday, the Chartered Institute of Stockbrokers (CIS) and the Association of Stockbroking Houses (ASHON) advised the CBN to follow due process in the discharge of its functions.

CIS President, Mr. Dipo Williams, and ASHON Chairman, Alhaji Rasheed Yussufu, explained that the impact of the CBN’s action, if not well handled, might produce “unintended consequences” for the economy.

Addressing stockbrokers alongside the management of the Nigerian Stock Exchange (NSE) yesterday, NSE Director-General, Prof. Ndi Okereke-Onyiuke said: “There is nothing wrong with borrowing and I didn’t owe any single bank. Even as I am talking to you now, I don’t owe any single bank in Nigeria and no other banks in the world can say I owe them one kobo.” It was time to initiate relevant ideas that would help boost the market, adding that “every Nigerian is being affected by what is happening in the stock market.

Williams told stockbrokers that the institute was working with other stakeholders to ensure that “the period is part of history.”

He, however, urged the CBN to ensure that it obeys the rules in discharge its duties.

Meanwhile, the CBN and the Economic and Financial Crimes Commission have received more knocks from the Nigerian Bar Association (NBA) over its present reforms in the sector.

In a statement by its President, Oluwarotimi Akeredolu (SAN) yesterday, the NBA asked the EFCC and the CBN to approach their duties with tact and in strict adherence to the extant laws.

It would be recalled that the NBA had applauded Sanusi over the move but in a swift reversal yesterday, it alleged arbitrariness by both the EFCC and the CBN.

Akeredolu said: “The CBN governor, in a moment of indiscretion, also expressed his predilection for the sale of the banks when none of them has been declared insolvent and incapable of meeting its obligations to the depositors and shareholders.

“These statements have excited controversies and cast a heavy shade of suspicion on the seeming altruistic intention of the governor.”

The association called on the EFCC boss, Mrs. Farida Waziri and Sanusi to make the interest of depositors of paramount importance. “No arbitrariness must be contemplated in resolving these issues. Debtors are under obligation to pay their debts within agreed contractual and legal framework. Those, who defaulted should be made to face full sanction within the ambit of the law. We must allow the law to dictate the steps to be taken in dealing with those involved in sharp practices.”

In Akure, the Ondo State capital yesterday, senior bankers left their banking halls to chase after debtors in a renewed onslaught to recover non-performing loans.

The drama, watched by a sizeable crowd of passers-by, took the bankers, all of them senior officers of Wema Bank Plc, who were in a convoy of 12 branded Toyota Corolla cars, to the homes and offices of the debtors to recover loans.

The convoy was initially mistaken for a road show or the bank’s new attempt at sales promotion to woo prospective depositors with their new products but when their hosts were seen looking frantic while explaining to the visitors the reasons for delay in honouring their pledges, it was obvious that this was another kind of road show.

Armed with a list of names and addresses of customers, the “debt collectors,” majority of whom came from the bank’s headquarters in Lagos, were assisted by officers from the Nigeria Deposit Insurance Corporation (NDIC), EFCC, the Independent Corrupt Practices and Other Related Offences Commission (ICPC), the CBN) as well as plain-clothes security operatives.

The mission, which started early in the morning, took the team to some private homes and the Oyemekun/Adesida Road, which is the main transport artery in the state capital and where medium commercial and trading activities in the metropolis take place.

The initiative however turned out to be a huge success as more than N100 million, accounting for more than 40 per cent of the N250 million non-performing loans among medium borrowers in the state was recovered in less than four hours.

Several of the shop owners that were visited were seen making payments through cash and cheques.

Regional Manager of the bank in Ondo/Ekiti states, Greg Adeoye, told reporters that “we identified core debtors that are recalcitrant in servicing their debts. These are the targets and today we have touched the untouchables from former commissioners in government to serving ones. And they have been paying.”