Also available
Nigeria Banking Developments 2010:
A New Broom Sweeps Clean
In 2010, the banking sector in Nigeria has faced its biggest upheaval since 2004 when former Central Bank of Nigeria (CBN) governor Charles Soludo initiated the first round of banking reform. When he took over in 2009, the new governor, Sanusi Lamido Sanusi, made it clear that Soludo’s reforms were just the beginning. Before becoming governor, Sanusi worked in Nigeria’s banking sector, where he was known for developing a culture of risk management. It is clear that he has carried this approach with him to the CBN.
In August 2009, just a month into Sanusi’s tenure, the apex bank bailed out five leading Nigerian banks – Afribank, Intercontinental Bank, Union Bank, Oceanic Bank and Finbank – with 400 billion naira (USD2.7 billion) of public money, followed by the dismissal of the banks’ respective bosses Sebastian Adigwe, Erastus Akingbola, Bartholomew Ebong, Cecelia Ibru and Okey Nwosu.
“We had to move in to send a strong signal that such recklessness on the part of bank executives will no longer be tolerated,” he said. Sixteen senior members of the banks were then charged by the Economic and Financial Crimes Commission (EFCC) with offences ranging from fraud, to lending to fake companies, giving loans to companies they had a personal stake in and conspiring with members of the stock market to raise share prices.
Despite the furore that followed, with some dubbing the governor’s managerial style the ‘Sanusi tsunami,’ in October 2009 he also sacked Francis Atuche, Charles Ojo and Ike Oraekwotu, of Bank PHB, Spring Bank and Equitorial Trust Bank for allowing their banks’ liquidity to run dangerously low. The bank chiefs were also referred to the EFCC to face charges, although Oraekwotu was later returned to his post after Globacom boss Dr Mike Adenuga agreed to provide ETB with an emergency injection of USD150 million in capital. Two other banks, Wema and Unity, have until this September to recapitalise.
Download the complete chapter as PDF
