Governor of the Central Bank of Nigeria, Mallam Sanusi Lamido Sanusi, last week unveiled his policy thrust before the Senate, especially the policies that have spawned public uncertainty. In the process he seems to have again stirred hornet’s nest with the appeal for a fresh injection of N500 billion by Federal Government into Assets management Company of Nigeria (AMCON).? LEADERSHIP SUNDAY’s UCHENNA AWOM in this analysis chronicles the major issues and his position on the shareholders of acquired banks?
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Governor of Central Bank of Nigeria, CBN, Mallam Sanusi Lamido Sanusi is not new to the National Assembly politics and of course he has cultivated a somewhat love-hate relationship with some of the lawmakers. Give it to Sanusi, he is not one given to polemics especially when the issue at stake is what he is well versed in. In such situation Sanusi would not hesitate to hit the nail on the head irrespective of the immediate consequences. ?
Last week, the CBN boss complained to Senators that the House of Representatives hurriedly killed the request for the Federal Government to increase of its contribution to the Asset Management Company of Nigeria [AMCON] to N500billion. He urged the senators not to toe the same line and appealed to them to approve the increase, while he continues to lobby the leadership of the House of Representatives to it position and concur at the harmonization conference of both chambers.
Well, he seems to have set the stage for an epic battle on two fronts. First, the battle between the National Assembly and the executive and then an internal power show between the Senate and the House of Representatives. But at the heart of the matter is the crisis already generated by the recent action of AMCON in the acquisition of toxic assets of some distressed banks, which has led to the outright acquisition of some banks and revocation of licenses of many, leaving the shareholders prostrate.
Some of the lawmakers are now asking questions of what becomes of the investment of shareholders in most of these banks. It is therefore doubtful if Sanusi would have an easy ride in both chambers because most of them still have more than passing interest in what had happened and may have aligned themselves surreptitiously with the protesting shareholders.
Nonetheless, Sanusi seems not ready to budge. Responding to questions from Senators at an interactive session organized by the Senate Committee on Banking, Insurance and Other Financial Institutions, he declared that he has no regrets in the ongoing banking reforms and his responsibility of protecting the depositors.
He told the lawmakers that his job is to protect the depositors against the backdrop of the recent recapitalization in the banking sector and not the shareholders.
The CBN boss said he is not under any obligation to return anything to shareholders of failed banks, adding that he is glad that they are not happy with him. “I am happy that they are unhappy with me”. Sanusi opined that what he did was done to protect the depositors as he was appointed by government to protect them.
Back to the N500billion request, Lamido lamented that the bill which was forwarded to the parliament seeking to increase the amount was thrown out by the House of Representatives.
He said, ‘’The CBN will contribute N500 billion according to the Bill which is before the senate. It is unfortunate that we could not meet with the House of Representatives before the amendment Bill was thrown out. I appeal to you to take the amendment because we have an agreement with the banks. And many of them were not involved in the problem that led to the situation we see now. We are pleading that we have agreement and if we renege, it will not be good”.
CBN Vs Bank Shareholders
The CBN governor thundered: ‘’It is my job to protect depositors”, when the senators question the fate of the bank shareholders in the present circumstance. He said depositors’ protection is the major concern of the apex bank and not what happens to shareholders adding that what the shareholders had done was simply to take business risk.
?According to him; “If you go and buy shares, you are taking a risk. The bank paid dividends, you took the dividends. Share price went up; you sold and tripled your money. Those that sold made money. Those that didn’t sell lost; it is a risk you took.
‘’The depositor did not go to lose money. We told them don’t put your money in the pillow, go and put in the bank. He expects to get that money on demand; my obligation is to make sure that every depositor gets his money. I have no obligation to the shareholders. It is not my job.
“I am serving depositors. ‘’Shareholders are not happy with me. I understand that and I accept it. I am happy that they are not happy because that means that I am doing my work.’’
On Non-Interest Banking:
Speaking on the non-interest banking for the umpteenth time, the Central Bank governor noted that he was surprised that the concept was being misconstrued and generating some criticisms.
He affirmed his readiness to approve for the take off of any non-interest banking in Nigeria that is operated elsewhere, adding that the CBN will study the guidelines, just as he stressed that he was not prepared to join issues with religious leaders on their position relating to the Non-interest banking.
Lamido who noted that Islamic banking is now a product globally, however reiterated that non-interest banking just introduced in the country is in the interest of the country not a particular religion.
On why he did not wait for the deadline to elapse before he took over the banks, the CBN governor said, ‘’If you go back to the newspapers, when I set the deadline for September 30, everybody said it was not possible, how did we fight back, we had realized that in many cases, this would have been concluded earlier, some people were playing games. You are a shareholder, you appoint a board and management, your management throws away bank assets, giving bad loans and loosing the money, we seized the bank. We find your partner by going to court to take all sorts of injunctions. I am not talking about the obligation; you know we said in 2009 that the reason the management of banks, we all know the chain, we can only talk about the things that have been decided in court. We know the chain of a CEO from whom we have recovered about 200 pieces of real estate in the United
Arab Emirate plus property in America, plus property in South Africa. Where were the shareholders when over 300 billion naira of depositors funds were being stolen. These are the shareholders that we are talking about. Where were they; now we come and save the institution and shareholders are talking about their rights, not about the right of the depositors?
‘’When you take a decision at the macroeconomic level, you cannot guarantee that the micro unit will be equally affected. If I want to fight inflation and I freeze liquidity and raise interest rate, your interest and your personal mortgage will go up; you will not be happy. Those people may even default and the banks will take possession of your property.
‘’But what is the option, I am looking at banking. It is possible that there would have been a miracle; miracles happen in the Bible and the Koran. We hear about miracles, but we don’t see them. It is only reported by somebody who is there; it could have been nice if the miracle had happened much earlier. What happened in two years may not have happened; it is not likely to happen in another one year.
‘’If we had gotten to September and the market knew the Central Bank had announced a deadline and you know this is deadline that cannot be a deadline without taking action. At that we knew that five of them were clearly on their way to liquidation, but the market didn’t know that.’’
The chairman of the committee, Senator Ayo Adeseun, while responding, said that the essence of the interactive session was to enable them see that the banking sector remained focused.? Ironically while Sanusi was busy explaining the most contentious issues plaguing the sector, the shareholders were marshalling out strategies to pin him down in the court.
But he does not seem a character that would blink first and the senators displayed an outlook that suggests that his explanation struck the right chord. The problem now is whether Sanusi has the capacity to strike a consensus that will rally the National Assembly behind his reform policy.
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