THE Central Bank of Nigeria (CBN) has been urged to effect an immediate disclosure of report of banks on which financial audit has been concluded.
This is to guard against speculations that could further erode industry confidence and jeopardize their financial position.
The call is sequel to a statement credited to the CBN Governor, Sanusi Lamido Sanusi, that the exposure of the remaining 14 banks whose audit had been concluded would only be disclosed in early October.
Sanusi had hinged his reason for a delayed release of the report on the fact that the apex bank had just begun the audit of the last three banks last Wednesday.
He said the process would be concluded before declaring the findings, as it did on the ‘stressed’ five banks whose chief executives were sacked on August 14 over corporate governance issues bordering on heavy exposure to margin loans and the energy sector.
The bank executives were also alleged to have granted the loans without collateral.
But stakeholders, who spoke to The Guardian on the matter, expressed concern that the combined impact of the delay – especially as it affects the seemingly hurried announcement of the list of debtors in the embattled five banks before the conclusion of the audit process – and the reported seizure of travel passports of some bank CEOs by the State Security Service (SSS), was building up tension in the industry, leading to speculations that could create artificial problems for even the healthy banks.
U.S-based financial advisor, Chris Okoli, urged the CBN to promptly release the audit results of the remaining banks to guard against far-reaching implications on the economy.
In an exclusive interview, former CBN Governor, Chief Vincent Ola, told The Guardian that the right thing would have been to “conclude the audit, take the findings of the examiners to the affected banks, and get their response before taking a stand on the matter.”
A source in the industry said that with reports of impending sanctions on more banks and their CEOs, some of the banks are experiencing signs of a run, as depositors are making irregular withdrawals.
With the CBN at its London town hall meeting not explicitly guaranteeing undertakings of banks yet to be audited, foreign banks may be waiting for the outcome of the remaining banks before taking any major credit decision on them.
With credit lines being strictly censored locally and internationally, therefore, production of goods could suffer.
“All the credit confirmation lines, even the ones the correspondent banks call Irrevocable Reimbursable Undertaking (IRU), which they used to collect from the Nigerian subsidiary banks abroad (like First Bank UK), are drying up,” said the source.
The worry over the delay of the audit report stems from the possibility that having released the results of the five banks and hinted its readiness to publish the rest, postponing it to October while at the same time giving the signal that some sanctions may be unleashed, could heat up the system.
“They are not acting until the CBN’s final result comes out. And what it now means is that Nigeria is at a standstill until the CBN result comes out. I do not know why it has to be so,” the source said.
Also in the news last week was that the SSS had invited bank MDs and seized their passports. And correspondingly, there is alleged run on the banks, with people are withdrawing their money.
“It is worrying that there is no sense of urgency. If the CBN governor wants to do something, let him do it next (this) week, so that everybody will now close the book. Shifting it to the beginning of October doesn’t do any good, said a source.
“Banking is all about reputation, integrity and trust. By shifting it (release of audit report) to October, it means he has now created three more weeks of uncertainty. The economy can’t take it, and I don’t think he understands the implication.”
The source said that the fact that banks could not lend at the moment meant that companies would continue massive sack of workers with far-reaching implications on the economy.
The source painted a gloomy picture of what is going on in the economy aftermath of the Sanusi actions:
It said: “They (employers) are sacking people. Can’t you see that the Aluminium industries are having problems? Many of them depend on credits and importation. Don’t you see that factories are closing down?
“What it means is that when the (CBN) governor finishes, those loans that were bad before he started that audit will still be bad, because the customers cannot meet matured obligations.”
“And you find out that most banks were giving retail banking loans like car loans to employees of some companies. Now, those companies are folding up because of drying up of credit; so, they are sacking those employees who took money from the banks.
“Those retail banking credits have started going bad and irrecoverable because they were based on the cash flow or future salaries of those people. So, that’s the ripple effect now.”