lagos—The Central Bank of Nigeria (cbn) has threatened that a list of chronic debtors to the banking system is being compiled and would be forwarded to the Economic and Financial Crimes Commission (EFCC) and the Police for prosecution.
The CBN Governor, Professor Charles Soludo, in an address to mark the end of the 2005 financial year, weekend told staff of the apex bank that asset strippers and bank managers mismanaged the banks. He added that the revocation of unhealthy banks' licence would commence along with the liquidation process after the proposed CBN verification and valuation of all banks in the system early next year. Eleven banks may be liquidated in the ongoing reforms, he said.
According to him, the CBN in its liquidation plan intends to have the option of selective purchase of weak banks by the stronger banks and assumption of liability and cherry picking of assets by the healthier banks.
The CBN, he said, in the liquidation plan, would issue bonds to depositors and ensure payment of private depositors within three months of liquidation. This, the apex bank chief said, was a record time when compared with previous liquidation schemes in the country.
Soludo also said the CBN's plan of a bridge bank to take some of the weak banks was an option that would be implemented in 2006.
The CBN chief said the International Monetary Fund (IMF) had recommended that the cost of liquidation be borne by the Federal Government which will require budgetary appropriation but that the CBN is to issue debt instrument that it will gradually write down over the period.
He said in 2006, the CBN would conduct its own due diligence on all the banks that made the N25 billion minimum capital base with a view of re-verifying banks' capital. During the process, he said, the CBN has put up a contingency plan in case any of the banks is found to have falsified its capital base. The plan is to get stronger banks ready to acquire any shaky bank during the period.
Soludo said in the new regime of banks beginning from 2006, there will be zero tolerance regarding infractions, misreporting and transparency. The CBN Governor said that Banking reform is not an end in itself and attributed the success so far recorded to the political commitment of the President.
He said many Nigerians expected the reversal of the policy because of the so-called Nigeria factor but were surprised that the policy had succeeded thus far. He said in the course of the reforms, he received 17 threat letters. He said many of the banks operating in Nigeria before the reforms were empty shells with huge non-performing portfolios, large insider related loans and huge negative shareholders' funds. The governor said regulators and auditors had a share of the blame as they provided room for banks to play games.
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