Rescued banks: CBN guarantees safety of funds

Rescued banks: CBN guarantees safety of funds
Hauwa Noroh Ali, Abuja

The Central Bank of Nigeria has assured depositors and creditors of rescued banks that their funds will be protected irrespective of any action taken on the issue of recapitalization.

Deputy Governor, Banking Supervision, Sam Oni, gave the assurance at a news conference after the 304 Bankers’ Committee Meeting held in Abuja.

He said: “What we can assure the members of the public is that whatever action that is ultimately taken, the depositors and creditors of those banks will be protected 100 per cent. The CBN will not allow any depositor and creditor of the banks to suffer.”

Oni advised that shareholders with negative asset value should work a way of resolving the issues with the banks.

He noted that the shareholders do not technically own the banks and stressed that the banks were surviving because of the Apex banks inter-bank guarantee.

“If we pull out the CBN guarantee today, those shareholders that think that they own the banks do not hold the bank anywhere,” he said.

The Apex bank Deputy Governor appealed to shareholders, who want to stall the merger and acquisition process, to have a rethink as the Apex bank had options available, as regulator, to deal with the situation.

“The central bank is resolute in the pursuit of the recapitalization process and will not allow any party to frustrate it. We will take all legal actions to back up court injunctions to ensure that the process was not frustrated.”

On May 31, the Apex bank announced that the license of any rescued bank that failed to recapitalize by September 30 would be revoked and handed over to the Nigeria Deposit Insurance Corporation.

Reducing cash flow

Managing Director, Zenith Bank Plc, Godwin Emefiele, at the end of the Bankers Committee meeting assured the Apex bank that banks will work to provide an enabling environment for its cashless policy to reduce the volume of cash flow in the country.

“The CBN released a circular alerting members of the public that come 2012 that the maximum amount for withdrawal will be 150, 000 Naira. “We deliberated on that subject because we feel that it is not just enough to put a policy in place but to ensure that we put in place proper process that will make it work ``Part of the decision that was taken at the meeting today is that we will start an implementation process with Lagos State under what we call `Operation Cashless Lagos’ in December 2011,’’ he said.

Strategies

Emefiele said that the process would entail aggressive deployment of Automated Teller Machines (ATMs) and Point of Sales (POS) terminals at various banks locations as well as on and off site locations for the banks.

He said that POS terminals would be procured and installed by the banks in shopping malls, airports and corporate organisations.

“The process has worked in many parts of the world including and Nigeria, with its population should not be left out. In Africa, countries like Kenya, Kampala, transactions are carried out primarily with cards and we think that Nigeria should not be an exception. “We think that Nigeria is a very good market with the population of about 150 million people, we should allow transactions to be carried out using cards and this will reduce the way we carry cash around,’’ he said.

Emefiele said that by December 2011, about 40,000 ATMs would be deployed in different parts of Lagos and by June 2012, it would double the number.

“The assurance that I want to give to Nigerians is that we will do this with every sense of responsibility and we will make sure that customers carry out their banking transactions without problem. “It will be a very seamless process and everybody will be happy with it,’’ he said.

On infrastructure to stabilise the process, he said that banks would engage the telecom operators to provide adequate bandwidth through which data could be processed and making transactions easy.

Agricultural loan

Managing director, Diamond Bank, Alex Oti, said 1,000 top farmers across the country would be in the first batch of beneficiaries to be granted agricultural loans to boost agriculture development and guarantee food security.

He said the names and addresses of the shortlisted farmers have already been circulated to all the banks, preparatory to having them provide support efforts towards increased food production.

Infrastructure development

On efforts to deepen the capital market to provide support for infrastructure development, particularly in the power sector, managing director, Stanbic IBTC, Sola David-Borha, said though the World Bank had already given partial risk guarantees to take care of the power sector distribution problems, there was need to address the residual risks inherent in the power sector, to make the banks comfortable with lending to this sector.

She identified some of these risks as termination rights, transmission risks, and tenure, which are not covered by the partial risks guarantee under the various power purchase agreements, adding that the platform that the infrastructure bonds would be trade on would soon be approved, while pension fund administrators would soon be allowed to use PENCOM funds for infrastructure development.

The 304 Bankers’ Committee Meeting focused its deliberations on a number of issues, including efforts to deepen the capital market to provide funding for infrastructure development; CBN intervention programme to ensure financial sector stability; development of the agricultural sector and consumer protection.

Williams