Failed banks not nationalised; we acted in the interest of the public – says CBN

The
Central Bank of Nigeria (CBN) yesterday clarified that the defunct
Springbank, Bank PHB and Afribank that were lately taken over by the
Asset Management Corporation of Nigeria (AMCON) were not nationalised.
It said they are being run on commercial basis by the AMCON on
Bridged-Bank Arrangement

While
differentiating between a bridged bank and a nationalised bank, through
its Deputy Governor, Dr. Kingsley Moghalu, it described nationalisation
as the “taking over of privately owned establishment by the government
of a state …”

Speaking
during a round- table discussion on Corporate Governance  tagged:
‘Nationalised Banks: In Whose Interest?’organised under the auspices of
Institute of Chartered Secretaries and Administrators of Nigeria(ICSAN),
Moghalu added: “Nationalisation  is driven by public policy.”  He said
what is being witnessed  in the banking industry is: “asset and
liability of failed banks being  transferred to the newly established
banks”.

He said: “CBN acted in the interest of the public and depositors that it owed accountability and responsibility.”

He
said it was the duty of regulators to ensure that depositors bear no
risk of loss in the event of any failed bank, adding: “CBN has resolved
banking crisis without anyone losing a kobo.”

Moghalu
also gave the impression that for depositors’confidence purpose, CBN
was sparing in his revelation about the three failed banks, stressing
that “if  all were released, people will panic and run away.”

While
responding to reporters questions on the future of Enterprise Bank,
Keytstone Bank and Mainstreet Bank that the failed banks metamorphosed
into, he affirmed that they would be sold to investors after their
stability is ensured.

He
argued that under the Nigeria Deposit Insurance Corporation (NDIC) Act
Section 32 to 42, the corporation could manage such bridged banks for
two to five years and could dispose of such bank before such time.

On
shareholding status of the new banks, he said: “AMCON is the number one,
number two, number three, number four, number five, number six …
shareholder of the banks.”

He
also justified the printing money by the CBN to bail out the failed
banks, arguing: “Under CBN Act, CBN as the bank of last resort can, if
need be print money …”

Meanwhile,
the President, Shareholders Association of Nigeria, Sir Sunny Nwosu,
insisted that the failure of the three banks should be blamed on CBN,
because the banks were attached to three regulators that should have
prevented such a problem.

Responding,
the Chairman and moderator of the roundtable discussion, Prof Wole
Adewunmi, described the banking industry as a special institution in
which “no bank is too small or too big to fail.” He said regulators’
intervention would ever be imperative for confidence sake.

In
his paper, the Director-General, Nigerian Institute of Advanced Legal
Studies, Prof. Epiphany Azinge, recommended proper education of
stakeholders in order to restore and uphold their confidence.