The Nation Newspaper

Tag: bank

  • Breaking news: Armed men invade bank in Ikorodu

    Suspected armed robbers Wednesday morning invaded a major commercial bank at Ogolonto area of Ikorodu, a Lagos suburb, scaring people away with gunshots.
    This attack is coming barely three weeks after a group of armed robbers attacked two commercial banks -First and Wema banks- in Ikorodu.
    It was learnt that the bank is located close to Dangote factory in the area, just as sources said the hoodlums have held the area hostage for close to an hour.
    Although a security source last week told The Nation that the hoodlums who invaded the two banks have been uncovered and would soon be arrested, there may be a possibility that the robbers could be the same people.

    The Police in a tweet on its handle PoliceNG said ” #Ikorodu Lagos now secured after our officers responded to ?Bank robbery this morning. Police units remain on ground.”

  • Breaking the bank for lawmakers

    Breaking the bank for lawmakers

    A report that senators will draw N8.64billion as wardrobe allowance sparked a huge row last week. The tension was doused following a clarification that they would get N506,600 each as dressing allowance. Does such profligacy fly in the face of dwindling resources and some states, inability to pay salaries? No, say some lawyers who are demanding a downward review of public officials’ salaries and elimination of some allowances to save cost. They also want the laws on remuneration of public officials reviewed to reflect present realities, writes JOSEPH JIBUEZE.

    Lawmakers enjoy the best of two worlds. They do not work full time, yet the country breaks the bank for them. Last week, a report that senators would earn N8.64billion as wardrobe allowance sparked a huge uproar. In the face of cash crunch, with some states unable to pay salaries, many considered it insensitive and a rip-off.

    But, Revenue Mobilisation and Fiscal Allocation Commission (RMFAC) Chairman Mr. Elias Mbam during a courtesy visit to Senate President Bukola Saraki, said each senator would earn N506, 600 as dressing allowance.

    “It is 25 per cent of the basic salary for senators and if you apply that, every senator will receive N506, 600 per annum. House of Representatives members receive less but I don’t have the figure,” he said.

     

    What do senators earn?

     

    Based on the 2007 RMFAC approved remuneration for National Assembly members, the lawmakers’ allowances include accommodation (Senator N4m, Rep N3.97m), vehicle loan (Senator N8m, Rep N6.948m), furniture (Senator N6m, Rep N5.956m) and severance gratuity (Senator N6m, Rep N5.956m), which are due once in four years.

    Other allowances, which are payable every year, are car maintenance (Senator N1.52m, Rep N595,563), constituency (Senator N5m, Rep N1.687m), domestic staff (Senator N1.5m, Rep N1.488m), personal assistant (Senator N506,600; Rep N496,303), entertainment (Senator N202,640, Rep N198,521), recess (Senator N202,640; Rep N198,521), utilities (Senator N607,920; Rep N397,042), newspaper/periodicals (Senator N303,960; Rep N297,781), house maintenance (Senator N101,320; Rep N99,260) and wardrobe.

    Nigerian lawmakers are said to receive salaries which rank the highest in the world, according to a report by The Economist magazine. The report revealed that with a basic salary of $189,500 per annum (about N30.6m), they were the highest paid lawmakers in the world.

    According to the report, the basic salary (which excludes allowances) of a Nigerian lawmaker is 116 times the country’s GDP per person of $1,600. The $189,500 earned annually by each Nigerian legislator is estimated to be 52 per cent higher than what Kenya legislators, who are the second highest paid lawmakers, earned.

    The figures put salaries of Senators and House of Representatives members way beyond those received by fellow parliamentarians in the 29 countries whose data was analysed by the magazine. In terms of volume of cash earnings, the Nigerian legislators beat their counterparts in Britain who take $105,400 yearly, as well as those in the United States ($174,000), France ($85,900), South Africa ($104,000), Kenya ($74,500), Saudi Arabia ($64,000) and Brazil ($157,600).

    Other yearly salary details published by The Economist two years ago are those of lawmakers in Ghana ($46,500), Indonesia ($65,800), Thailand ($43,800), India ($11,200), Italy ($182,000), Bangladesh ($4,000), Israel ($114,800), Hong Kong ($130,700), Japan ($149,700), Singapore ($154,000), Canada ($154,000), New Zealand ($112,500), Germany ($119,500), Ireland ($120,400), Pakistan ($3,500), Malaysia ($25,300), Sweden ($99,300), Sri Lanka ($5,100), Spain ($43,900) and Norway ($138,000).

    Constitutional lawyer Prof Itse Sagay (SAN) said the lawmakers’ earning was based on what he called “the locust mentality”.

    “What is particularly disturbing is that the National Assembly is completely impervious to public outrage,” he said.

    According to Sagay, in spite of dismal standard of living and poverty, coupled with low income per capita, past lawmakers awarded themselves the highest salaries and allowances in the world.

    He recalled that in 2009, a senator earned N240million in salaries and allowances, while a member of the House of Representatives earned N203.7million. Converted to dollars  at then existing rates, a senator earned $1.7million while his counterpart in America earned $174,000.

    “President Obama, president of the richest country in the world, earns $400,000 per annum. The British Prime Minister earns 190,000 pounds. A senator in Nigeria, one of the poorest countries in the world, earned $1.7million per annum. It is absurd. It is, as someone called it, a feeding frenzy,” Sagay said.

     

    Secrecy of actual earnings

     

    The exact amount lawmakers earn in Nigeria is still shrouded in secrecy. Hundreds of billions voted into the National Assembly are allegedly never broken down, which should have shown at least a summary of the legislators’ exact earnings. It has also been alleged that senators allocate money to themselves way above RMAFC stipulations.

    Co-founder of Newswatch magazine, Mr Ray Ekpu, who was a member of the last National Conference, criticised the National Assembly for acting above the law on their remuneration.

    He said: “You cannot have a National Assembly that operates above the law. Right now, that is what happens. I give a few examples – we spoke to the former Head of RMFAC that is supposed to decide the salaries of public servants and he said that the National Assembly ignored the prescription of the commission and decided on paying itself what it wanted to pay.

    “That is a shame because that is an assembly that is supposed to make laws and it cannot be above the law as prescribed by the country. That is the problem. So if they do that, it is a disservice to Nigeria. And you know one of the media agencies as a way of tasting the vitality of the Freedom of Information Act has sent a letter to the National Assembly asking them to inform them on the salaries and allowances of the legislators. They have not complied with that.”

     

    Reducing cost of governance

     

    Analysts say corruption-induced wastage would not be easily stopped because its protagonists or beneficiaries are known to always put up some resistance. However, it will require a focused and determined political will on the part of the government of the day. It will involve curtailing the excesses of a powerful privileged class which has suddenly supplanted the yearnings and aspirations of teeming Nigerians with its bloated appetite for opulent and ostentatious lifestyles.

    A Senior Advocate of Nigeria, Mr George Oguntade, believes what the lawmakers earn do not reflect present realities.

    “Quite frankly, I find it difficult to comprehend the basis upon which the RMFAC has allocated so much money to lawmakers by way of allowances and remuneration, especially given the realities on ground today.

    “Laws are never static and should be continually reviewed to reflect the realities  in which society finds itself. This is the essence of the Nigerian Law Review Commission. The RMAFC clearly needs to be reviewed and amended though I foresee obstacles in the path of this given that the amenders are major beneficiaries of the law as it currently stands. I believe Nigerians should agitate for an immediate review and put pressure on the National  Assembly to give priority to this,” he said.

    Reducing the cost of governance will mean cutting down on some of the allowances, such as the one for clothing, Oguntade said.

    His words: “Many of these lawmakers are already affluent in their own right given where they are coming from and can certainly do without funds  that can be utilised in developing the country. We must not continue to delude ourselves by paying jumbo allowances to lawmakers when we can ill afford to.”

    It is also significant that richer countries pay their lawmakers far lesser. Said Oguntade: “Even countries that have the financial capability to do so do not pay much to their lawmakers. It amounts to fiscal irresponsibility and I believe the lawmakers ought to be in the vanguard of calling for the urgent review of the RMAFC. Senegal recently demonstrated fiscal responsibility when it recently voted to abolish its Senate and by so doing, save the sum of US$15million annually and divert same to infrastructural development.”

    The senior advocate believes lawmakers should not be paid salaries or constituency allowances, the purpose of which is never verified.

    “I also believe that lawmakers should only be entitled to sitting allowances as opposed to a yearly salary. As it is, they spend more time on recess than on real legislative duties and still get paid for the entire year. The country is short changed by this incongruous position and it certainly calls for a review.

    “Also, the retinue of aides of lawmakers needs to be reduced drastically. Lawmakers are only able to afford this because they get paid all kinds of allowances, including so-called ‘constituency allowances’. It is incredible that no audit is ever conducted to ascertain the projects to which the so- called ‘constituency allowances’ have been applied to.

    “Given the dwindling economy, it is imperative that the lawmakers follow the recent example of the President by agreeing to a substantial reduction in the annual funds allocated to them alone,” Oguntade said.

     

    Reducing recurrent expenditure

     

    To save cost, experts say there is need to substantially cut down on the high recurrent expenditure which had become the norm in federal budgets. Development, they said, would remain a mirage if recurrent expenditure continued to surpass capital budgetary allocations.

    Observers say implementing the 2012 Stephen Orosanye-led Presidential Committee on Rehabilitation and Restructuring of Federal Government Parastatals, Commissions and Agencies report would help save cost. The committee recommended efficient down-sizing or consolidation of several ministries, department and agencies in order to check wasteful duplicity of government functions and overhead costs.

    There have also been calls for a unicameral legislature which will be run on a part-time basis where the legislature will be constituted by Nigerians who are already gainfully employed in other vocations other than politics.

    A former senator, Smart Adeyemi: “We should run a unicameral system and one chamber, so that we can provide water, good roads, electricity and life for people rather than catering for a large number of people who are honourable members or distinguished senators.

    “The process of running government should not be more costly than what the system will give to the people. Is it not madness for a governor to appoint 70 special assistants? It is fraud!”

    There is also the need to cut down on number of aides and political appointees. President and Chairman of Council, Chartered Institute of Bankers of Nigeria (CIBN) Mrs. Debola Osibogun advised the government to cut down on the retinue of aides attached to heads of ministries, department and agencies.

    “The most important issue which the new federal government must address is the high cost of governance. If you look at the number of special advisers and personal assistants, you will notice that they have rendered the bureaucrats who are in the ministries almost redundant and they get paid. They should allow them to do their jobs and reduce the number of people they bring when they get appointed,” she said.

    The government has also been urged to focus on increasing its internally generated revenue (IGR) by harnessing other non-oil sectors. Analysts say Section 22 (1) and (2) of the 2007 Fiscal Responsibility Act has created some loopholes that mean little is remitted to the government treasury. The Nigerian National Petroleum Coorporation (NNPC) and its subsidiaries were discovered to have internally generated as high as N6.20trillion between 2009 and 2011, but made zero remittance, simply because they declared zero operating surpluses.

    It has also been suggested that a law should be enacted that will mandate government to henceforth use IGR for recurrent expenses while externally generated revenues only spent on capital projects.

    It is believed that should this law be enforced, a revenue inward-looking government should hardly waste any time in sealing off the leakages created in Section 22 (1) of Fiscal Responsibility Act of 2007 by making sure that all its IGR are paid into the Consolidated Revenue Fund Account, where no agency of government should have any drawing right to the account.

    A lawyer and a delegate to the National Conference, Chief Bisi Adegbuyi, said the law which allows parastatals to withdraw from the source, the recurrent expenditure content of their budget before remitting whatever remains to the Federation Account, must be reviewed.

    “That is the biggest drain pipe and the huge component of the recurrent expenditure content of the federal budget.  Why will NNPC withdraw from source unilaterally the amount determined by it as forming the recurrent expenditure and remitting paltry sum to the Federation Account? We need to look at such laws that impinge and impede progress.

    “When you spend 72.3 percent of your budget on recurrent expenditure, leaving 27. 7 percent for debt servicing and capital expenditure, certainly, there is no way you can improve on the welfare if the people. The cost of governance in Nigeria is humongous,” he said.

    The United States, the most powerful and richest country in the world, is said to have a comparatively slimmer and more cost effective bureaucracy than Nigeria. It has less than 20 federal ministries and secretaries of state (equivalent to Nigeria’s ministers). The British cabinet is smaller than that of Nigeria, which has a minimum of 37 due to Federal Character.

    Observers say President Buhari’s objective of economic transformation will be made a lot easier if he can find a way of reducing the huge economic and financial burden of running this country.

    Chairman, Lagos Branch of the Nigerian Bar Association (NBA) Mr Alex Muoka believes public service should be about service to humanity and not an avenue for self-enrichment.

    “I feel that representative or elective government positions should be seen as more of a call to serve than anything else. Therefore, people who vie for such offices should expect a severe drop in their income rather than the opposite.

    “The remuneration attached to such offices should be very basic and almost meagre. It is the prestige that the office carries and the clout and network that should be the payoff. Our situation is the opposite, thus some people go into government to make more money than they could ever have hoped to make from employment or business.

    “When we remove all the extravagant allowances and reduce the remuneration attached to political office, we would make it unattractive and then we would begin to attract the kind of good people with a genuine desire to serve that would move this country forward. We would also have drastically reduced the cost of governance,” Muoka said

     

    ‘Expunge some allowances’

     

    A Constitutional lawyer, Mr Ike Ofuokwu, called for the abolition of most of the allowances paid lawmakers.

    “It is ludicrous, obscene and a violent rape on the Nigerian economy for members of the National Assembly to earn wardrobe allowance where over 65 per cent of the workforce they represent are not paid their salaries for several months now.

    “The RMAFC has on its own part over the years become a white elephant project on the Nigerian nation. They should be scrapped and tried in a court of competent jurisdiction for irresponsible fiscal policies that are not in conformity with economic realities and for a deliberate and calculated attempt to bankrupt this nation. I strongly suggest that we should return to the wages and salaries commission.

    “I advise members of the National Assembly to speak in one voice and condemn this act of economic terrorism on the Nigerian state or else it will be seen as an act of parliamentary gang-up against the Nigerian workers.

    “During campaigns and even after the inauguration, we saw them all adorning flowing lace agbada and designer suits. Of what benefit other than parliamentary stealing is the wardrobe allowance? Some of them are already on salary and pensions for life. Their states are already bleeding as a result of their misadventure in the politics of their states.

    “We can now see why our legislators are the highest paid in the world. This is one of the few instances you will find them speak in one voice without a dissenting vote and without party affiliation.

    “To reduce the cost of governance, most of the allowances paid members of the National Assembly should be expunged. The job should be made part time and less attractive. By so doing, it will attract brilliant, selfless and financially independent men and women of character and morals,” Ofuokwu said.

    However, Mbam said that RMFAC would soon review downward lawmakers’ allowances, taking into consideration state of the economy, rate of inflation, capacity to pay, and the reality of the day.

    “The commission is currently reviewing the 2008 Remuneration Act and hopefully we expect it will be ready by the end of the third quarter and once we are ready, we will make it public and of course, present it to the National Assembly,” he said.

     

     

  • Tension in Ejigbo over sale of bank building

    There is tension in Ejigbo, the headquarters of Ejigbo Local Government of Osun State over the proposed sale of the building accommodating a new generation bank.

    Following incessant robberies, the bank management relocated the branch about two years ago to Ede, a community which is 25 kilometres away from the town.

    Since the relocation, residents have been complaining of harrowing banking experience.

    Tension started when residents said they found out that the bank was going to sell the building.

    At the weekend, the Ogiyan of Ejigbo, Oba Omowonuola Oyeyode Oyesosin, addressed a briefing where he told the reporters that the people were going to frustrate the bank’s plan.

    According to him, the town was against sale of the property because the land on which the building was built was never sold to the bank.

    Oba Oyesosin said in 1980 a part of the palace was carved out and given to a bank, which later metamorphosed to the new generation bank after the recapitalisation of the banking industry.

    The monarch challenged the bank to produce the land sales agreement and documents to prove if the land was ever sold to it.

    He said: “For more than 20 years, the first bank operated the branch without any robbery attack, until the merger and acquisition took place and the new generation bank took over.

    “I gave the land from the parcel of land belonging to the palace.

    “In fact, some structures had to give way without compensation to anybody before we could carve out a portion of the land for the bank.

    “In fact, a sizable part of the palace ground was affected.”

    The monarch, who said the proposed sale of the land, was for selfish reasons gave out the letter he wrote to the bank management to complain about the matter.

    The letter reads: “The space given out is mainly for building of a bank. If (the space) is sold, this will defeat the original purpose we had for the land.”

    The monarch said he released the land “purely for banking services bearing in mind its inherent social, economic and commercial benefits to my people”.

    He, therefore, advised the management of the bank to stop the transaction on the land in the overriding interest of Ejigbo.

    Though there are two microfinance banks in Ejigbo, the bank is the only commercial bank in the town.

    Its officials could not be reached for comments.

  • Customer accuses bank of complicity in alleged ATM fraud

    A customer of the Union Bank Plc, Mrs Tejumade Adeyemi, has accused the bank of complicity in the alleged illegal withdrawal of the sum of N251, 447 from her account with the Oba Akran, Ikeja branch of the bank.

    Adeyemi threatened to take legal action against the bank, if her money was not refunded.

    She said that she received sms alerts from the bank on May 4, 2015, notifying her of unauthorised withdrawal of the sum of N30,000 from her account through ATM.

    She said she immediately rushed to the Iju branch of the Union Bank to report the matter and was advised by officials of the branch to further report the incident at the Oba Akran, Ikeja branch where her account was domiciled.

    On her visit to the Oba Akran branch on May 5, Adeyemi said she was shocked to discover that the illegal withdrawals actually started on May 2 and May 3 and that she was not notified by the bank to date.

    Adeyemi explained that even after she instructed the bank to suspend further transactions on her account, she was utterly shocked to receive sms alerts indicating that the remaining balance in the account had been withdrawn by unknown persons.

    She said:” On May 4, 2015, I received an alert indicating that the sum of N30,000 had been withdrawn by unknown persons from my account. I quickly went to the nearest branch of Union Bank at Iju Road, Ifako-Ijaiye, from where I was advised to visit the branch where I opened the account on Oba Akran Road, Ikeja, after I explained to the officials of the bank that my ATM card was with me and that its details were not in anyway compromised by me. The next day, May 5, I visited the Oba Akran branch and I asked that further transactions be suspended on the account until further notice. When I asked for the details of the transactions, I was shocked to discover that the illegal withdrawals started between May 2 and May 3, wherein about N45,747.35 had been taken from my account and no alert or notification was sent to me till date. I also discovered that there were other illegal withdrawals totaling N180, 000 made on May 4, yet the bank did not notify me.”

    “I was assured by both the manager of the bank and the Head of Customer Service that further transactions on my account will be suspended including ATM. As at then, I was having about N25,190 as balance in my account. The money was still in my account as at May 14, when a statement of account was given to me and I was surprised to receive further notification concerning illegal withdrawal of the remaining balance a few days later. I immediately called the secretary to the manager of the branch on his mobile phone and I was assured of prompt remedy that has not been fulfilled to date. In all, N251, 447 was illegally withdrawn from my account and I strongly suspect an insider in the bank is behind the illegal withdrawals from my account. The bank has refused to take blame for its complicity in this fraudulent withdrawal of my money and I am going to consider a legal option if the bank refuses to refund my money.”

    When contacted, the Head of Media and Special Projects of Union Bank Plc, Francis Barde, via an email, initially said, “Thanks, Kunle for your patience and understanding on this issue. I will thoroughly investigate and revert to you.”

    Barde, however, did not make categorical comment in his official response via another email he sent to our correspondent on Wednesday.

    He said:”Kindly note that Union Bank values the relationship of every customer and it is our goal to handle all customer relationships with utmost integrity. Therefore, Union Bank does not divulge details of customer relationships and transactions to third parties for privacy issues. The bank has a clear and documented process for investigating and resolving claims of fraud on customers’ accounts and will work to ensure that all claims are addressed and resolved in an expedient manner.”

  • British bank payments system set for review

    The “Big Four” British banks at the heart of the £75 trillion a year payments system face a major shake-up after the regulator launched a full-blown review into their charges and the limited choices on offer.

    Barclays, HSBC, Lloyds and Royal Bank of   Scotland are the main owners of systems such as BACS and Chaps and the major ATM networks which smaller challenger banks must use to move their clients’ money around the UK. This includes provision of the all-key sort codes which are at the heart of identifying banks and branches.

    The review will also cover the rapidly growing, digital-payments sector which includes businesses like PayPal and Monitise.

    The move comes just months after Hannah Nixon was appointed as the UK’s first Payment Systems Regulator.

    At the regulator’s launch in April, she said: “Our approach will bring change to the industry, injecting competition and innovation where it is needed most, and will put the interests of the people and businesses that use payment systems front and centre.

    “True, long-lasting change will be difficult, but we have the powers and the people to make it happen.”

    Today she launched her first inquiry, which will cover the supply of indirect access to the payment system. This will investigate how easy or difficult it is for the Big Four’s competitors to access the payments system, the charges made, transparency about such access, the quality of technology and the demand for potential alternatives to the current set up.

    Ms Nixon has powerful weapons in her armoury to enforce change if she finds the current system is not working or is unfair. She can single out specific banks, fine them, order changes, advise the Bank of England and Prudential Regulation Authority to make changes and even call for a full-blown Competition and Markets Authority inquiry.

    Ms Nixon warned: “Parliament has given us very strong powers. If firms do not step up to the mark we will use those powers to issue directions, impose fines and impose obligations that will force individual players to act differently.”

    She plans to publish an interim report by December or January next year with a final report due in April or May  of 2016.

  • Bank loan defaulters

    N138bn loss in one year is worrisome; CBN should wake up to its responsibilities

    We loathe a situation where the issue of bank loans default gradually becomes a Frankenstein’s monster which, rather than be nipped in the bud, becomes a romanticised item by the topmost hierarchy of the banking sector. Yet, the avoidable quagmire is not beyond redemption.

    In a report based on data obtained from the 2014 annual reports of banks, it was stated that loan default by bank customers created a combined loss of N138bn amongst 13 deposit money banks (DMBs) within the 2014 financial year. The losses purportedly incurred under their respective interest expenses, were usually charged against profits made in a financial year. The breakdown of the affected five Tier-1 banks as reported include, Access Bank Plc.- N11.7billion; First Bank of Nigeria Limited-N25.9billion; Guaranty Trust Bank Plc.- N7.1billion; United Bank for Africa Plc. N6.6billion; and Zenith Bank Plc-N13.1billion. Collectively, banks in this category incurred total loan impairment charges of N64.4billion.

    On another level, eight Tier-2 category banks also affected in the report with breakdowns of the amount owed them include: Diamond Bank Plc.- N26.4billion; First City Monument Bank Limited- N10.6billion; Fidelity Bank Plc.- N4.3billion; Stanbic IBTC Bank- N3.2billion; Sterling Bank Plc.-N7.4billion; Union Bank of Nigeria Plc.-N6.6billion; Unity Bank Plc.-N15billion; and Wema Bank Plc.- N0.1billion. Collectively, they have a total of N73.6billion credit losses. Again, the provision for the losses were made from charges against the income or profit made for a given period. This is huge when the loss of N138billion is spread across the 13 banks, it gives an equivalent of a scandalous over N10billion loss per bank.

    We realise the unstable nature of the nation’s environment that negatively impacts on businesses. Here, we are talking about things such as high interest rate of sometimes 28 to 30 per cent, unsustainably high foreign exchange rate and irregular government policies, among other risk factors. Consequently, it is not impossible that several industries/companies established with large chunk of credit facility might have witnessed avoidable difficulty; but we also know that most times, the required compulsory feasibility studies were not effectively conducted by designated bank officials while the necessary collaterals and insurance guarantee, in most cases of loan default, were handled with levity. And because the bank officers involved can make impairment charges recommendation without any definite sanction by the banks on the erring officers, that bad trend has become intractable.

    While we unequivocally call on the government to endeavour to improve the business environment, it is also pertinent to admonish the Central Bank of Nigeria (CBN) for its inefficient discharge of its supervisory role over the commercial banks. Additionally, it takes the banks so long to make this avoidable trend public simply because most officials of banks saddled with the responsibility of ensuring conformity to requirements and standards in loans granted, with the exception of natural business risk factors, compromised the process, thereby making their banks vulnerable to credit losses.

    This detrimental loan default has become a recurring decimal and a scandal in an economy like ours. The retrogressive trend that is gradually becoming a vicious circle is nothing but a manifestation of the case of corruption catching up with the banks, but with greater consequences on bank customers.

    Henceforth, we demand, like we had canvassed in numerous editorials on the subject, that the name and shame policy of chronic loan defaulters should be implemented without further delay. The CBN should set up a Credit Bureau as institutional/systemic checks to vet loan applicants so as to stop the criminal incidence of loan refinancing among banks, and to enforce standards across board on loan issues.

  • Bank appeals court’s order on N5 billion judgment sum

    Guarantee Trust Bank (GT Bank) has appealed against the judgment  of a Federal Capital Territory (FCT) High Court , Abuja, which ordered it  to pay the sum of  N5,240,516,186.21 to an Abuja based lawyer,  Dr Ted Isegholi Edwards.

    Justice Valentine Ashi of the FCT high court gave the order after considering the submissions of counsels to the applicants and defendants in an application brought by Edwards against the bank.

    In the notice of appeal filed before the Abuja division of the Appeal Court, , the bank through its counsel, Chief Anthony Idigbe (SAN) stated that the first respondent has no locus standi to institute the suit as constituted and has not disclosed a reasonable course of action against the appellate (GT Bank)

    The appellate also argued that the lack of locus standi and/or reasonable course of action on the part of Dr. Edwards robbed the trial court the jurisdiction to entertain the suit and therefore all proceeding conducted without jurisdiction is a nullity.

    The bank  stated further  that the judge erred when he held that the appellate (GT Bank) has not disclosed a prima facie defence to the first respondent’s suit.

    The appellant is therefore seeking an order of court allowing the appeal and setting aside the judgment of the lower court made on Monday, May 18, 2015.

    The bank is also seeking an order remitting  the matter suit N0 FCT /HC/CV/939/15 to the Chief Judge of the Federal Capital Territory for transfer  to another judge of the FCT, Abuja for retrial.

    Apart from the notice of appeal, the bank is also asking for an order of the Appellate court  staying execution of the judgment  of the lower court delivered on Monday May 18, pending the  determination of its  appeal filed  at the Court of Appeal against  judgment of the lower  court.

    The bank submitted  that  the trial judge erred when he held that he has jurisdiction to determine the suit filed by the first respondent ,  Dr Edwards.

    According to the bank  Order 21, Rule 3 of the Federal Capital Territory High Court Civil Procedure Rules 2004 stated that where the defendant discloses a defence on the merit to a suit filed under undefended list Procedure, leave should be granted to the defendant to file its defence..

    The appellate’s notice of intention to defend, the bank argued, discloses a defence on the merit to the first defendant’s suit.

    It therefore stressed that the court failed to properly evaluate the affidavit evidence placed before it before reaching the conclusion that the appellate’s notice of intention to defend discloses no defence on the merit of the first respondent’s suit.

    No date has been fixed for the hearing of the applications.

    Justice Ashi, had in a judgement delivered Monday May 18, 2015, in a suit filed by Dr. Ted Isegholi Edwards  against the Central Bank of Nigeria (CBN), Mr. Jonah Otunla, the Accountant  General of the  Federation,  Ambassador Bashir Yaguda, Minister of State for Finance, GT Bank,   Anaocha Local council in Anambra State and   Incorporated  Trustees of Association of Local Government of Nigeria (ALGON) ordered GT Bank  to pay the plaintiff the sum of  N5,240,516,186.21, for debiting the Plaintiff’s account without his consent.

    The judge  who struck out all the other defendants apart from GTB bank for lack of jurisdiction and ordered the bank to pay 21 per cent interest per annum on the judgment sum of at the prevailing interest rate whichever is higher calculated from December 12, 2014 up till date of judgment as well as  post judgment interest of ten per  cent  from date of judgment until the judgment sum is liquidated.

  • Fire guts sawmill, building, bank

    Fire guts sawmill, building, bank

    FIRE yesterday swept through Oko-Baba Sawmill in Ebute-meta, Lagos Mainland; a bank and a building, destroying Properties worth millions of naira.

    Traders at the sawmill are counting their losses to the fire, which reportedly began around 2a.m.

    “I received a phone call around 3am that the market had been destroyed. I was confused. I didn’t know what to do but to see for myself. On getting there, I almost passed out. The only thing I could picture was my machines; generators and planks I just bought. Oh! God why me? How will I move on?”, said John Ezenye, who claimed to have lost equipment worth N12million.

    Ezenye said the planks he just ordered were still at the shoreline because he thought he was going to pay his supplier after yesterday’s sales.

     The cause of the fire is yet to be ascertained but some traders believed it could be the carelessness of those who sleep in the market.

    Another trader, Niyi Akinloye, said that was the second time his goods would be destroyed.

    “What else can I do than to accept my fate? I just sawed some woods yesterday (Monday) and anticipated my customers who promised to come today (yesterday). I am pained you don’t need to ask. I just hope favour comes from somewhere,” Akinloye said.

    Another trader, simply called Alhaja, said she lost her office to the fire.

    “I lost so many things. I had vital documents there. All the logs of wood I cut yesterday (Monday) got burnt. I will be depressed if I continue to count my losses,” she said.

    Secretary, Lagos Mainland Saw Millers F Ward Oye Agbujeloye praised the fire fighters saying: “I learnt that it was probably due to carelessness of some individuals who sleep in the market. I know it wasn’t deliberately destroyed because we are like a family here. This is another challenge and we must continue. I plead with the government to assist us because we also pay some dues to them. They should rescue us because some of us have employees who have families to fend for.”

    He added that four industrial generators were burnt.

    There was panic at a branch of Ecobank on Oba Ogunnusi Road, Omole, Lagos, when fire gutted its generator. The generator is outside the bank.

    A boys’ quarters at 46, Adegbola Street in Alakuko, Lagos, was also razed by fire.

    Director of the State Fire Service Rasaq Fadipe said four rooms in the boys’ quarter got damaged.

    “The fire at the boys’ quarter was due to electrical surge. Immediately we got the information, I deployed men from Alausa and Ogba to the scenes. Thank God, there was no casualty,” he said

  • Banks face liquidity crisis

    Banks face liquidity crisis

    Most Deposit Money Banks in the country are increasingly battling unprecedented credit crisis as majority of their customers have had to bear the brunt of the biting economic crunch, reports Ibrahim Apekhade Yusuf

    IF the opinion of insiders is anything to go by, it may be correct to say that the nation’s banking community is in dire financial straits. That much The Nation can authoritatively report.

    For the avoidance of doubt and confusion, a short anecdote would suffice.

    Alhaji Abubakar Muftau (not real name), a military retiree, had a fortnight ago gone to one of the new generation banks to collect his monthly pension of less than N100, 000. But on getting to his bank, he met a motley crowd, which was not unexpected anyway. But two hours later, rather than abate, the crowd seemed to be growing even larger with customers wearing long faces and shouting at the top of their voices amidst sweltering heat.

    Tired out himself, Pa Muftau raised his voice above the din as he approached the cashier to know what was amiss only to be told that the bank was temporarily out of cash.

    “Sorry sir, we’re trying to collect deposits, please bear with us,” begged the manager of the bank, Pa Muftau recalled, as he waited patiently for the whole day just to be able to collect his paltry pension.

    Just like Pa Muftau, Miss Adebimpe Adewara, and a host of others, in a chanced encounter with The Nation, shared tales of woes as they also couldn’t withdraw cash at their respective banks within Lagos metropolis and its environs.

    Our correspondent also suffered a similar experience as he was unable to cash a cheque of N120, 000 at one of the branches of a new generation bank, as the cashier had to direct him to a sister branch due to cash squeeze at the particular branch.

    The Nation gathered that there were also cases of cash squeeze in some banks outside Lagos as customers were left stranded.

    However, many of the customers were disappointed because they could not get the amounts they requested across the counter and Automated Teller Machines.

    Bank officials said some customers were making panicky cash withdrawals to make provision for their families in case of security problems after the elections.

    A bank official told our correspondent that it was a sign of liquidity problem for banks to keep giving excuses of network breakdown and employ delay tactics to force some of their customers to leave in frustration without being unable to make withdrawals.

    Crux of the matter

    It is instructive to note that the increase in the Cash Reserve Ratio of public sector deposits to 75 per cent at the twilight of last year by the apex bank was a clear indication that things are no longer at ease with the banks.

    Besides, the implementation of the Treasury Single Account; this means banks do not have access to funds belonging to the Ministries, Departments and Agencies of government, analysts have argued, caused the current liquidity crisis in the banking system.

    However, the immediate cause of the current liquidity squeeze across bank branches in the country, according to financial analyst, was largely attributed to the massive withdrawal of cash from Deposit Money Banks by politicians and their associates in preparation for the general elections.

    Investigation by The Nation revealed that several billions of naira had left the banking system between December last year and last month as different political parties spent huge amounts on their campaigns.

    Most banks, The Nation learnt, were facing serious liquidity crisis. “Huge deposits running into several billions of naira have been withdrawn for election campaigns by politicians. This has affected some of the banks. So, liquidity issue is of utmost concern right now,” a top official of a tier one bank confided in our correspondent.

    “Banks have been calling and pleading with some investors not to terminate maturing fixed-income debts as a result of liquidity problems; some bankers are also not lending not necessarily because of uncertainties in the economy, but due to lack of liquidity,” a banker added.

    The Nation further gathered that a majority of the politicians have had to resort to selling off their properties below the real values in a bid to raising funds for campaigns.

    Shedding light on the cash squeeze, Prof. Chris Onalo, a credit expert, said political spending in the run up to elections usually affected the banking system and the economy in general, citing the examples of what happened in previous polls.

    Onalo, who sits atop as Registrar/Chief Executive Officer, Institute of Credit Administration (ICA), Nigeria’s only national body for overseeing and monitoring standards, behaviour and administration of those who give, take, facilitate and manage credits in the economy, stressed that some banks are currently experiencing liquidity problems because a significant part of the huge funds leaving the banking system for election campaigns is currently held in the informal sector.

    “The adverse effect of the not-too-favourable economic conditions in the last six months and the inflationary effects of the devaluation of the naira have reduced the income of the average household; this has also led to reduction in household savings. So, it will be difficult for banks to be very liquid in the face of all these factors. Some banks may be more liquid than the others.”

    While attempting a prognosis of the prevailing economic crunch in most banks, Dr. Luka Marne, a senior management staff with First Bank of Nigeria Plc, said the current situation shares a verisimilitude with what happened in 2008 when there was recession in the banking sector in the country.

    Marne, who spoke at a public forum in Lagos, organised by the ICA recently, said: “There is recession now in Nigeria, I hope you know. Most of you that are eating with two hands, you must plan to save. Some of these states that are not paying salaries if banks have extended loans to some of their staff those loans would have gone bad already because they can’t pay.”

    The senior banker, while further buttressing his point, recalled: “One of the governors, Benue State governor, when he became the governor, reviewed the salary of the civil servants by up to 50 per cent. You know because then there was a boom in the economy. We had oil, and the share of the excess crude oil account was quite substantial. Now the price of crude oil has come down by almost 50 per cent as at last week, it was about $53 or thereabouts. He wanted to reduce the salary but labour said he could not do that. Now he is having crisis. For the last six months he has not paid salaries.

    “If majority of the banks had borrowed these state governments money, you can imagine the level of cash crunch we would be talking about now.”

    Waxing philosophical, he said we must apply the wisdom of the biblical Joseph. “You will recall the story of Egypt, who interpreted the dream of seven years of abundance and seven years of famine.

    “You need a man of wisdom. It’s a difficult time, so we need to plan, especially now that we are not generating much as a country as we were generating before.

    “The country is not as buoyant as it used to be. Our foreign reserve is fast depleting. Even if Jonathan had won this election, how is he going to run the economy?” he lamented.

    Like Marne, Mr. Godfrey Ozurumba, a top banker in one of the old generation banks, is appalled that things are looking topsy-turvy in the nation’s banking landscape right now.

    “These days, most people who take loans from banks have the mindset that they’re collecting their share of the national cake, hence they don’t need to pay back, but that is a misconception.”

    Those saddled with the management of credit in the banks, Ozurumba stressed, “should be very careful the way they manage people’s deposits.”

    To him, the preponderance of bad debts in the banking system led to the establishment of the Assets Management Corporation of Nigeria (AMCON).

    “It is because of the wrong management of credit that made the AMCON come into in 2010 and took away all the bad debts and toxic assets to make some of them come alive again.”

    Ripple effect of credit crunch

    Sadly, one of the dire consequences of the cash crunch, The Nation gathered, is that a number of foreign banks have started suspending short and medium-term credit lines to their Nigerian counterparts as falling crude oil prices continue to fuel exchange rate volatility and uncertainties in the economy.

    This is coming just as several Nigerian lenders are said to be seeking extension on the settlement of their debt obligations to the foreign banks.

    Top bankers told our correspondent that the overseas banks had been expressing deep concerns about the ability of Nigerian banks to continue to meet up with all their foreign currency denominated credit lines, especially maturing Letters of Credit, as the external reserves continued to be depleted due to falling oil revenue.

    The situation has been further worsened by speculations over the possible devaluation of the naira after the February elections

    This, according to banking sources, has made some of the foreign banks to suspend credit lines to some Nigerian banks.

    It was further learnt that the Central Bank of Nigeria’s regulations aimed at curbing speculative attack on the naira had led to some delays in accessing foreign currencies by the banks.

    Analysts, however, recalled that foreign banks had suspended credit lines to Nigerian banks during the global financial crisis of 2008 and 2009.

    They said the foreign banks were fond of doing so whenever they sensed that a crisis would come.

    Blessed assurance by CBN

    However, addressing the issue of delay in accessing forex to fund LCs at an interactive session with the business community in Lagos last month, the CBN Governor, Mr. Godwin Emefiele, said there was no reason to panic over the state of the economy.

    He said the CBN had recently introduced some measures into the foreign exchange market in order to curb speculative attack on the naira, adding that the volume of demand for forex being witnessed lately was abnormal.

    The governor, however, urged the representatives of the foreign banks present at the event to continue their business with Nigerian banks as usual, assuring them that the CBN would provide enough forex for the banks to meet their obligations.

    He also said there was no reason to panic over the challenges facing Nigeria and other commodity exporting countries.

    Emefiele said, “Nothing bad will happen in Nigeria. We know the large volumes of obligations that are in the foreign banks; so, we will try as much as possible to give comfort. The demand for foreign exchange that I am seeing now is more than the demand we would normally see; it means something abnormal is happening.

    “This is what we are checking at the forex markets. I want to urge Deutsche Bank, Stanbic IBTC, Citibank, Standard Chartered and others to renew their credit lines. There is no cause to worry.

    Earlier in the conference, a representative of Deutsche Bank in Nigeria had complained that banks in the country were extending their obligations by 30 and 60 days as a result of delays in getting dollars from the CBN, among other factors.

    Reporting the development to the CBN governor, the Deutsche Bank representative said, “I want to bring something to your attention, which is credit; and it is tied to a trend due to your pronouncement in November. In the last three days, I have had requests from Nigerian banks, which are not meeting their obligations that have matured, and they are requesting extension of 30 days and 60 days.

    “I am not panicking just as you have asked us not to panic. I have, however, reassured banks all over the world where Letters of Credit are due to be paid. I believe that they will pay the refinancing.”

    Meanwhile, domestic investments in the Nigerian Stock Exchange have recorded a substantial decline due to fears and uncertainties regarding the 2015 general elections, as well as concerns about insecurity.

    The latest investment details from the NSE showed that local investments dropped by N40.1bn at the end of February 2015.

    As of January this year, the total investments by domestic investors stood at N90.61bn.

    The document obtained from the NSE on Friday, however, indicated this amount dropped by N40.1bn or 44 per cent to N50.24bn as of the end of last month.

    On the other hand, statistics showed that foreign investments rose in the period under review, as a total of N133.95bn was invested by foreigners in February 2015.

    The NSE document said, “Domestic investors conceded about 45.22 per cent of trading to foreign investors as domestic transactions decreased from 47.76 per cent to 27.39 per cent while FPI transactions increased from 52.24 per cent to 72.61 per cent over the same period.

    The Managing Director and Chief Executive Officer, Cowry Asset Management Limited, Mr. Johnson Chukwu, said that factors leading to the decline in local investments were both external and internal, adding the trend was likely to continue until the second  quarter of 2015.

  • Bank chief urges bankers on integrity

    Chartered Institute of Bankers of Nigeria (CIBN) president, Mrs. ‘Debola Osibogun has advised bankers on the need to embrace integrity and best practices in the course of their duties.

    Speaking at the CIBN Graduates Induction and Prize Awards Day held in Lagos, she said bankers would always abide by the CIBN code that condemns gratification and bribery among other unwholesome practices in banking. “I wish to remind you of some of the things contained in the Code of Conduct in the Nigerian Banking Industry recently approved by the Bankers Committee.

    You must endeavour to avoid these if only to ensure that you become the heroes and heroines of your chosen profession.  You must avoid engaging in any ventures of which there are clear issues of conflict of interest; abusing the trust reposed in you or your office; misusing official information in the course of your professional career; offering and or accepting gratification or bribe,” she said.

    Osibogun said the induction remains a symbolic reminder of the core mandate of the Institute which is to admit student members who have passed the prescribed examinations and fulfilled all other conditions set by the Governing Council into Associateship (ACIB); admit students into the Associateship of the Institute among others.

    She said this year’s induction sees a record high number of 993 student members who have all successfully completed the qualifying examinations of the Institute. “This number is the highest in the history of the Institute and it comprises of the following; 162 for Associateship, nine for Chartered MBA, four for Treasurers’ Dealership Certificate, 795 for Micro-finance Certification Programme, and, 23 for Certificate in Banking,” she said.

    She congratulated the bankers describing the achievement in completing an extremely demanding, rigorous and tough professional programmes. “Not only is today, a deserved testament to your hard work, your discipline and your commitment, it also represents a major milestone in your lives. It is equally a time for celebration as you mark both the end and beginning of exciting parts of your lives and an occasion on which to look forward to the opportunities available to you as Chartered Bankers, Certified Treasury Dealers and Microfinance Certified Bankers.

    I wish you all the best as you start the next adventure of your lives and hope that this accomplishment opens many doors of opportunity and helps you to realize your personal and professional ambitions,: she said.

    “In today’s dynamic business environment achieving such professional qualifications, demonstrate commitment to professionalism which is an important differentiator in the competitive market place. As bankers there are so much you can do to bring fresh lease of life to the banking & finance sector and businesses in both the private and public sectors. This implies that the economic potential of our country is not limited by your visions and the dreams of the future. I therefore urge you to always “shoot for the moon, even if you miss it you will land among the stars,” she added.