Sanusi Lamido Sanusi understood the Nigerian psychology particularly their love to bay for blood. After alerting bank customers that banks were about to collapse and that they would lose their monies if nothing was urgently done, he ordered a stress test on banks. In the end, some bank CEOs were pronounced guilty of stealing depositors’ funds.
This was at a time of global financial crisis. Our stock market had crashed, and Nigerians were genuinely worried about their deposits in banks. Overnight, he became a cult hero of sorts, dealt with the banks as he pleased, and in the end, demonising the system he inherited.
Here is what a respected columnist in one of the nation’s leading daily newspapers wrote at the time: “But towards the end of Soludo’s tenure, rot and lethargy had set in, and horrible insider abuses held sway. Owners, directors, managers and operatives of banks started looting depositors’ funds unchecked.
When Malam Sanusi Lamido Sanusi arrived in June 2009 as the new CBN Governor, he showcased exploits of a two-edged sword. Coming from risk management background, he sacked a number of errant bank executives. He separated some banks from their founders who committed some of the most monumental acts of thievery on record at that time.
To save the banks from collapse he supported them with public funds and later sold them to new investors. But he also set up the Asset Management Corporation of Nigeria, (AMCON), to arrest the incidence of non-performing loans in our banks. In other words, he was able to provide the cure to the disease that had set into the banking industry under Soludo…”
How did this columnist come to this conclusion? Based on what Sanusi’s CBN said? Which Editor or Financial Journalist can stand up to say he/she saw the comprehensive report of the audit on banks as we did with the 13-page report of Financial Reporting Council on CBN’s 2012 Accounts? Where in the world (except in Sanusi’s CBN) do you do an external audit of a bank or quoted company and there is no audit query to respond to the examiner’s findings?
The attention of Nigerians should be drawn to a statement credited to the suspended CBN Governor, on November 6, 2009, at the Annual Bankers’ Dinner where he stated that there was no crisis in the nation’s banks since they were still all performing their obligations to customers. He further stated that it was the sacked bank CEOs that were in crisis.
Hard-hitting Renaissance Professionals, the combative group that took on Sanusi had reminded Nigerians that the CBN under Sanusi moved against the eight banks it took over “on the basis of a financial stress test which it claimed to have carried out which showed that these banks were in a bad shape and would collapse if the CBN did not take over their management. The CBN did not make the result of this stress test public. The stress test was carried out by CBN-appointed examiners. No independent review of this stress test was done. What Nigerians know about this stress test and the result is what the CBN has told the public. The public has believed what the CBN says because it is assumed to be true.
However, the public should also note that the former CBN Governor, Professor Chukwuma Soludo recently wrote an extensive article and while defending his tenure in office, said that before he left office, he conducted a similar stress test on the banking system and the result showed that 65% of the banks in the system had a “satisfactory” rating. He said he stood by the result of this initial stress test of the Nigerian banking industry. We leave it to the public to decide who they want to believe, the current or former CBN Governor.”
They wrote the above piece in 2011.
In fact, on March 30, 2009, then CBN Governor, Professor Soludo gathered captains of industry, media owners and editors, and Bank CEOs, including Sanusi, then First Bank chief executive officer at Eko Hotels, and presented the picture of the nation’s banking industry, problem resolution plans, etc, but urged caution and restraint especially on the part of the media because of the sensitive nature of the industry.
The speech was significant because it was delivered at a time of intense global financial crisis. As the CBN governor at the time of the speech, it was important that he clarified how vulnerable Nigerian banks were to the emerging crisis.
In his speech, Soludo laid bare his evaluation of how exposed Nigerian banks were to the global economic crisis and what the CBN, under him was doing to counter it.
First, he emphasized the fact that “Nigeria cannot afford a bank crisis”. His reason was simple: “The non-deficit part of the FGN budget in 2009 is less than banks’ capital; hence the totality of FGN budget cannot recapitalize the banks if the system should collapse. With the drying up of global finance, and non-bank investing public still nascent, the scope for funding any bank bailout in Nigeria was slim— except by ‘printing money’!”
That was Soludo’s conclusion.
But Soludo did not deny that the Nigerian banking system was under pressure. He however listed the different measures that the CBN under him was taking to ensure that the global banking crisis did not affect Nigerian banks.
But just three months down the line, Sanusi came into office and clamped down on “eight bad Bank CEOs” and Nigerians clapped for him.
In his petition to President Goodluck Jonathan, as published in the media, the former chief executive officer of the defunct Intercontinental Bank Plc, Erastus Akingbola stated that “till today no report of the examination has been made available to me, the management, or the Board of the bank. We had no opportunity to learn how the CBN came to its decision, nor were we given an opportunity to respond to the examination report, as is the usual process.”
Akingbola made further allegation concerning how Intercontinental Bank after his removal wrote off a loans to the tune of N8.115 billion, in a bank that they were meant to be rescuing. He also alleged that the banks CBN, under Sanusi took over are yet to receive any examination report from the CBN to show areas of deficiency, and therefore requested that the allegations against him and other bank CEOs should be independently investigated because it is curious “to first send off all management staff before accusing them of wrong doing.”
In the light of the disputable actions during his tenure; his statements with respect to unremitted NNPC’s revenues, and the alleged sleaze in CBN under his tenure, isn’t it time to subject his stress test of banks in 2009 to proper scrutiny?
• Barrister Ehigiator is a Public Affairs Analyst
