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Tuesday, August 18, 2009

Panic withdrawals hit Nigerian banks


It's a mad rush for cash
It's a mad rush for cash
By Lanre Oyetade, Akin Adewakun and Odidison Omankhanlen

Sequel to the sack of the managing directors and executive directors of five banks by the Central Bank of Nigeria (CBN) at the weekend, both the affected banks and those yet to be audited have been hit with massive panic withdrawals by depositors.

Investigations carried out by the Nigerian Tribune revealed that no sooner had a local radio station, which pre-empted the CBN, reported the sack than depositors besieged the various banks for withdrawals, with the various automated teller machines (ATMs) becoming the first casualties.

All the banks visited on Friday afternoon recorded huge presence of customers who had gone with the sole aim of making withdrawals.

According to a lady who identified herself simply as Mrs. Jimoh, though her bank was not one of those that had been audited, she had lost hope in the banking system.

This latest development is against the assurances from the CBN governor, Mallam Sanusi Lamido Sanusi, and the newly appointed managing directors that the banks were safe and sound.

In removing the former CEOs, Sanusi had maintained that the apex bank’s decision was in the interest of the depositors and other stakeholders of the affected banks, stressing that the full information before him showed that the banking system was safe and sound.

He had reiterated that the action was to ensure public confidence in the banking system and engender public confidence in the sector, adding that the CBN would not allow any bank to fail.

“Let me reassure especially the customers of the affected banks and all the banks in general that there is no cause for alarm. They should continue to transact their normal businesses in the banks where their accounts are domiciled as this exercise is meant to further strengthen the banking industry and recapitalise the affected banks,” he said.

However, much against this assurance, many depositors were overheard saying that they would make more withdrawals as soon as the banks – especially the affected ones – opened their doors for business today (Monday).

This is on the heels of speculations in certain quarters that the CBN governor was pursuing a northern agenda, while some quarters also called for a sack of the auditing firms connected with the affected banks.

The new Group Managing Director/Chief Executive of Union Bank of Nigeria Plc, Mrs. Funke Osibodu, resumed office at the weekend with assurances to all stakeholders, especially customers that the bank would not compromise their interests and expectations, and stressed the need for them to remain steadfast with the bank.

She stated, “The change is to create a strong enabling environment for growth of the bank while enhancing several of the transformation going on within the bank. As with all changes, there will be questions and fears by all stakeholders. You have my assurances that the change and the additional funding will positively enhance the bank”.

Meanwhile, mixed reactions have continued to trail the decision of the Central Bank to sack the five bank chief executives.

While some described the action as long overdue, since most of the affected bank chiefs should have thrown in the towel before the sack, others argued that if not well-handled it might whittle down whatever public confidence that was left in the sector, especially when viewed against the fact that the sector was recently jolted by the report from a foreign publication, giving four out of the whole lot a clean bill of health.

Speaking with the Nigerian Tribune on the latest development, a former chairman of the Lagos Branch of the Chartered Institute of Bankers of Nigeria, Mr. Wale Adeyemi, argued that the apex regulatory body should have devised a better means of carrying out the operation. He argued that CBN should have allowed for a succession plan, instead of just wielding the big stick.

“There is nothing wrong in the apex bank giving the affected bank chiefs some time to be able to actually find a suitable successor instead of just coming out of the blue to take this type of action,” he stated.

Describing the action as tantamount to rubbishing the profession, the former Lagos CIBN boss, argued that if not well-handled the action could erode the public confidence in the nation’s financial institutions, adding, “considering the fact that those involved are thorough professionals, the action is capable of sending the wrong signals to the investors as well as the customers of those banks. It is definitely not good for the profession. People like Akingbola should not be treated anyhow.

But another banker with one of the nation’s top banks in Lagos , who pleaded anonymity, argued that the exercise was long overdue. According to him, it was glaring that some of the nation’s financial institution’s helmsmen were actually manipulating figures.

“What we were seeing was expansion without a solid capital base and all these malpractices must be stopped to forestall crisis. It shows that the CBN governor is actually serious in sanitising the industry. We might actually witness another round of consolidation, at the end of which we may not have more than ten banks,” he stated.

He argued that the provision of N400billion for the affected banks by the apex bank was a way of cushioning the effect of a possible invasion of the affected banks, arguing, “it would go a long way towards dousing tension if customers promptly get their funds on demand.”


Source: Nigerian Tribune

1 comment:

Frost said...

Xanax is known to be an FDA (Food and Drugs Administration) approved medicine for treating panic disorder, generalized anxiety disorder, anxiety related to depression et al and further details on Xanax info make it apparent that xanax is meant for short term treatment of anxiety.

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