Central Bank of Nigeria on Thursday said it would soon issue guidelines on margin lending to prevent the kind of reckless lending that contributed significantly to the crisis in the Nigerian banking sector.
The CBN Governor, Mr Lamido Sanusi, said, during a news conference that the sector entered a crisis situation, partly because the CBN, as the regulator, lacked both the capacity and will to supervise the banks.
Banks lost about N1m after the stock market bubble, fuelled by a lending spree to stockbrokers, bank subsidiaries and individuals for stock purchases, burst in 2008.
Citing examples of regulatory lapses, Sanusi said there had been no guideline on margin trading, adding that “for instance, the Financial Sector Regulatory Committee did not meet for three years and no one talked.
He observed that the major issues in sector centred around corporate governance, saying banks were controlled by their chief executive officers rather than the boards.
He said, there was no risk management framework, and there was lack of investor/consumer sophistication. People were buying bank’ stocks without knowing the reasons for doing so.
He added, when you have someone responsible for financial system stability or surveillance, who has never worked in a bank, it is difficult to expect him to now what makes the banks run.
Sanusi noted that the reforms in the sector were based on four pillars enhancing that quality of banks ensuring financial stability, ensuring good financial sector evolution and putting in place a system to ensure that the financial sector continued to contribute to the economy.
He said the financial market division of the CBN had been strengthened,adding that the apex bank was also working closely with the Ministry of Finance to ensure stability.
The CBN governor said the Asset Management Company, expected to take toxic assets off banks balance sheets, would take off with N1m when the bill was passed.
In his speech, the Minister of State for Finance, Mr Remi Babalola, said to initiate the kind of reforms embarked upon by the CBN governor required an unusual boldness and the kind of political zeal you don’t find in environments like this.
He also disclosed that the Nigerian Deposit Insurance Corporation had alerted the Ministry of Finance of developments in the banking sector before the recent crisis.
The NDIC wrote to us to tell us that there were serious issues in the banking industry. They named specific banks and talked about the proportion of loan book in the capital market, he said, adding that in circumstances like this, discussions were stalled because the other regulator would not agree with the others position.
He, however, expressed the ministry’s full support for the banking reforms, saying that, we are committed to higher regulatory and supervisory standards in all segments of the financial services industry.
Our overall focus is economy. We will collaborate with the CBN to fast track the establishment of the AMC and ensure that we safeguard the banks.
We will give the CBN that governmental support it needs at any point in time without jeopardising confidence in the system. On his part, Acting Managing Director/Chief Executive Officer, NDIC, Alhaji Umaru Ibrahim said 89 NDIC examiners, in addition to those CBN, were currently in the 24 banks to re-ascertain the financials of the banks.
He also said the corporation had already set in motion, the process of reviewing its act to accommodate provisions that would enhance its effectiveness.
Farmer Cries Out Over Cattle Invasion
A farmer in Aluu Community in Ikwerre Local Government Area of Rivers State, Mr Nwo Nna, has cried out over cattle invasion of his farmland and crops.
Nna made this known in a chat with newsmen in Aluu recently.
He said that the most worrisome aspect of the development was the neglect by the herders of the Anti-Grazing Law passed by the Rivers State House of Assembly.
The farmer who discribed such as vexatious and provocative, appealed for intervention by relevant agencies in order to secure their future.
“I got to my farm on Saturday morning only to see my vegetables, cassava, yam and the entire farm devastated by cows”, he said.
He expressed regrets that his farm, which was not at the road had experienced such attack for the second time.
The farmer noted that it would have been a different ball game, if he had met the herders in his farm.
“The saving grace was that I did not meet them. They should be called to order to avoid problems”, he said.
He also sought for urgent intervention of the Rivers State Government, Myyetti Allah and other relevant authorities to warn the herders to keep off people’s farms in the interest of peace.
The farmer further explained that it was becoming a regular practice for herders to parade their cows along the roads, and such cows stray into farm lands and destroy people’s means of livelihood.
While declaring that Rivers people are hospitable, the farmer warned stranger elements, who do not have respect for the laws of the land as well as terrorise other people’s means of livelihood, to take their lawlessness elsewhere.
Other farmers who also responded called for the establishment of a system that monitors the activities of herders.
According to them, it will enable those who take their cows into farms to be identified and adequately sanctioned in the event of any invasion by the cows.
This, they said will bring a lasting peace and as well serve as a deterrent to others.
By: King Onunwor
EFCC Blames Frauds In Banking Sector On Insiders
The Economic and Financial Crimes Commission last Wednesday said most frauds in the banking sector were perpetrated by insider Information, Communication Technology employees.
Head, Cybercrime Section of the EFCC, Abbah Sambo, made the declaration at a national seminar on Banking and Allied Matters for judges in Abuja recently.
Sambo, who represented the EFCC Chairman, Mr Abdulrasheed Bawa, at the seminar, said that most banking sector frauds handled by the commission showed that bank employees aided the acts.
He also expressed regrets at the increasing rate of cybercrime in spite of efforts by the commission to tackle it.
Sambo observed that in years past, young people involved in cybercrime were not ICT savvy, but today, it was ICT graduates that are the champions in perpetrating the crime.
He attributed the increase in cybercrime to moral decadence and peer group influence.
“The rate at which young men are perpetrating cybercrime is seriously alarming.
“When we arrest these criminals, one major reason they give for going into the crime is peer influence.Their friends are into it and they want to run with guys that drive the best cars and have the best girls in town”, he said.
He hinted that most times when the criminals were arrested, a lot of assets on them, are registered in the names of their parents.
“Cars in the names of their mothers and houses in the names of their fathers. There is a fundamental issue relating to decay in moral coverage in the society,’’ he said.
Sambo said that the greatest challenge in fighting cybercrime was the knowledge gap, and noted that the criminals were getting more sophisticated.
According to him, the criminals had the ability to talk to one another seamlessly by sharing knowledge, unlike law enforcement agencies.
“A lot of the people trying to combat the crime in the field tend to lack the drive because they do not have adequate training,’’ he said.
He stressed the need for adequate sensitisation and engagement with youths, especially from secondary school level to let them know the ills of crime.
The two-day seminar was organised by the Chartered Institute of Bankers of Nigeria in collaboration with the National Judicial Institution.
SEC Frowns At Resurgence Of Ponzi Schemes
The Securities and Exchange Commission has frowned upon the resurgence of Ponzi schemes and illegal fund managers in the country’s financial sector.
The Director-General of SEC, Mr Lamido Yuguda, made the observation of the development at an enlightenment workshop with the staff of the Federal Ministry of Finance, Budget and National Planning on in Abuja over the week.
Yuguda said that the unlawful schemes had continued to enjoy massive patronage of the populace and remained a source of concern for regulators in the financial sector.
According to him, the commission was poised to continue to apply measures and seek the cooperation of relevant stakeholders toward combating the activities of these Ponzi schemes.
He expressed regrets that the upsurge of the schemes had undermined the reputation of the financial markets and dampened investors’ confidence, among other things.
“SEC firmly believes that the country’s capital market can attain its potential if market operators and participants contribute their respective quotas to the growth”, he said.
He also explained that SEC was committed to always ensure and maintain an environment that was enabled by the appropriate regulatory framework, timely and affordable access to market.
“The commission is also committed to zero tolerance for infractions, heightened investor confidence and awareness, innovative product development and good governance practice”, he said
“There is the need to restore investor confidence and improve the participation of retail investors in the market.
He further pointed out that the demography of investors in the country’s capital market showed that the young population do not participate in the capital market, and only a few Nigerians invested in the capital market.
The situation, he said, created a huge challenge to the market growth and the commission and added that it was striving to change the narratives by instilling a fair, transparent and orderly market.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, represented by Mr Stephen Okon, Director Home Finance, urged investors to take advantage of the various initiatives in the market.
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