We believe that the CBN is aware of the possible negative implication of these actionsand has gradually put measures in place to curb the effect. The measures include:
Introduction of guarantee for interbank takings in early July:
This willhelp to boost liquidity, clear trading uncertainty and eventually bring down thecost of funds.
Injection of fresh capital to the affected banks:
This is to allow the bankscontinue normal operation without loosing market share due to capitalinadequacy or a perceived loss of confidence.
Making cash available in all branches of CBN
to meet all withdrawalrequests, honouring all cheques issued on funded accounts and asking Stateand MDAs to leave deposits unmoved. By this action, the CBN envisaged thatthere may be depositor flight to safety. Again, these provisions are meant toaccommodate a possible run on the banks.
Soliciting the support of security agents in the recovery efforts ofdelinquent debtors:
This is another measure aimed at assuring depositorsand investors of the safety of their monies. By enhancing the debt recoverydrive of the banks, the Federal Government is keeping to its promise of notallowing any bank to fail. The recovery of the debts will boost the banks’liquidity and ultimately, profitability.
Appointment of a new Deputy Governor in charge of FinancialSurveillance Services:
The appointment of Dr. Kingsley Moghalu, a riskmanagement specialist based in Switzerland as the new Deputy Governor(Financial Surveillance Services) will add more teeth to the ongoing reformand strengthening of the regulatory capacity of the CBN. With his wideexperience in Nigeria and abroad, Moghalu will be able to ensure theimplementation of proper risk management policies and full disclosure bybanks.
Evident collaboration with NSE and SEC
to guard against adverse tradingof these (listed) banks’ shares. Public statements by the CBN have revealedsupport for the defensive actions taken by Capital Market authorities insuspending price movement and trading in the stock of the banks.In the final analysis, we believe the measures are adequate to cushion whatevernegative impact this action might have on the monetary system. The CBN hasquite boldly moved to assure that depositors’ monies remain safe. When the dustsettles, we are of the opinion that the pre-emptive actions will be correctlylauded. We also feel that in the short-to-medium term, the new managers will beable to turn around these significantly-sized banking firms and aid the CBN’s