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CBN Sacks Five Bank CEOs, Injects N400b

Akingbola forewarns directors of pending sack
By Ijeoma Nwogwugwu, 08.14.2009

The Central Bank of Nigeria has moved to inject N400 billion into five banks in the country following the decision to remove the CEOs and executive directors of the affected banks. The affected institutions are Intercontinental Bank Plc, Union Bank of Nigeria Plc, Oceanic International Bank Plc, Finbank Plc and Afribank Plc. The CEOs that have been sacked by the CBN are Erastus Akingbola (Intercontinental Bank); Okey Nwosu (Finbank); Sebastian Adigwe (Afribank); Mrs Cecelia Ibru (Oceanic Bank); and Bartholomew Ebong (Union Bank). But in a pre-emptive move, Erastus Akingbola, MD/CEO of Intercontinental Bank who got wind of his impending removal called his executive directors to inform them of their certain sack by the CBN. Akingbola was said to have rushed to Ota yesterday to elicit the support of former President Olusegun Obasanjo to intervene on his behalf and call President Umaru YarAdua to stop the CBN from carrying out the sack. However, the CBN governor, Sanusi Lamido Sanusi, who made this decision known this morning at the Emergency Bankers Committee convened by the CBN in Lagos, explained exclusively to THISDAY that the decision was being taken to safeguard the financial sector from systemic collapse. He said following the audit exercise conducted by CBNs examiners it was discovered that five of the banks had accumulated margin loans of N500 billion, among other loans, that had gone bad and eroded their shareholders funds. Some of these banks are quite large institutions and they have been mismanaged, so we had to move in to send a strong signal that such recklessness on the part of bank executives will no longer be tolerated. He said the CBN had obtained the approval of the President to inject N400 billion into the affected banks to shore up their tier 2 capital to minimum acceptable levels. Sanusi added that the funds being injected by the CBN was just temporary and does not translate to the government taking a stake in the five banks, as the interim management will be given a period to recapitalise the affected institutions, following which the N400 billion will be paid back to the CBN. On how the CBN will prevent a run on the banks and create panic in the economy, Sanusi said the CBN intends to make it clear that the money being injected by the reserve bank as well as the decision to guarantee interbank placement should allay depositors concerns. The CBN, he stated, stands ready to ensure that no bank collapses in the country, but will encourage them to seek for funds to raise fresh capital and merge with stronger banks. He said an interim management and board for the affected banks will be put in place to run the institutions until they are taken over by new management teams and owners. For more details on the state of the five banks under the CBN hammer, get a copy of THISDAY, the Satuday Paper tomorrow