The Banking Sector's "Dirty Five" (i) [opinion]

On Friday last week, the Central Bank of Nigeria (CBN) wielded the big stick on the riotous banking industry. Five CEOs - and their executive directors -were sacked from office in one fell swoop with immediate effect and 'automatic alacrity'! The bank chief executives affected were Afribank's Sebastian Adigwe, Finbank's Okey Nwosu, Intercontinental's Erastus Akingbola, Oceanic's Cecilia Ibru and Union's Bartholomew Ebong. It was only a shocker because the number of sacked directors was unprecedented in the nation's history. When the same measure was adopted by the apex bank in the recent past, it involved just one bank at a time -Wema and Springbank -and only the CEOs lost their plum jobs. The draconian punishment was predictable and predicted. In my piece titled "CBN Rate Cut: Matters Arising" (30/7/09), I had canvassed the view that rather than giving an open cheque to erring banks to wallow in their cesspools through the operation of a CBN-guaranteed interbank funds market, it was better for the apex bank to disclose the distressed banks and either cull them from the pack (to prevent them from destabilizing the entire financial system, just as rotten apples spoil good ones when kept together), or take appropriate remedial measures to prevent them from going under.

I was unusually alarmed when notable commentators started making the vacuous argument -based on a widely-circulated document of dubious authorship and intent -that the CBN had no power to sack members of a bank executive management. They even went to the ludicrous extent of accusing the apex bank of compelling banks to "needlessly" make "unreasonable" anticipatory loss provisions that were likely to impair their capital adequacy ratios. My immediate response was to construct a piece titled "CBN Bank Audit: Myths, Blackmail and Realities." In the essay -which was slated to be published today but for the fact that it has been overtaken by the CBN's action on Friday -I quoted relevant portions of the amended Banks and Other Financial Institutions (BOFI) Act (along with established precedents) to prove that the apex bank would not be acting ultra vires if it embarked on its rumored course of action. For crying out aloud, if the governing council of a university cannot expel students who flouted the relevant rules, who else can -the Parent-Teacher Association? The Media?

I have it on good authority that some of the sacked CEOs are planning to sue the CBN in order to "protect their good names and reputation." Yeah, right! You clearly can fool some people all of the time and all the people some of the time, but you can never fool all the people all of the time. The game of deceit and hypocrisy is over. I dare say it was a jolly good ride for some of them while the jamboree lasted. It goes without saying that some of them would immediately move to assume full control of companies they had set up whilst still in office. Meanwhile, depositors would be saddled with the stressful act of mulling over the safety of their funds. If it were up to me, some of them should be having intensive "chats" with EFCC officials right now. Nothing I've said so far, however, should be misconstrued to mean that I'm in support of denying the affected individuals the fundamental rights guaranteed them by the Constitution. To the contrary, I advise them to seek legal redress (although the CBN won't be enamored with such a move because it simply prolongs the agony for depositors, creditors and the financial system) because it is the only way our justice system can be deepened by establishing jurisprudential precedents. I would, however, plead with judges to avoid being financially induced to grant all manner of frivolous and time-wasting injunctions and adjournments.

I don't have much to say about Afribank and Finbank because they haven't created the same impact on the financial system that Intercontinental, Oceanic and Union have done. Mrs. Ibru's case is clearly pathetic because she practically transformed Oceanic from a mom-and-pop outfit to an international banking institution. Nobody gave the bank a prayer during the consolidation exercise. There was a time when Union Bank -big, strong, reliable -bestrode the banking industry like a colossus, even outperforming its primary competitor, First Bank. That such a first-generation bank with unparalleled access to large pools of very cheap deposits from a huge customer base should be counted among the "Dirty Five" speaks volumes about the incompetence of the sacked CEO. As for Mr. Akingbola, I feel a righteous anger and deep pain in my heart. I was the pioneer AGM/DGM (Banking) and had a crop of the brightest young minds working under me: Godson Echegile and Tony Iwobi in Treasury, Pat Onyekweli in Intercontinental Securities, Pat Ikomi in Foreign Exchange, Funsho Fatobi in Corporate Finance and Eric Balogun in Corporate Banking.

Together we achieved uncommon goals. It is a mark of Akingbola's small-mindedness that the names and laudable contributions of this pioneering team that risked so much in opting for the "Intercontinental Dream" (professional colleagues and well-wishers alike warned us that eaglet banks like Intercontinental had no future!) have been completely obliterated from the bank's records and history. Mr. Akingbola also deserves my strong condemnation because he is the sitting president of the respectable Nigerian Chartered Institute of Bankers (NCIB). The only time when such a shame befell the umbrella bankers' organization was in the early 90s during the tenure of Femi Adekanye and Raph Osayameh, president and vice-president respectively, and both NCIB fellows just like Akingbola. Commerce Bank which the duo administered as MD/CEO and deputy MD was numbered among the failed banks. It goes without saying that the NCIB really needs to take a hard look at itself in the mirror and adopt measures designed to preclude such embarrassing outcomes.

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