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…As Nigerians decry ‘A Bold New Beginning’ advert by Polaris Bank

At a time Nigerians are upbeat that the Nigeria Deposit Insurance Corporation (NDIC) and the Central Bank of Nigeria (CBN), through which the N640bn (about $7bn) bailout was lavishly given out to nine banks during the 2006 to 2008 banking shakeups will lead the process of the recovery, on Friday last week, both federal agencies dashed away another N786bn to one bank alone; Skye, withdrew its license and hurriedly created Polaris Bank as its receiving bridge bank.
However, several Nigerians who recalled that the so called bridge (Polaris) bank breathing on the N786bn (Nigerian commonwealth) injection by NDIC and CBN is placing frivolous advert on dailies saying “A Bold New Beginning,” is an indication of swallowing the money just like what it did between 2016 and date when the same CBN chased out the management, appointed its choice manager and laced their performance with N100bn. The N100bn is not yet repaid even before the latest N786bn making it N886bn commonwealth of Nigerians donated to only one bank.
To many analysts, Polaris Bank may be banking on the way and manner CBN and the same NDIC did not border recovering the N640bn after all.
While announcing the revocation of Skye Bank’s licence on Friday in Abuja, CBN Governor, Mr. Godwin Emefiele was quick to reveal that a bridge bank known as Polaris Bank, created by the Nigeria Deposit Insurance Corporation (NDIC) has assumed the assets and liabilities of Skye Bank.
According to him, “The bridge bank will inject N786bn to recapitalise the bank and return it to stability and profitability before selling to interested investors”.
Reactions of industry analysts who spoke to Business Hilights Abuja Bureau chief shortly after the revocation announcement were mixed as many traced the development to the over-bearing negative influence of nonperforming loans (NPL).
An issue of national economic importance now is that a total of N1.426tn (N640bn plus N786bn) of Nigerian commonwealth are in the hands of few banks without any clear recovery timelines.
Business Hilights recalls that the embattled chairman of the Special Presidential Panel on Recovery of Government Assets and Properties’ (SPPRGAP), Mr. Okoi Obono-Obla had earlier in the month, announced government’s ongoing investigations and plans to recover all bailout funds given to stressed banks in the wake of banking reforms during the time current Emir of Kano, Mallam Sanusi Lamido Sanusi was governor of the apex bank.
Checks on the affected banks’ annual reports on the bailout (N640bn) show that the bailouts never appeared in their yearly annual reports, a sign of fraud-driven complacency.
Obono-Obla had made it clear that the banks had yet to refund the money over a decade after, stressing that the N640bn (about $7bn) bailout fund was not a gift to the commercial banks and so must be recovered and returned to government’s coffers.
However, in a swift, the Federal Government has dropped Mr Okoi Obono-Obla as the Chairman, Special Investigation Panel on recovery of Public Property on grounds of flagrant granting of media interviews on critical issues on the eve of election.
The announcement was made by Mr Salihu Isah, Special Adviser, Media and Publicity to the Minister of Justice, Mr Abubakar Malami.
He said that Obono-Obla was directed to stop carrying out operations as head of the panel and that the directive which was issued in a letter addressed to the panel’s chairman was signed by Malami.
According to Isah, the decision to release Obono-Obla of the position was based on the grounds that his recent actions were contrary to the enabling act that established the panel.
It was not clear whether the removal will end the planned recovery process of the bailout funds for banks between 2006 and 2008.
Obono-Obla had revealed that “We are currently doing a lot of investigations to recover monies that have been taken away from the people of Nigeria.
“One of them is the almost seven billion dollars bailout fund that the Central Bank of Nigeria granted commercial banks in 2006, 2007 and 2008.
“After 13 years or so, these commercial banks have not returned that money to the coffers of the Federal Government of Nigeria.
“When we enquired from the Central Bank of Nigeria (CBN) the status of that money, the banks told us that the money was ‘dashed’ (given free) to the commercial banks,’’ he said.
The panel chairman said that the money belonged to the people of Nigeria and so could not be given away like that to commercial banks owned by private individuals.
Business Hilights recalls that barely one month after former CBN Governor and current Emir of Kano, Alhaji Sanusi Lamido Sanusi assumed duty, he raised alarm that by the fact that the total amount outstanding for banks at the Expanded Discount Window (EDW) was N256.571 billion, most of which was owed by five banks including Bank PHB Plc (Keystone Bank), Spring Bank Plc, Equitorial Trust Bank Limited (Sterling Bank Plc) and Wema Bank Plc.
It is important to recall that the entire reform effort by Governor Sanusi followed a significant reform effort begun by his predecessor, Prof Charles Soludo in 2004 on the consolidation of the banking industry in Nigeria.
Sanusi stated further that a review of the activity in the EDW showed that four banks including Intercontinental Bank (now Access Bank), Union Bank, Oceanic Bank (now Ecobank) and AfriBank (now Mainstreet Bank) had been almost permanently locked in as borrowers and were clearly unable to repay their obligations. A fifth bank, he added, had been a very frequent borrower when its profile ordinarily should have placed it among the net placers of funds in the market.
According to him, “Whereas the five banks were by no means the only ones to have benefited from the EDW, the persistence and frequency of their demand pointed to a deeper problem and the CBN identified them as probable source of financial instability, most likely suffering from deeper problems due to non-performing loans,” said Sanusi.
To get to the root of the matter, the Governor ordered a joint examination of 10 banks by the CBN and the Nigerian Deposit Insurance Corporation (NDIC).
The 10 banks were Diamond Bank, First Bank, United Bank for Africa, Guaranty Trust bank and Sterling Bank, Afribank Plc, Intercontinental Bank Plc, Union Bank of Nigeria Plc, Oceanic International Bank Plc and Finbank Plc.
By the result of the examination, which was made public on August 14, the CBN found five institutions in a ‘grave situation’ namely Afribank Plc, Intercontinental Bank Plc, Union Bank of Nigeria Plc, Oceanic International Bank Plc and Finbank Plc.
Sanusi said the Management was found to have also acted in a manner detrimental to the interest of their depositors and creditors. In exercise of the powers of his office as contained in Sections 33 and 35 of the Banks and Other Financial Institutions Act 1991, as amended, and after securing the consent of the Board of Directors of the CBN, Sanusi removed and replaced the executive management of the five banks. He injected N420 billion in the form of tier 2 capital to the five banks to enable them continue as going concern.
After the action on the five banks and the clean bill of health to the five other banks, the CBN commenced the audit of the remaining 14 banks namely: Bank PHB, Equitorial Trust Bank, Spring Bank, Wema Bank, Access Bank Plc, Citibank Nigeria Limited, Ecobank Nigeria Plc, Fidelity Bank Plc, First City Monument Bank Plc, Skye Bank Plc, Stanbic IBTC Bank Plc, Standard Chartered Bank Limited, Zenith Bank Plc and Unity Bank.