A double whammy against banks was served up at the weekend by both the Central Bank of Nigeria (CBN) and the Economic and Financial Crimes Commission (EFCC).

Any Director of the 24 banks who fails to redeem loans by November 30 will have his appointment terminated by the CBN, and may face arrest and prosecution. 

Checks are to be carried out by the EFCC on bank loan seekers to weed out those looking for money for dodgy projects.

A new policy pursued by the CBN prohibits bank Directors from owing their banks or other financial institutions in the country, and a circular on this has been sent out to all banks.

The circular, dated October 26, was signed by CBN Director of Banking Supervision, Samuel Oni, who explained that the aim is to enhance corporate governance in line with global best practice.

He said the process will be concluded by December 31, 2009, and will entail the review of the requirements for fitness and proprietary for both serving and prospective appointees, in accordance with Section 44 of the Banks and other Financial Institutions Act (BOFIA).

As a prelude, the CBN warned that all Directors (executive and non-executive) are not permitted to have non-performing loans either in their own banks or any other bank/financial institution.

“Therefore, all executive and non-executive Directors with non-performing facilities, either in their own banks or other banks/financial institutions, are, in their own interest, advised to regularise such facilities on or before November 30, 2009, failing which their appointment will be determined by December 31, 2009.”

CBN Governor, Sanusi Lamido Sanusi, stated elsewhere at the weekend that the shake-up in the banking industry is to save it from collapse, although the move does not mean that there is a crisis in the sector. 

“I can authoritatively tell you that there is no crisis in the banks, since all of them are still performing their obligations to their different customers. It is the CEOs (Chief Executive Officers) of some of these banks and some borrowers that are in crisis,” he said in a lecture delivered at the 2009 Annual Bankers’ Dinner in Lagos.

“We had to create a crisis for them so that the banks would not have a crisis. If we had not created the crisis for these people, the banks would have been in crisis by now.”

According to him, the seven per cent growth in the last two quarters, despite the credit squeeze and the global economic downturn, showed that the economy could go on without the banks.

“It simply means the growth of bank credit to the private sector recorded in the last two years were fake.”

The banks, he noted, are not lending to the real sector, and the greatest challenge is getting them to perform their statutory function to the banking public.

Sanusi repeated the CBN’s determination to ensure that no bank fails in Nigeria, since the failure of one could lead to collapse of the entire banking system.

One of the ways to ensure this is by continuously “intruding” on the privacy of banks to ascertain their health.

Besides, a source said the EFCC will investigate to see if prospective borrowers have previous records of non-performing loans. 

Questions to be asked include, “What is the nature of the project,” and, “Is it in line with the government’s seven-point agenda, the Millennium Development Goals (MDGs), and Vision 2020?”

Attention would be given to projects in the energy sector, the source added.

Aso Rock  has reportedly given the EFCC its backing for the task, said to be at the behest of Central Bank of Nigeria (CBN) Governor, Lamido Sanusi; and Presidential Economic Adviser, Tanimu Yakubu.

It was learnt at the Nigeria Financial Intelligence Unit (NFIU), which is located in the EFCC, that all bank executives have been briefed on the new guideline, “And they have all promised to co-operate with us, so the condition applies to all loans in all Nigerian banks. 

“It is not targeted at anybody or any bank but in continuation of the present effort at sanitising the financial system.

“The EFCC would complete its pulling      out of the troubled banks on Monday (today) but we would still be working very closely with them, to ensure that all those owing them pay up as they promised to do.”

The source explained that the new move is to reduce the chances of loans being given to persons without business interest. 

“Loans from banks are for less financially buoyant businessmen who have good ideas and entrepreneurial skills that would assist the nation, not for politicians and big men who get broke and need rehabilitation.

“We have to prevent that, and do the real banking work in this country. That is the reason we would investigate any person asking for loan first before he/she is given the loan.”

EFCC Spokesman, Femi Babafemi, confirmed that the Commission will from today become less engaged with the troubled banks, although it will continue to work with the new managements. 

 “It is a kind of operational strategy whereby we would not be physically present in the banks, but behind the scene we would still be working because there is a lot still needed to be done there,” he stressed.

He added that the EFCC will this week begin the process of extraditing Erastus Akingbola, the former Managing Director (MD) of Intercontinental Bank, who escaped to England after he was sacked along with four other bank MDs on August 14. 

He said Akingbola will be charged to court on  20 counts of alleged fraudulent practices. 

Babafemi insisted that the EFCC will not succumb to the antics of those accusing it of collecting 10 per cent kickback from the money recovered from bank debtors.

He described the allegation as “a blatant lie and a cheap blackmail” that cannot stop the EFCC from cleansing the financial sector. 

“It is a well scripted falsehood designed to create a distraction from the on-going prosecution and investigation of those that have abused their positions and betrayed depositors.”

- Daily Independent