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Last Updated: Oct 13, 2008 - 8:20:42 AM |
ANOTHER restructuring exercise looms in the banking and financial
sector. In the forthcoming change, the Central Bank of Nigeria (CBN)
may not be spared.
Going by feelers from the Senate Committee on Banking, Insurance and
Other Financial Institutions, the CBN may cease to be a regulator of
the industry.
A new umpire that will even oversee the activities of the apex bank is
being considered by the Upper House. In fact, the Senate plans to strip
the CBN of its regulatory powers to enable it concentrate on other key
functions. The proposed regulatory body, The Guardian learned will be
similar to the United Kingdom's Financial Standard Authority (FSA).
In an interview with The Guardian in London, the chairperson of the
committee, Senator Nkechi Nwaogu, said the panel was unhappy with the
apex bank's dual roles as an accuser and a judge. She quickly added
that the CBN would not be weakened, but strengthened to provide
"efficient services."
To prepare the ground for the take off of reforms, the committee will
consult with the chief executive officers (CEOs) of the 24 banks to get
their input into the amendment of the CBN Act.
The lawmaker stated that the apex bank as now constituted is
"overburdened with functions," such that the payment of depositors of
failed banks had dragged for too long.
Nwaogu said it was also becoming evident that the CBN was not providing
efficient supervision to the industry operators because "it has too
much on its plate. For instance, the apex bank is the one supervising
the over 800 microfinance banks in the country. I mean, it is not
feasible for the apex bank to discharge its duties well. We still have
the Bureau de Change and you also have other investment banks being
supervised and licensed by the same CBN. We just think this is not
right," Nwaogu said.
On the amendment of the CBN Act (2007), she said there are other areas
"where we need the legislature to exact control. In fact, the CBN
itself needs to be supervised...(because) we do not want a judge and a
jury in one place. At present, the CBN serves as judge and jury and we
think it's not right. "
The senator decried some unethical practices in the banking sector,
especially the setting of unrealistic targets for members of staff,
which she described as a "nightmare."
"The existing banks have missed the mark. Instead of developing
products that will bring in fresh deposits and other new business
activities, they have made life miserable for their personnel. They
give them unreasonable and unattainable targets and consequently, in
our committee, we have more than 20 petitions from bankers who are
frightened to their teeth because of these."
Some banks, she added, "have capitalised on the high unemployment rate
in the country to abuse their workers. Some of these bank officials
just roam the streets, looking for deposits. The situation is even
worse for women bankers, who are subjected to unspeakable activities.
And worst of all, these banks do not even want to care about what they
did before the deposits came in. So, we in the committee are saying, it
is wrong. It is wrong! "
The panel is also unimpressed with the high figures quoted by some
banks on their balance sheets, capital and asset bases, and profits,
which it described as unrealistic.
Nwaogu accused the banks of not being transparent. "We know they're not
transparent and neither are the figures being quoted realistic. If they
have such figures, why then is the interest rate on credits so high and
where are the economies of large scale? If everybody claims to have hit
the trillion base, who are they lending it to?"
According to her, what the banks are claiming to be in their balance
sheets does not correspond with the level of activities in the
productive sector. "Since we do know that the level of activities in
these banks is not commensurate with activities in the manufacturing
and productive sectors, they're supposed to be servicing... and if
they're not, what are the banks doing with these deposits and why is
our credit so high? Why are people paying much as 30 per cent interest
rate and why are they dwelling only on short-term monies? These are the
sort of things we want to table at the forum with the banks' chief
executives and perhaps, they might have answers or know what we don't
know."
On casualisation in the industry, she said it is "inhuman."
"Our banks are copying what they do in the developed world by
'outsourcing' most of their activities," she noted. "Nigeria is not at
that level ...This should be done when the activities in Nigeria have
reached saturation level...The percentage of labour employed is very
small compared to the profits being declared by these banks and I think
it's inhuman. We're an emerging market and I don't think the banks
should engage in these practice."
Source:Ocnus.net 2008
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