Mass Sack In Banks: Blame Soludo, Ndi-Okereke

Sanusi Lamido Sanusi, the Central Bank of Nigeria (CBN) Governor is noted for his outspokenness and straightforwardness.

On 15 December 2009, while addressing some businessmen during the 15th edition of the Nigerian Economic Summit (NES) at the Transcorp Hilton Hotel, Maitama, Abuja, Sanusi said: “The market should be a barometer of the health of the economy. If your economy is not moving, if you are not creating jobs, if you are not producing goods, why do you want to have a vibrant stock market? You know, it’s a bubble. Nigeria is the worst performing stock exchange this year (2009). You know it was the best performing stock exchange in 2006…wrongly.

“Because it had nothing to do with the fundamentals as we have now seen. People were just lending money to people, manipulating the share price and the share price was just going up without a stop. There was absolutely no change in the economic fundamentals, and it has just come down to earth and reality.

“So let’s face the reality. The market will go back up because their assets valuation are below books, they are certainly undervalued and the market will go back up. But if the market starts heading back to where it was in 2007, I will stop it. I will starve it of oxygen, in fact I will shut down money supply.

“But there is a lot of room for growth because this economy has been growing in real terms at seven per cent growth in the second and third quarter. It’s interesting that this economy is growing at seven per cent without peace in the Niger Delta, without power and with a negative growth in manufacturing. What we need as policy makers is to focus on the real economy, as opposed to what we saw.

“The stock market will then take care of itself, if the real economy grows and companies are making money and paying dividends. This will make people to buy shares. You don’t need to manipulate it. People will go and buy shares because they want the dividends. But this issue of looking at numbers that were fake, I say, we are not going to go back there.”

Even before Sanusi made this shocking revelation of the manipulated share prices at the country’s stock market, Nigerian banks had lost billions of naira in 2008, mainly due to the crash of the market.

Last year, banks continued to accumulate huge losses. For instance in December 2008, six banks earlier bailed out by CBN had posted a combined loss of about $10 billion. The six banks, Bank PHB, Intercontinental Bank, Oceanic Bank, Spring Bank, FinBank and Union Bank, in a filing to the Nigerian Stock Exchange, said that they had lost N1,426.79 billion.

While Bank PHB posted a N439 billion ($2.9 billion) group pre-tax loss for the 15 months to the end of September, Intercontinental Bank posted a pre-tax loss of N447.45 billion ($3 billion) for the seven months to September.

Union Bank said it had accumulated a pre-tax loss of N222.86 billion ($1.5 billion) for the half year to September from a N14.19 billion pre-tax profit a year ago.

Springbank posted a pre-tax loss of N23.3 billion ($155 million) for the five months to September. The bank said gross earnings in the period reached N9.29 billion.

Finbank posted a N94.35 billion ($630 million) pre-tax loss for the 11 months to September. Gross earnings for the period came in at N59.5 billion.

Oceanic Bank posted a pre-tax loss of N400.9 billion ($2.7 billion) for the nine months to September, compared with a profit of N36.52 billion a year ago when the figures were manipulated.

Already, many bank workers, including senior managers, have received the boot. Many of the workers arrived their offices in the morning only to realise that they could not access their computers, because their names had been deleted from the data base. Sack letters were distributed to them afterwards.

Even banks declared sound by an audit of the Central Bank of Nigeria are not spared. The wave of retrenchment, analysts say, is being aggravated by a directive from CBN to the eight troubled banks to reduce cost, including staff emolument by 30 per cent.

Last December, Intercontinental Bank was reported to have sacked 1,500 staff, two weeks after it sacked about 50 senior managers. United Bank for Africa was said to have sacked 1,000 staff about a month after it had sacked 400.

In October last year, First Bank and Stanbic/IBTC were reported to have sacked 485 and 300 staff respectively.

Wema Bank had sacked about 500 workers, including 25 top managers in September 2009 while Spring Bank Plc also reportedly laid off about 200 members of staff. The list is endless as many banks are said to be compiling the names of those to go. As the gale of sack continues, many parents and breadwinners continue to be thrown into the unemployment market.

Tude Lemo, the Deputy-Governor of the Central Bank had said that the mass sack in banks is inevitable. He said that the figures banks used to post as profit were fake, adding that banks needed to lose some fat to enable them remain in business.

But who is to be blamed for all this? The sacked bank chiefs who engaged in some illegal and corrupt practices certainly share part of the blame. But while all these frauds and manipulations were going on, Professor Charles Soludo and Professor Ndi Okereke-Onyiuke, were respectively CBN Governor and Director-General of the Nigerian Stock Exchange. What were their roles?

While Soludo was removed and has gone to contest the governorship election in his native Anambra State, Okereke has remained at the stock market unchallenged by the authorities, leaving millions of depositors and shareholders to lick their wounds.