The ascension of Sanusi Lamido Sanusi to the position of Governor of the Central Bank of Nigeria (CBN) has unconsciously sent some consciousness into bankers to be more sensitive to strict regulatory requirements like transparency, good corporate governance and voluntary disclosures.
Some banks have already made public why they may not be paying as much dividends as would have been expected by shareholders and industry watchers for the year 2008. They want to make provisions for the margin loans that have turned toxic due to the crisis that led to the crash of stock prices. The era of just wanting to declare large paper profits may soon be gone into history.
Many banks want to be transparent and want to be seen and known as such. Establishment of in-house ombudsman unit to address customers’ complaints and issues, some banks are already adopting the International Financial Reporting Standard (IFRS) in the preparation of their financial statements and all efforts at offering better services to customers can be taken to mean that Nigeria now has more careful bankers, who show more willingness in observing banking regulatory rules. CBN had told banks to adopt the International Financial Reporting Standards by December 2010. The Nigerian Accounting Standard Board (NASB) has prompted auditing firms to be committed to full disclosures and transparency in the preparations of financial statements.
The CBN asked the banks this week to submit details of their loan exposures to ascertain their level of involvement with toxic loans in the banking system. This is all about being careful in all dealings. Eleven of the nation’s 24 banks are carrying the burden of N421.7 billion as margin lending which mainly includes loans backed by share certificates. The CBN recently put the total estimate of the facilities granted by banks and lending secured with share certificates at N1.2 trillion. While battling with this margin loan loss provision, banks are also under pressure of reported escalating ATM frauds, to replace the fraud-prone cards and to relocate their ATM machines from public places before the end of this month.
Read Also: CBN debits banks of CRR worth N926.4bn for breaching lending requirements
The CBN must tirelessly work towards providing a level playing ground where all operators alike play by the rules at all times and as regards all issues. Provision of level playing ground is crucial to defining the integrity and impartiality of the regulatory institution. Shareholders must exercise patience with these banks to clean up their books of toxicity. In this same path, bank executives must show responsiveness to the public mood of recession at this time of economic hardship by trimming down expenditures where possible.
With all these challenges facing banking operations and regulation in Nigeria, we expect banks and the CBN to begin a targeted capacity building in terms of human capital and information technology infrastructure to handle novel challenges as they may arise.
It is our view that as banks navigate this careful and exemplary path of banking, bordering on transparency and full disclosures, the CBN must stay very close to their operators to see and know some things themselves.
