Home Finance Bankers tells CBN N400 bn injection is capital in your letter

Bankers tells CBN N400 bn injection is capital in your letter

by Business News Report

By Omoh Gabriel
Bankers yesterday volunteered more facts as to why bank Managing Directors and their executive directors were sacked. The pointing to the letter signed by Sanusi and delivered to the chairmen of Boards of the five affected banks said that the letter written by Sanusi to the banks stated that at the discretion of the CBN governor the funds injected into the banks can be converted to equities. The bankers expressed fears that the CBN Governor has made up his mind to forcefully take over and change the ownership structure of the affected five banks hiding under the cover of the CBN act.
The letter Sanusi wrote to the Chairmen of the five Banks reads ‚ÄúBy order I, Sanusi Larnido Sanusi, Governor of the Central Bank of Nigeria, hereby require Xbank to take the following steps and do the following acts: immediately acknowledge the injection of the sum of N billion, only by the Central Bank of Nigeria, to address the grave situation aforesaid, as credited to the bank’s main account maintained with the Central Bank of Nigeria, on the terms of a financial accommodation agreement as may be prescribed by the Central Bank of Nigeria, including but not limited to the following:
“At the option of the Central Bank of Nigeria, the advance shall be convertible into fully paid up securities of the bank; the advance shall be for a maximum tenor of seven years: if the conversion option is not exercised, the advance shall only be callable after the fifth anniversary of the grant of the advance; and the advance shall be subordinated to all other creditors of the bank.
“Give full effect and implement the financial accommodation agreement in respect of the advance made available to your bank by the Central Bank of Nigeria as aforesaid, and executed by the Managing Director/Chief Executive Officer appointed by my Order as aforesaid,

“Adopt, ratify and implement any business continuation plan prepared by the Managing Director/Chief Executive Officer appointed by my Order as aforesaid and approved by the Central . Bank of Nigeria,
“I, Sanusi Larnido Sanusi, Governor of the Central Bank of Nigeria, by virtue of the powers vested in me by Section 33(1)1 of the Banks and Other Financial Institutions Act, Cap 33, LFN, 2004, having been satisfied that: it is in the public interests so to do because, inter alia, Xbank showed excessive liquidity stress with persistent use of the Expanded Discount Window of the Central Bank of Nigeria; and has been carrying on its business in a manner detrimental to the interest of its depositors and creditors , ordered a special examination into the books and affairs of the bank on 22 June, 2009.
“Take all steps and do all things necessary to implement and give full effect to the directives given to Xbank, by the Central Bank of Nigeria, in particular: Make full provisioning for the sum of N billion only being the amount required to be provided in accordance with the Prudential Guidelines for Banks going by the books to the bank as of 31 May being the cut-off date of the Specialised Examination aforesaid.
“Make full provisioning for such other sum or sums as may be required for other lost or doubtful debts that may have fall due for classification as such, from 1 June 2009 being the date following the cut-off date of the Special Examination aforesaid, till closure of the books of the bank for the current financial year of he bank , in accordance with the Prudential Guidelines for banks. henceforth make full provisioning as required by the Prudential Guidelines for banks; and Take immediate steps to stop the disregard, breach or violation of rules, regulations, guidelines and administrative directives of the Central Bank of Nigeria especially in respect of the issue, creation, treatment and accounting for commercial papers, bankers acceptances and other off-balance sheet engagement products.
“Take all such other steps and do all such things necessary for the effective turnaround of the bank as I may further direct or order within the next six months of the date hereof.
I hereby further order that the Board of Xbank, meets within a week of this order on a date to be fixed by the Managing Director/CEO appointed by me as aforesaid to consider the state of the bank.
I hereby further order that the Managing Director/Chief Executive Officer and all other persons I have by Order appointed shall remain in office until I otherwise order or direct, and the said persons shall not be removed from office by the bank”.

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