Home Finance CBN, 11 banks set up a 5 man committee to raise N300billion to finance housing for civil servants

CBN, 11 banks set up a 5 man committee to raise N300billion to finance housing for civil servants

by Business News Report

By Omoh Gabriel, Business Editor
More facts emerged over the week end on the meeting the CBN had with 11 bank chief executives on Thursday. Those who were at the meeting said it was called in furtherance of the meeting the CBN Governor Professor Charles Soludo had with the National Assembly earlier with some bank chief executives in attendance at which it was proposed that the banks set aside about 10 per cent of their aggregate loans and advances to finance the purchase of federal government houses, being sold nation wide, by civil servants. In the proposal brought before the CBN by the National Assembly, about N300billion is to be put together by the banking industry and passed over to the Federal Mortgage Bank for on word lending to civil servants to purchase houses billed for sale by the federal government. At the said meeting of the CBN governor and some select bank chief executives with the National Assembly, Professor Charles Soludo was said to have told members of the Assembly that the proposal was not feasible but that he would discuss it with banks chief executives.
The Thursday meeting which had in attendance the CBN governor Professor Charles Soludo, his Deputy Mr. Tunde Lemo understandably had the Public sector domain as its agenda.
In the letter inviting the bank chiefs to the meeting, they were asked to be at the meeting in person thus underscoring the importance of the meeting. Two banks which were at the Thursday meeting but were omitted in the earlier report were Wema Bank PLC and Charttered Bank PLC. It was however learnt that contrary to earlier report UBA was not invited to the meeting.
According to sources at the Thursday meeting, the matter of setting aside 10 per cent of banks aggregate loans and advances which as at last month were about N3trillion was thrown open by the CBN governor and bank chief executives were invited to give their views. It was learnt that after a long debate the meeting came to the conclusion that the National Assembly proposal was not feasible as the current lending rate is far above the 8 per cent that mortgage institution give out their loans. Besides bankers were averse to the proposal because they have short term deposit portfolios.

The meeting it was learnt also looked at the plea of the National Assembly to convert the Small and Medium Scale Enterprise Scheme set up by the Bankers Committee and the CBN for the purchase of houses by civil servants. The select group of Banks which met with the CBN was said to have opposed it vehemently and rejected the idea of tinkering with the SMEISIS funds.
Following the rejection of the two point proposals brought before the bankers by the CBN it was learnt that a five-man committee was set up at the Thursday meeting to further explore ways by which an arrangement can be worked out along the line suggested by the National Assembly. The committee it was gathered was asked to study the situation and propose alternative funding for the public sector purchase of federal government and report back to the group before the next bankers’ committee.
The Vanguard on Friday reported that ten banks met with the CBN at which it classified the Nigerian banks into three, the top ten which has met the minimum capital requirement and have huge resources to finance the acquisition of other banks, those banks that have the capacity to meet the N25billion and those that are very weak and cannot meet the new capital requirement. As a result the strong banks such as first bank may be required to acquire ten weak banks the source at the meeting disclosed. According to those at the meeting the middle-level banks that can meet the minimum capital may be allowed to stand on their own and the weak banks.
Specifically, the meeting reviewed the ongoing consolidation exercise and incentives for the strong banks to acquire smaller and weak banks. Discussion was further held on strategies needed to ensure the exercise ends on a strong footing.

CBN meets bank 2 18/03/05

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