A few months ago, A people were scrambling for jobs in the banks and finance houses of Nigeria. But now, there is a different scramble. Career bankers are scrambling out of banks and finance houses and are looking for jobs elsewhere.
Customers too are scrambling to withdraw their deposits. The bubble has at last burst for Nigerian banks, which recorded phenomenal growth under ex-President Babangida's deregulated economy.
Although it was formerly murmured in financial circles that many banks were distressed, now the matter is an open one. The Central Bank of Nigeria (CBN) withdrew the licences of four distressed banks in January and February. The first two to fall were Financial Merchant Bank and Kapital Merchant Bank. Then, in February, Broad Bank and Republic Rank had their licences suspended for three months.
The CBN and the Nigerian Deposit Insurance Corporation (NDIC) immediately initiated action to liquidate the first two. But Kapital Merchant Bank filed a N 1. 5bn suit to contest its liquidation, pleading that the actions taken by the CBN and the NDIC contravened the Banks and Other Financial Institutions Decree (Bofid) No 25 of 1991 (see article on page 31).
In its move against Broad Bank and Republic Bank, the CBN proclaimed that its action had been taken 'sequel to the banks'persistent and flagrant violations of the provisions of the Banking Decree and other regulations".
CBN sources indicate that Republic Bank owed the CBN N24 1m (now $10.95m) and that Broad Bank owed it N97m (now $4.4 1 m). It was also alleged that Republic Bank drew four cheques of N591m on the CBN in Kano for some companies when it did not have money with the CBN. It is also accused of having drawn another cheque, for N193m, on the CBN without cover. It is further claimed that the bank attempted to smuggle itself into the clearing house after it had been excluded and that it tried to bribe a CBN official with N500,000, for which it made an advance payment of N140,000. The official involved was subsequently arrested and interrogated.
Broad Bank was accused of attempting to bribe its way back into the clearing house after it too was excluded, by means of bribery. It is said to have issued a cheque for N96m (now $4.36m) drawn...