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Will CBN set up another AMCON or liquidate any failing bank?

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It is now obvious that there are crakes in the financial walls of Nigeria banking system. How deep the crakes are is yet to be known. There are growing worries that the nation may need another Asset Management Company to deal with the ever rising non performing loans in the banking system. The Asset Management Company of Nigeria AMCON has long stopped buying non performing loans. It is saddled with how to pay the N5.2trillion outstanding bond in the next nine years. It is not even in any position to buy new non performing loans except the instrument setting it up is amended.

The Chief Executive Officer, CEO, Asset Management Company, AMCON, Ahmed Kuru, said recently that the agency may lease out seized assets to raise funds for its operations. AMCON may opt for the real-estate scheme by the end of the year if it’s unable to generate funds for the repayment of its bond. The agency was created six years ago to take on non-performing loans in banks and rescue the nation’s banking industry from systemic collapse.

Stressing that companies that owe AMCON are struggling to off-set their debts due to the slump in crude prices that has crippled foreign-exchange supplies and the country’s economy, Kuru said the agency has no plan to rescue banks as it’s focused on repaying the N5.2trillion outstanding bond in the next nine years. He said AMCON incurred about 14,000 non-performing loans at the cost of N3.9 trillion in a government-led bailout of ten banks following the 2009 banking crisis. Just some six years down the road after AMCON was set up, can Nigeria afford another banking crisis especially now that the federal government is cash strapped?

The signs that the banking system may soon burst reared its ugly face when the CBN had to remove the board of Skye Bank and replace it with a new board. Besides the CBN said that there were few other banks its eyes are on which financial indices are below the approved ratio. The governor Mr Godwin Emefiele explained that CBN had to remove all the non-executive directors and two longest-serving directors of Skye Bank and appointed new non Executive and Executive Directors and EDs in their place.
“The most important issues in banks are Non Performing Loans (NPL), Capital Adequacy Ratio (CAR) and liquidity situation. What we have since late 2014 to 2016 is that the prudential and adequacy ratio has been weakening. We thought it is not right for us to allow this to continue to the point that it gets irreversible. That is why we took this step to nip it in the bud. It has nothing to do with being in distress. We do not want the liquidity and adequacy ratio to worsen to the point that depositors’ fund gets into risk,” he explained.

Skye Bank evolved from the merger of five legacy institutions including Prudent Bank Plc, EIB International Plc, Bond Bank Limited, Reliance Bank Limited and Co-operative Bank Plc. To confirm fears that there are holes in the capital of banks in the country, the Managing Director/Chief Executive of Nigeria Deposit Insurance Corporation (NDIC), Alhaji Umaru Ibrahim expressed concern over the increasing wave of non-performing insider loans in various banks and its consequence on the stability of the nation’s banking system. Alhaji Ibrahim expressed this concern while receiving the newly elected President and Chairman of Council of the Chartered Institute of Bankers of Nigeria (CIBN), Professor Segun Ajibola and some of his executive members who paid a courtesy call on the NDIC Senior Management in Abuja. According to him, the development had posed credibility questions which were capable of eroding public confidence in the banking system.

He called for strict compliance with the existing code of conduct and a review of the existing laws and regulations to provide stiffer penalties for directors who take advantage of their positions and fail to pay back their loans.

The NDIC CEO observed that the situation, in which casual staff accounted for about 25% of the banking industry workforce, had a negative impact on the industry.

Alhaji Ibrahim noted with concern the practice of some banks that assign sensitive roles to casual staff; thereby exposing the banking industry to cases of fraud and forgeries.

Recall that on October 5, 2014, AMCON announced Skye Bank Plc as the preferred bidder for Mainstreet Bank Limited with N126 billion. Mainstreet Bank, formerly Afribank, was adjudged to possess N261 billion assets in 2012 and N29.8 billion shareholders’ fund as at 2011. AMCON had selected Skye Bank for the acquisition of all its interests in Mainstreet Bank, representing the entire capital of the bridge bank after a rigorous bidding exercise that spanned five months and involving over 20 bidders.
Banks in a panic move to fill up the hole in their capital base are resorting to raising fresh capital from the public in a depressed economy. Five banks, Wema, First City Monument Bank FCMB, Sterling Bank, Diamond, Skye have openly declared their intentions to raise funds from the capital market to beef up their capital.

Diamond Bank for instance said it is considering raising fresh capital and selling some assets in order to maintain its capital ratios, its chief executive said last week. Uzoma Dozie said the bank’s capital plan will ensure it meets all regulatory requirements both in the short term and in the future. Diamond Bank’s capital adequacy ratio had fallen to 15.6 percent of assets by mid-year from 18.6 percent a year ago. “We are doing a capital management plan and that will determine how much capital we want to raise, tenor and size,” Dozie told an analysts’ conference call. We don’t have any need to grow our branch network any more. We are also looking at some assets that we can dispose of and we are a long way into that,” he said

First City Monument Bank FCMB on its part said it plans to raise 10 to N15 billion  in Tier II debt to boost its capital ratio and will target its retail investors for the offering, its chief executive officer said. Ladi Balogun said its capital ratio was close to the regulatory limit of 15 per cent by half-year, and that it was doing the capital raising to provide some cushion. He said the bank was also slowing down loan growth. “For the Tier II we would be looking at anywhere in the range of 10 to 15 billion naira. Its really going to be targeted at retail because we feel that the rates from institutions will be high,” Balogun told an analysts conference call.

Banks are under pressure as their loan books – nearly half of them in dollars are under performing as a result of shrinking economy, a plunging currency and acute foreign exchange shortages following the slump in oil prices. The central bank has told banks to set aside extra provisions against their dollar loans in the wake of the sharp fall in the naira since it floated the exchange rate in June.

The critical question the banks hoping to raise funds from the capital market must answer is who will buy these shares on offer? With months of unpaid salary and rising prices of goods and services in the country, how many Nigerians can afford to buy share? The reason why banks will find it difficult to raise money from the capital market is not just because of economic downturn but their inability to declare dividend for many years. Some of these banks have not declared dividend for years, so there is lack of confidence in their management to meet shareholders’ expectations .For, instance, Wema Bank has not paid dividend for more than four years. So, how can investors be encouraged to invest money in such a company especially in this present economic downturn? For companies paying dividend consistently such as Sterling Bank etc they may succeed in raising the funds”

However, bond issue could be favouarble to some of these banks especially when it is non convertible, stressing that companies should indicate how the debt would be serviced. Rights issue and public offering are not favourable at this period in time as the economy is in recession. There is nothing happening in the economy as activities have been low. Workers are being owed salary and contractors not being paid.”

This is not the right time to float rights issue or public offering because the economy is in recession. The disposable income of consumers has been depleted by the rising inflation. Even state governments are not paying salary to workers; contractors are being owed and no meaningful economic activities are going on. So, how can investor save and invest in the capital market.

What is the way forward to avoid a system financial crisis from the collapse of banks, another Asset Management Company? The ball is in the CBN court, it can play it the way it want by promptly liquidating distress banks or rescue any failing bank as it has done with Skye bank and in the recent past.

 

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Decemberissaveybe: Firstbank sponsors “the caveman concert” thrills audience 

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By Oladapo Sofowora
 
December is a particularly vibrant and deeply meaningful month in Nigeria, imbued with a palpable sense of excitement and celebration that permeates the air. As daily life slows down, this festive season offers a welcome opportunity for relaxation and togetherness. Families and friends gather to create cherished memories, participating in a rich tapestry of cultural activities that showcase Nigeria’s diverse heritage. The month is characterized by a colourful array of events, including theatrical plays, musical concerts, traditional festivals, operas, fashion shows, poetry readings, and various forms of performance arts, all reflecting the dynamic cultural expressions of Nigerian society.
 As December unfolds, the excitement continues to build, with streets and homes becoming vibrant displays of holiday spirit. Elaborate decorations adorn every corner, featuring colourful Christmas ornaments, twinkling lights, and festive paraphernalia that evoke a sense of wonder and joy. Evening skies light up with breathtaking fireworks, illuminating the night and further enhancing the joyous mood of the season. Year-end Thanksgiving parties have become commonplace, offering spaces for loved ones to gather, share meals, and express gratitude for the blessings and experiences of the past year. This period also allows Nigerians to reconnect with family and friends, many of whom travel from various parts of the globe to partake in these significant celebrations.
 As the year-end festivities for 2024 draw near, FirstBank has thoughtfully curated an exhilarating lineup of events under the DecemberIssaVybe program, aimed at enhancing the enjoyment of this festive season. A highlight of this initiative is the much-anticipated concert featuring The Cavemen, a celebrated musical duo. Which was held on Friday, December 27, 2024, at Muri Okunola Park, located along the bustling Lekki-Epe Expressway, the event brought Lagos to life with a captivating performance that seamlessly blends highlife, soul, and folk music. Attendees enjoyed an engaging experience filled with mesmerizing sounds for over an hour, keeping them on their feet and immersed in the rhythm.
 The atmosphere at the concert was electrifying, drawing a diverse crowd of enthusiastic youth eager to experience The Cavemen’s unique interpretation of highlife music—a genre deeply rooted in Nigerian culture and characterized by its rich, rhythmic beats and soulful melodies. The concert also featured an impressive lineup of other notable artists, such as the popular act Ckay, who collectively contributed to a night filled with remarkable entertainment and unforgettable performances. The stage witnessed a pulsation of energy as The Cavemen’s talented band propelled the evening forward, delivering an infectious performance marked by masterfully executed guitar riffs, powerful drumming, and enchanting vocals. Audiences found themselves wholly absorbed in the moment, as the music unites them in joy and celebration, showcasing the revitalization and redefinition of the highlife genre that The Cavemen have pioneered.
In addition to the music, the concert artfully integrates comedic performances, highlighting the vibrant and diverse creative entertainment scene in Africa. Acclaimed comedians took to the stage, drawing laughter and delight from the crowd, while emerging music also had their moment in the spotlight, receiving enthusiastic applause and encouragement from an appreciative audience. Recognising the profound impact of December in nurturing relationships and spreading joy, FirstBank has actively engaged its First@arts initiative to launch the annual DecemberIssaVybe campaign. This initiative is meticulously crafted to inspire and empower individuals across Nigeria to create and experience exhilarating moments throughout this joyous season. By providing fully sponsored access to premium concerts, theatrical performances, shows, and festivals featuring some of the industry’s top entertainers, FirstBank aims to alleviate the financial burdens that often accompany festive celebrations.
 In a time marked by economic uncertainty, FirstBank stands as a crucial support system for Nigerians wishing to celebrate without the weight of added financial stress. With a proud legacy spanning over 130 years, this esteemed financial institution has woven itself into the fabric of Nigerian life. FirstBank has long championed numerous festive concerts showcasing Africa’s music icons, including Kizz Daniel, Davido, Burna Boy, Asake, and Tiwa Savage, crafting unforgettable experiences for music aficionados across the nation.
The DecemberIssaVybe campaign encapsulates the essence of creating lasting memories during this festive season. It serves as a dynamic platform for both local and international audiences to immerse themselves in unique, culturally rich experiences tailored to the holiday spirit. Since its inception in 2018, the FirstBankIssaVybe campaign has quickly become a highly anticipated annual event, delighting participants with exhilarating moments designed to resonate and linger long after the celebrations are over. Olayinka Ijabiyi, the Acting Group Head of Marketing & Corporate Communications at FirstBank, emphasized the institution’s unwavering commitment to crafting a ‘Wow December to Remember’ experience for individuals of all ages. He stated, “FirstBank is devoted to facilitating memorable homecoming experiences this December through gatherings such as weddings, family reunions, and festive celebrations, ensuring that every moment spent together is cherished.” Through this commitment, FirstBank continues to play a pivotal role in the celebration of culture and community during this significant time of year.

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Deadly rice stampedes: Suppose President Tinubu bans rice?

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By Ikeddy ISIGUZO
Once President Bola Ahmed Tinubu addresses Nigerians it is clear that his silence is actually golden, as it gives chances to guess what the President feels about ordinary Nigerians, the hungry, the poor, the weak, those excluded from Tinubu’s concerns because they are not rich. The President rushing in with a media chat, after 18 months in office, and days after the “poverty stampede” in Ibadan, where mainly children died, was thought to be an opportunity to explain to Nigerians, elicit their support as they go through a crushing economic crisis that the President gloats about as if the entire purpose of his policies is to inflict pains. The deaths in Ibadan that were over 35, were followed by similar incidents in a church in Abuja, and an individual’s event in Okija. The deaths resulted from free distribution of rice to the needy. Poverty once personal, private, is now public, and deadly.
Just blame rice.
Are opponents using free rice to distract the President from focusing on his economic policies? The President should ban rice for more clarity. No rice, no stampede, no deaths. One of my teachers said the solution to headache was decapitation – no head, no headache, or any ache for that matter.
We remember Tinubu promised Nigerians “agbado (corn) and cassava”. Not rice. More people have fallen into poverty without the President’s permission. Should they? Could this account for the President not knowing about them? What really does the President know about Nigerians?
Does he know that more people would have died if they knew of these events? Food is beyond the reach of ordinary Nigerians. Tinubu does not feel the impact of his harsh economic practices of lavish spending on presidential consumptions, unproductive as they are. Some call the spendings reckless.
Would you blame them? In the midst of a drifting economy, soaring inflation, no jobs, hunger, anger, capped with insecurity, the President bought jets, including one for the Vice President, and maintains a bloated cabinet.
He used the presidential chat as a platform to defend his Ministers. They are performing. He sounded as if he needed more people like the bunch that maintains a distance from the daily challenges people face.
For the President to see “switching off things” as the solution to poor electricity supply – and the frequency with which the national grid collapses – was one indication that governance has become a joke. When the Minister of Power, months ago, held the same position on electricity, the public tore him to shreds. The Minister apologise. Tinubu blamed the organisers for the stampede, “I see this as a very great error on the part of the organisers.” He said he had been giving out foodstuffs, including envelopes, smoothly at his Bourdillon residence in the past 25 years. “If you do not have enough to give, don’t publicise it,” he advised organisers.
The organisers too are poor, and have no Bourdillon pedigrees. These things count.
Do not expect Tinubu to blame the new wave of incremental poverty his hope agenda has renewed. He did not. He will not. If Tinubu halts the slide to absolute poverty for more Nigerians, there would be no deadly rice stampedes, and no organisers to blame. Other Nigerians have organised these events for years without incidents. Large crowds would turn up and go home home safely. Was it not rice they shared? What is the difference now? People are out searching for something to eat, anything. Even if “pure water” is being shared, there will be stampede. Our people are living by the minute.
They have lost hope. Nigerians have no assurance that someone cares about their efforts to survive. Millions of our compatriots are ready to do anything to survive. While at it, insecurity is not allowing them to breathe.
Sadly, more of our people are falling into crimes with the times.
Employment opportunities are shrinking. The few jobs available are for relations of those in power, the rich, the very rich, the same ones who accuse us of greed. Do they have a different meaning for greed?
Last October, the Senate President, His Excellency Obong Godswill Akpabio on the floor of the Senate advised poor Nigerians, “Times are difficult, wherever you see free food, please endeavour to avail yourself”. Could the people have followed Akpabio’s perspective of the solution to poverty and the hard times? Mocking the poor is Akpabio’s favourite idea of enlivening Senate sessions.
“The prayer is that, let the poor breathe, and Senator Mustapha has seconded that the poor should breathe. Those who are in support of the additional prayer that the poor should be allowed to breathe, say ‘ayes’ and those who are against say ‘nay,’” Akpabio had said in July 2023 during a debate on the 15 per cent hike of electricity tariff. “The ayes have it! The poor must be allowed to breathe,” Akpabio concluded.
At a Niger Delta Development Commission event in July 2024, Akpabio mocked those who called for demonstration over the economic hardship. “Those who want to protest can protest, but let us be there eating,” the former Akwa Ibom State Governor had said. In Tinubu’s 18 months, poverty has pole-vaulted to dizzy heights that left Nigerians dazed.
The only thing worse is the President’s spectacular performances when addressing his failure to rein in inflation as he drives the economy with the enthusiasm of kids playing with new toys. People are hungry. Some people around the President call poor, hungry Nigerians “greedy”. Someone looking for what to eat is greedy? Have we fallen so low to justify the President’s unwillingness to accept that the problem is well beyond him?
Is he using his uncaring attitude as a buffer? He is the bigger problem by refusing to engage the people. Rather, he talks down on them when he decides to talk, well aware that he has nothing to say.

Take the tax bills, for instance, they have their merits. Tinubu thinks it is beneath him to discuss issues the radical bills raise. He sneers, the bills will be passed. He takes responsibility for nothing. Tinubu sounds like Rik Rok and Shaggy in their famous 2000 hit song, “It Wasn’t Me”. The President provides answers without addressing our concerns. The answers are always dismissive. The major lesson of 2024 is that Nigerians have to continue looking after themselves. It may even annoy those who are just discovering that they cannot decide when we should stop breathing.
Happy New Year, that is peaceful – prosperity will follow peace.
Finally… INFLATION to crash from 34.6% to 15% in 12 months, is what the President has promised in 2025. Safe trip, Mr. President.
FEDEERAL Capital Territory Minister Ezewoke Nyesom Wike said of those who accuse him of land grabbing, “Peo­ple say land grabbing, do you grab what you are in charge of? I am in charge of land in Abuja how will I go and grab what I am in charge of? Those, who are grabbing land are whom I am dealing with”. Wike, at the Port Harcourt event where he spoke, did not forget to call Governor Sim Fubara, “this boy”.
*ISIGUZO is a major commentator on minor issues

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Building a stronger Nigeria through health, transparency, human rights

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By Ambassador Richard M. Mills, U.S. Ambassador to Nigeria
Every December, we mark three international observances that are at the heart of the U.S.-Nigeria partnership: World AIDS Day, International Anti-Corruption Day, and Human Rights Day.  While distinct, these commemorations underscore a simple truth – Nigeria’s path forward requires progress on health, good governance, and human rights.  The United States remains your steadfast partner on this journey. For two decades, the United States has stood with Nigeria in the fight against HIV/AIDS under the President’s Emergency Plan for AIDS Relief (PEPFAR).  The U.S. government has invested more than $8.3 billion in Nigeria’s health sector and provided life-saving anti-retroviral treatment to more than 1.5 million people.  These numbers represent improved life expectancy and quality of life for these Nigerians and their families.  In clinics across Nigeria, I’ve met dedicated healthcare workers who deliver HIV prevention, treatment, and care, supported by the resources of the American people.  This work has done more than save lives – using HIV as an entry point, Nigeria’s health system has also benefited.  
As Nigeria’s health system is strengthened, this important work will be led by government and engagement with the private sector to sustain the gains.  This commitment was reinforced during Ambassador Nkengasong’s recent visit, where his discussions with Nigerian health officials focused on how the Government of Nigeria would sustain the HIV health programs with strengthened Nigerian leadership and local ownership. But positive health outcomes depend critically on good governance.  When medical supplies are diverted, when healthcare workers go unpaid, when facilities buy dangerous, counterfeit medications or lack resources due to mismanaged funds, it costs lives. 
This is why the United States supports numerous initiatives, not only in the health sector, to enhance transparency and accountability in Nigeria.  Our programs work directly with government agencies and civil society organizations to strengthen fiscal responsibility with the goal of the state ensuring resources reach their intended beneficiaries.
The success of these efforts rests on respect for human rights and civic engagement.  When members of marginalized communities face discrimination in accessing healthcare, when citizens fear reporting blatant corruption like the need to pay for appointments or ‘free’ healthcare, or when vulnerable populations cannot advocate for their needs, development falters.  Through our partnership with Nigeria, we promote the rights of every person to access essential services and enjoy fundamental freedoms without fear or discrimination. These three areas – health, transparency, and human rights – reinforce each other. 
Consider the results: U.S.-supported initiatives have helped strengthen pharmaceutical supply chains, reducing theft and ensuring safe medicines reach patients.  Our human rights programming has empowered civil society organizations to advocate for marginalized communities, leading to better access to health services.  Our health system investments have created platforms for transparency that benefit all sectors.  And, perhaps most importantly, according to a recent survey by the United Nations Office on Drugs and Crime, Nigerians are both more frequently refusing to pay bribes and reporting bribe seekers to investigative journalists and rule of law authorities.  A shift in norms is beginning to take root and must continue.    
 The U.S. Embassy stands ready to support Nigerian voices pressing the fight against corruption in Nigeria.  To Nigeria’s government officials, civil society leaders, healthcare workers, and citizens:  your dedication to building a stronger nation inspires us.  Together, we can continue to advance the interconnected goals of better health outcomes, good governance, and human rights for all Nigerians.  Challenges remain, but the work we’ve done together shows what could be possible on a larger scale across these crucial domains. As we mark these December observances, let us use this moment not just for reflection, but for renewed commitment and action.  The United States continues to stand with the Nigerian people as they carry out this essential work with their elected government.
*Ambassador Richard M. Mills is U.S. Ambassador to Nigeria

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