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Together CBN, AMCON Spend N3.83 Trillion on Struggling Banks

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AMCON
  • Together CBN, AMCON Spend N3.83 Trillion on Struggling Banks

The Central Bank of Nigeria (CBN) and the Asset Management Corporation of Nigeria (AMCON) have so far spent N3.83 trillion on struggling banks since 2009, according to report.

The bailout, which started in 2009 when the CBN first injected N620 billion into ten struggling banks to prevent the banking sector from collapsing, has taken a new turn as it failed to revive the affected banks.

In August 2011, the CBN was forced to revoke the licence of Bank PHB, Afribank, and Spring bank and created bridge banks to take over their assets and liabilities. While AMCON funded the bridge banks with N679 billion.

This was after AMCON had purchased about 14,000 loans estimated at N3.3 trillion for N1.7 trillion in 2010, stated Ahmed Kuru, AMCON’s Managing Director.

According to Kuru, the firm also provided financial accommodation of N2.2 trillion, however, only 300 customers that constituted 5 percent of the 14,000 loans were responsible for over 70 percent of the total value of loans that were purchased.

Despite 5 percent of customers responsible for majority of the loans that went bad as at 2017, AMCON only recovered N716.1 billion from obligors, cash and assets accounted for 45 percent and 55 percent respectively.

Left with huge debt with no end in sight, AMCON approached the Federal High Court on September 22, 2018 for assistance in recovering N5.4 trillion non-performing loans, a day after the CBN revoked SKYE Bank licence and created another bridge bank, Polaris Bank.

Again, the new bridge bank, Polaris Bank, will once again be funded N786 billion by AMCON after assuming assets and liabilities of Skye bank, which according to Godwin Emiefele, CBN’s Governor, has a negative book value of about N800 billion due to high non-performing loans. Meaning for the new Polaris Bank to thrive it needs all the help it can get it.

AMCON total investment on distressed banks now stood at N3.16 trillion –N679 billion spent on three bridge banks, N1.75 trillion used in acquiring debt of financial institutions and the N786 billion to be injected into the new Polaris bank.

However, experts have accused the CBN and FG of encouraging the financial misconduct going on in the banking sector as many bank executives and directors were allowed to go scot free without prosecution despite the size of the funds.

John Darlington, former Bond Bank managing director, urges shareholders to sue executives, managing directors, and non-exexcutives who ran down their banks. According to Darlington, past CEOs, like Skye’s CEO, should ‘face the law’ for running down banks.

“They looted the patrimony of a whole lot of shareholders and destroyed otherwise what was meant to be a solid bank,” he stated.

“I believe shareholders must now come together under an umbrella and go after the management and the board that looted and destroyed their common patrimony. Let us test it in court and see if they can get justice against those who looted the assets of the bank and destroyed their investments.”

Abiola Babajide, Associate Professor Department of Finance, Covenant University, said: “Bailouts incite bad behaviour in the banking industry as this bailout isn’t really changing anything fundamentally as another bank can still fail tomorrow. The root of the problem is still not being tackled. We need to address the ethical issues in the bank; corporate governance right now is very bad in the country.”

Babajide, who agreed that the bailouts have helped protect depositors’ funds and create stability in the banking sector, said without profitability it will be at the expense of the taxpayers.

Still, he thinks for the sake of stability in the sector it is imperative.

“In the real sense, not all of the money that the regulators have invested in these banks have been fully recouped so it is not profitable for the CBN to continues bailouts but for the sake of stability in the industry it is important they do,” he concluded.

A depositor with one of the affected banks, Ishioma Ogbekene, a freight forwarder, said: “Banks have risk managers, there are limits to the amount that can be lent and loans are usually secured with collateral, so why will a bank collapse?”

“But because bank chairmen, CEOs and board members take huge loans that are not backed by collateral and eventually failed to repay, collapses those banks. Forcing the government to use taxpayers’ money to stabilise the sector and protect jobs.”

“CBN is not effective in her oversight function,” said Ezekiel Enejeta, the Founder of Financial Watch Nigeria. “Executives of collapsed banks were supposed to be investigated and jailed if found guilty to restore some sanity back to the system.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Delta Air Lines Flight Diverts to Togo After Passenger Dies Midair

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Delta Air Lines

A Delta Air Lines flight from Atlanta to Lagos was diverted to Togo following the midair death of a yet-to-be-identified passenger.

The unfortunate incident occurred approximately three hours before the flight’s scheduled arrival in Lagos, prompting the crew to address a health emergency onboard.

Despite initial intentions to proceed to Lagos, adverse weather conditions, including heavy thunderstorms, forced the pilots to divert the plane to Lome, Togo.

The flight, Delta Air Lines’ A330-200 aircraft, was carrying 215 passengers at the time. Upon landing in Lome, the aircraft underwent refueling procedures and awaited clearance amidst the inclement weather.

Subsequently, after an additional delay in Togo, the flight resumed its journey and safely landed in Lagos, albeit approximately eight and a half hours behind schedule.

Passengers onboard expressed their concerns and frustrations, particularly regarding the handling of the medical emergency and the subsequent diversion.

Social media platforms buzzed with accounts of the ordeal, with one passenger recounting the unfortunate sequence of events, including the midair death and the necessity of an emergency landing due to fuel depletion.

Meanwhile, an airplane operated by Dana Airline veered off the runway at Murtala Muhammed International Airport.

The affected MD-83 aircraft, registration 5N-BKI, carried 83 passengers. Dana Air spokesman Mr. Kingsley Ezenwa confirmed all passengers and crew disembarked safely without injuries.

Ezenwa, in a statement, said: “Dana Air regrets to inform the public of a runway incursion involving one of our aircraft, registration number 5N BKI, which was flying from Abuja to Lagos today, 23/04/24.

“We are relieved to confirm that all 83 passengers and crew onboard the flight disembarked safely without injuries or scare as the crew handled the situation with utmost professionalism.

“We have also updated the Accident Investigation Bureau, AIB, and Nigerian Civil Aviation Authority (NCAA) on the incident, and the aircraft involved has been grounded by our maintenance team for further investigation.

“We wish to thank the airport authorities, our crew for their very swift response in ensuring the safe disembarkation of all passengers following the incident, and our sincere apologies and appreciation to the passengers on the affected flight for their patience and understanding.”

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ARISE News Channel Goes Global: Launches in Nine Southern African Countries

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ARISE News Channel, a prominent Nigerian cable news network, has reached another significant milestone in its journey to become a global media powerhouse.

The channel has officially gone live in nine Southern African countries, including South Africa, Angola, and Botswana.

This expansion was made possible through a partnership with Multichoice/DSTV, with ARISE News Channel now available on Channel 416.

Alongside South Africa, Angola, and Botswana, the channel is now accessible to viewers in Lesotho, Malawi, Mozambique, Namibia, Swaziland, Zambia, and Zimbabwe.

In a statement released by the Chief of Staff to Chairman/Editor-in-Chief of ARISE News Channel, Fauziya Ali Mohammed, it was revealed that the channel’s presence now spans 54 African countries.

Mohammed explained that ARISE News Channel is committed to delivering high-quality news coverage across the continent, showcasing various facets of African life, including business, politics, technology, commerce, science, sports, show business, and fashion.

ARISE News Channel, which celebrated its 11th anniversary earlier this year, has earned acclaim for its Emmy-winning programming.

It has become a leading broadcaster in Africa, offering audiences a diverse range of content while projecting the best of Africa’s culture and people to the world.

Chairman/Editor-in-Chief of ARISE News Channel, Nduka Obaigbena, expressed his excitement about the channel’s expansion into Southern Africa, emphasizing its commitment to promoting African narratives globally.

Obaigbena highlighted ARISE News Channel’s dedication to showcasing the continent’s potential and celebrating its achievements on the global stage.

The channel operates around the clock from studios located in Lagos, Abuja, Johannesburg, Cape Town, London, and New York.

Its coverage extends beyond traditional broadcasting platforms, reaching viewers across Europe, North Africa, the Middle East, and the United States through various channels and streaming services.

With its latest expansion into Southern Africa, ARISE News Channel continues to solidify its position as a leading voice in African media, shaping narratives and fostering dialogue on issues of regional and global significance.

As the channel continues to grow its global footprint, it remains dedicated to providing audiences with insightful and impactful journalism that reflects the dynamism and diversity of the African continent.

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Air Peace Flight Delayed, Passengers Stranded After Failed Promise of Hotel Stay

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Passengers aboard an Air Peace flight from Abuja to Owerri found themselves in a state of disarray and frustration after a series of delays and unmet promises left them stranded without accommodations.

What was supposed to be a routine flight scheduled to depart Abuja at 4:30 PM and arrive in Owerri at 5:30 PM turned into a nightmare as the flight was delayed until 6:18 PM due to a reported lack of a pilot.

However, midway through the journey, passengers were informed that the flight couldn’t proceed to Owerri because the airport there would close by 6:40 PM.

The flight was forced to return to Abuja, where passengers endured further uncertainty as they waited for over 20 minutes to receive any communication from the airline. Eventually, they were informed of plans to provide a bus to transport them to a hotel for accommodation.

However, this promise was not fulfilled, leaving passengers stranded and scattered around the airport.

One passenger, who had already experienced delays with another airline earlier in the day, expressed frustration at the lack of accountability and protection for travelers.

The incident highlights the ongoing challenges faced by passengers in Nigeria’s domestic aviation sector and raises questions about the adequacy of regulations to safeguard passengers’ rights.

Attempts to reach Air Peace for comment on the situation were unsuccessful at the time of reporting.

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