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

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  • 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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Sport Business

Usyk Claims Victory Over Fury in Historic Bout, Becomes Undisputed Heavyweight Champion

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Oleksandr Usyk emerged victorious over Tyson Fury to claim the title of undisputed heavyweight champion.

The highly anticipated bout, held in Riyadh, Saudi Arabia, showcased the remarkable skill and determination of both fighters, culminating in a split-decision victory for Usyk.

From the opening bell, the tension was palpable as Fury, the reigning WBC champion, and Usyk, the unified cruiserweight champion, squared off in the ring.

Fury, known for his towering stature and formidable punching power, sought to impose his will early on, using his reach advantage to keep Usyk at bay.

However, Usyk, undeterred by the size disparity, showcased his superior footwork and technical prowess, darting in and out of Fury’s range to land precise counterpunches.

As the rounds progressed, the momentum shifted back and forth between the two fighters, with each landing significant blows and demonstrating their resilience in the face of adversity.

Fury’s powerful punches tested Usyk’s chin, while Usyk’s speed and agility kept Fury on the defensive.

In the pivotal moments of the fight, Usyk delivered a masterful performance in the later rounds, capitalizing on Fury’s fatigue to unleash a barrage of punches that rocked the defending champion.

Despite Fury’s valiant efforts to rally back, Usyk’s relentless pressure and pinpoint accuracy earned him the judges’ favor, securing a split-decision victory and etching his name in the annals of boxing history.

With this triumph, Usyk joins the ranks of legendary heavyweight champions, becoming the first undisputed heavyweight champion since Lennox Lewis more than two decades ago.

His victory not only cements his status as one of the sport’s elite athletes but also signals a new era in the heavyweight division, characterized by fierce competition and unparalleled skill.

As the boxing world reels from the electrifying showdown, fans and pundits alike eagerly await the prospect of a rematch between Usyk and Fury. With both fighters showcasing their championship pedigree, the stage is set for another epic clash that promises to captivate audiences worldwide.

In the aftermath of his victory, Usyk expressed gratitude to his team, his country, and his faith, attributing his success to hard work and dedication.

Meanwhile, Fury, while disappointed with the outcome, vowed to bounce back stronger and reclaim his title in the anticipated rematch.

As the boxing world celebrates Usyk’s historic achievement, his victory serves as a testament to the enduring spirit of sportsmanship and the unyielding pursuit of excellence in the noble art of boxing.

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Education

JAMB Releases 36,540 Withheld UTME Results, Dismisses Cyber Breach Claims

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The Joint Admission and Matriculation Board (JAMB) has quelled concerns over the integrity of the Unified Tertiary Matriculation Examination (UTME) results by releasing an additional 36,540 previously withheld scores.

This move follows earlier revelations of withheld results and assertions of a cyber security breach.

Fabian Benjamin, the spokesperson for JAMB, confirmed the release of these results in a statement issued late Tuesday in Abuja.

This latest batch of released scores, when combined with the 531 previously unveiled, brings the total number of results made public to 1,879,437.

Benjamin took the opportunity to address circulating rumors regarding the security of the UTME results.

He categorically dismissed claims of a cyber security breach, saying that the examination outcomes remain intact and securely stored.

He stressed that the results are not stored in any cloud system and thus cannot be compromised by external entities.

At the time of the UTME release, JAMB had disclosed that certain results were withheld pending further investigation.

Subsequently, 531 of these results were recently unveiled with the remainder still under scrutiny.

Benjamin explained that any candidates implicated in examination malpractice are undergoing thorough investigation.

The examination board intends to meticulously review footage from CCTV cameras installed across all accredited centers to ascertain each candidate’s involvement.

Benjamin urged the public to remain vigilant against misinformation originating from sources not affiliated with JAMB.

He attributed the discrepancies in minimum admissible scores to variations among tertiary institutions. Some institutions, he noted, proposed lower minimum scores than others, resulting in varying benchmarks.

Benjamin clarified that these benchmarks are determined collectively by all Heads of Institutions during the annual Policy Meeting on Admissions, ensuring uniformity across the country.

Also, Benjamin cautioned religious organizations against overstepping their designated roles.

He warned against the dissemination of false information to governmental bodies for personal gain.

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Travel

British Airways Owner IAG Prepares for Summer Surge Amid High Travel Demand

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As the world gradually emerges from the grip of the pandemic, the travel industry is witnessing a resurgence in demand with British Airways owner IAG SA gearing up for a busy summer season.

Despite lingering challenges, the airline conglomerate remains optimistic about the outlook, citing strong demand for travel within Europe and across the Atlantic.

In a recent stock exchange filing, IAG disclosed an adjusted operating profit of €68 million ($73.3 million) for the three months ending March.

According to Chief Executive Officer Luis Gallego, the group’s core markets, including the North Atlantic, South Atlantic, and intra-Europe routes, have shown robust performance, positioning them well for the upcoming peak travel period.

With vaccination rates increasing and travel restrictions easing in many parts of the world, consumers are eager to resume travel plans, fueling the surge in demand.

However, the road ahead is not without its challenges. While travel within Europe and across the Atlantic remains strong, other regions present a more complex operating environment.

The ongoing conflict in the Middle East has dampened demand for certain destinations, while airspace restrictions resulting from geopolitical tensions, such as the Russian invasion of Ukraine, have disrupted flight routes to East Asia.

Despite these hurdles, IAG remains resilient, banking on the strength of its core markets and the performance of its brands to weather the storm.

The company’s strategic positioning and proactive measures to adapt to changing circumstances have positioned it to capitalize on the rebound in travel demand.

As the summer season approaches, IAG is focused on ensuring operational readiness to meet the surge in passenger numbers.

With travelers eager to reconnect with loved ones, explore new destinations, and embark on long-awaited vacations, the airline group stands ready to facilitate safe and seamless travel experiences.

As vaccination campaigns progress and travel sentiment rebounds, IAG’s proactive approach and strategic investments position it as a key player in the aviation industry’s recovery journey. With optimism on the horizon, the company remains committed to delivering exceptional service and fostering a seamless travel experience for passengers worldwide.

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