TSA: We could’ve sacked bank CEOs, says CBN

bibing

The Central Bank of Nigeria on Tuesday said it could have removed the chief executive officers and executive management teams of banks that recently violated the Federal Government’s directive on the Treasury Single Account.

The CBN said it chose rather to impose heavy monetary fines on the affected banks because the removal of their CEOs and directors could lead to a major systemic crisis in the financial services sector and the economy in general.

The Deputy Governor, Corporate Services, CBN, Mr. Bayo Adelabu, made the disclosure during the annual business forum of the Bank Directors’ Association of Nigeria in Lagos.

The CBN had a few weeks ago imposed over N8bn fines on First Bank of Nigeria Limited, United Bank for Africa Plc and Skye Bank Plc for failing to adhere to the TSA directive.

The banks were found to have concealed several billions of naira belonging to the Federal Government, especially funds belonging to the Nigerian National Petroleum Corporation.

It imposed a penalty of N1.877bn on First Bank; UBA was fined N2.942bn; while Skye Bank was fined N4bn.

Adelabu said the CBN chose to impose the heavy monetary fines on the banks because it knew that the lenders’ directors would ask questions from the CEOs as to the gravity of the offences committed.

According to him, the central bank now has zero tolerance for rendition of false returns and will not in any way condone such an act.

The CBN deputy governor told the bank directors present at the meeting that they should seek to know the reason why the central bank imposed the heavy fines on the banks that violated the TSA directive.

While First Bank reportedly concealed N37.548bn belonging to the NNPC, UBA was alleged to have concealed N58.843bn of NNPC funds; Skye Bank was alleged to have concealed N40bn.

Adelabu said, “I know that the huge penalty that the CBN has levied on a couple of banks has been a source of concern and subject of discussion. Bank directors need to take interest in this. Nothing stops you from securing a date or appointment with the CBN governor or the Committee of Governors and ask: why this huge penalty?

“All we were used to were the recommendations by the Bank and Other Financial Institutions Act’s N2m fine and all that. This fines has become a chicken change to the banks; all they will say is: let us break the law and we will pay them N2m later on. We are now in the era of zero tolerance.

“Some of the offences committed actually warrant the CEOs being removed; not only the CEOs, but the CFOs, the treasurers, even the entire executive management; but we know the systemic implication of this on the industry at this crucial time in our economy.

“This is why some of them were even converted to financial penalties and we know that the boards will ask questions: why have you incurred these billions as penalties? What is the gravity of the offences you committed? The boards can then decide in their own business that you are not fit to head this bank.

“We know the implication of the regulator sacking an MD; it has a systemic impact. So, when we imposed the penalties, the directors ought to find out the nature of the offences committed by the banks. There is no amount of penalty that is too much for a bank that renders false returns. Why that? So, this is to ensure that the TSA policy has come to stay just as the BVN has come to stay.”

Adelabu, who represented the CBN governor, Godwin Emefiele, had earlier read the governor’s speech to the bank directors present at the forum.

He also said that series of circulars from the CBN were meant to stabilise the economy and the currency, adding that the Bank Verification Number project was good for the country.

“We are in a very difficult situation in this country. Whether we like it or not, we have become poorer than we used to be. I never believe we were rich anyway. Our external reserves are a bit lower than $30bn. We have to protect it. The BVN and other circulars will help in this regard,” he added.

Earlier, the President, BDAN, Dr. Sonny Kuku, had advised the members to build good relationship with their organisations’ internal and external stakeholders.

Speakers at the event included a former CEO of Guaranty Trust Bank Plc, Mr. Fola Adeola, and a management consultant, Mr. Adedotun Sulaiman.

Kuku said the theme of this year’s BDAN forum was apt in view of the recent challenges being faced by many banks and other financial institutions.

Source: Punch