Nigeria injects $2.6 billion into five failed banks, sacks CEOs
17 Aug 2009
In a drastic economic policy measure, the Nigerian government took control of country's five banks and pledged a $2.6 billion (405 billion Nigerian naira) bail-out to save the banking system.
Governor of the Central Bank of Nigeria (CBN), Lamido Sanusi has sacked the CEOs and executive directors of five badly managed mid-tier banks; Oceanic Bank, Afribank, Intercontinental Bank, Union Bank and Finbank, on Friday in a move to revamp the financial sector.
Sanusi who took over the charge of CBN from Chukwuma Soludo barely two months ago, began an audit that revealed that the five banks were close to bankruptcy.
According to CBN, their huge exposure to the capital market and oil and gas sectors, and massive non-performing loans were the key factors that contributed to the liquidity problems in the affected banks.
"A few Nigerian banks, mainly due to huge concentrations in their exposure to certain sectors, and also due to a general weakness in risk management and corporate governance, have continued to display signs of failure," Sanusi said.
The governor assured that the depositors' money would be safe in the bank and the government would continue to support the banks.
The CBN appointed acting CEOs to head the banks asking then to continue with the business as usual.