CBN: Depositors Claim N107bn from 'Wonder Banks'

THISDAY Newspaper- Ayodele Aminu and Emele Onu

A total of 560,882 claims amounting to N106.9 billion has been submitted by members of the public against 440 illegal companies/’wonder banks’, the Central Bank of Nigeria (CBN) said yesterday.
This came hours after the banking watchdog restricted the stakes a bank can take in bonds issued by state governments.
Out of the N106.9 billion claims made by the public, which still has to be verified by the Inter-Agency Committee On illegal Fund Managers, the apex bank in a statement signed by its Head of Corporate Affairs, Muhammed Abdulahi, said 36 illegal fund managers accounted for N104 billion, or 97.3 per cent of the total collated claims.

It said Nospetco Oil and Gas Ltd, one of the illegal fund managers, accounted for 48 per cent of these claims.
The Inter-Agency Committee, which was set up to stem the menace of ‘wonder banks’, comprises CBN, Nigeria Deposit Insurance Corporation (NDIC), Security and Exchange Commission (SEC), Economic and Financial Crimes Commission (EFCC), Corporate Affairs Commission (CAC) and the Police. The committee according to the statement met recently and deliberated on issues relating to the activities of illegal fund managers and wonder banks with a view to addressing the scourge.
The Committee also deliberated on measures to confront the challenge posed by the stripping of assets by the promoters of the ‘wonder banks’, many of who have gone underground.

The CBN said:”In the case of Sefteg Company Nigeria Ltd, where a liquidator had been appointed by a court, the liquidator was able to realise a sizeable sum of money from the assets of the company and has commenced payment to verified depositors of the company. This approach of using court appointed liquidators will be replicated in all cases to ensure early resolution.”
The committee according to the statement, has also mapped out strategies to address the menace in a comprehensive and sustainable manner through enhanced public communication, the use of court appointed liquidators and intensive surveillance by the law enforcement agencies to resolve the problem.

The CBN therefore advised members of the public to refrain from dealing with unlicenced or illegal operators, who offer astronomical or extraordinary returns on investments to extort money and lure undiscerning people into dubious pyramid schemes. “Members of the public, who choose to deal with these unscrupulous individuals and companies, despite these warnings, do so at their own risk. Where in doubt, enquiries should be made at the CBN, SEC and other member-institutions of the Inter-Agency Committee,” the apex bank stressed.
Meanwhile, the banking watchdog has restricted the stakes a bank can take in bonds issued by state governments.
The restrictions are contained in the guidelines for granting liquid asset to state government bonds posted on the CBN website yesterday.

CBN said: “Banks shall not invest more than ten per cent of shareholders’ funds in bonds issued by a single state government.”
It also stated that in order to be eligible for liquidity ratio determination of a bank, the value of state government bonds in the bank’s portfolio shall not exceed 50 per cent of the value of the bank’s investment in Federal Government securities.
The monetary authority also stated that for the purpose of computing the capital adequacy ratios of banks and discount houses, state government bonds with liquid asset status shall be assigned a weight of 20 per cent or as may be prescribed by the CBN from time to time.
It said the guidelines were issued to confer liquidity status on state government bonds, promote investments in the securities, encourage the regular issuance of the bonds by state governments, stimulate primary and secondary market activities and also facilitate the development of the Nigerian capital market.

According to the guidelines, state government bonds shall be limited to a minimum maturity of seven years in order to be considered for liquid asset status.
“The issuance of the bonds shall be backed by a law enacted by the State Assembly, specifying that a Sinking Fund fully funded from the consolidated revenue fund account of the issuer be established. The state government shall have in place a fiscal responsibility law, with adequate provisions for public debt management, in order to enhance investors’ confidence in the issuer,” the apex bank stated.

Besides, the CBN said the state government shall have a credit rating at inception and throughout the tenor of the bonds. It added that the credit rating shall be determined by a rating agency registered or recognised by the SEC.
The proceeds of the bond issue it said, shall be strictly disbursed to the projects they were meant for and execution shall be monitored by the SEC. In addition, for outstanding bonds, a SEC confirmation shall be required.
It also said the issuer shall maintain a fully-funded Sinking Fund to be managed by a Trustee registered by the SEC.


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