Disclose loans to board members, CBN directs banks The Central Bank of Nigeria has directed all Deposit Money Banks to disclose the details, including ownership of any loan exceeding N1m, offered to members of their board or staff. The central bank also warned that any bank that failed to comply with the directive would face “severe sanctions.” The directive, which was contained in a circular posted on the CBN website on Wednesday, asked the banks to “report the credit facilities availed to their board members and staff in the Credit Risk Management System.” The CRMS, according to the circular, is a central database for credit information on borrowers, established by the CBN Act, which makes it mandatory for all banks to render returns in respect of all credit facilities of N1m and above. The circular, signed by the Director, Banking Supervision, CBN, Mrs. Tokunbo Martins, read in part, “Provisions of Sections 3.4 and 3.5 of the Prudential Guideline for Deposit Money Banks in Nigeria, July 2010, do not preclude banks from reporting credit facilities availed to their board members and staff in the CRMS.” “Banks are, therefore, required to report all credit facilities (principal plus interest) of N1m and above availed to their board members and staff in the CRMS as well as regularly update these credit facilities on monthly basis.” The directive came barely two months after allegations of indiscriminate loan advancement in favour of the Chairman of Ecobank Transnational Incorporated, Mr. Kolapo Lawson. Lawson was said to owe Ecobank Nigeria N1.6bn ($10m) and a further N1.4bn of borrowings, which had been sold to the Asset Management Corporation of Nigeria, according to a Reuters report. The Financial Times of London had cited documents as showing that the CBN notified Ecobank in April of Lawson’s alleged failure to make good on promises to repay the loans passed to AMCON. However, Ecobank later said through its Chief Executive Officer, Thierry Tanoh, that Lawson had repaid a set of loans he took from the bank and no company rules were broken by the transactions. Tanoh said the loans were contracted two years ago in line with the bank’s risk principles and that Lawson was not the chairman at the time, adding that the loans had been disclosed in the annual accounts. South African sovereign fund manager, PIC, a 20 per cent shareholder in the pan-African bank, had said it would wait for the board of directors to investigate and draw conclusions on the allegations around the debt taken out by Lawson. The lender itself had said previously that the loans were performing.
Posted on: Thu, 12 Sep 2013 04:06:19 +0000
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