WARNING: This is Version 1 of my old archive, so Photos will NOT work and many links will NOT work. But you can find articles by searching on the Titles. There is a lot of information in this archive. Use the SEARCH BAR at the top right. Prior to December 2012; I was a pro-Christian type of Conservative. I was unaware of the mass of Jewish lies in history, especially the lies regarding WW2 and Hitler. So in here you will find pro-Jewish and pro-Israel material. I was definitely WRONG about the Boeremag and Janusz Walus. They were for real.
Original Post Date: 2011-01-04 Time: 17:00:02 Posted By: News Poster
By Akoma Chinweoke
The Central Bank Governor, Lamido Sanusi, has again stirred the hornet’s nest by stretching his reform agenda to include the scrapping of Universal Banking In its stead banking licenses will from this month be issued for each independent stream of specialisation: mortgage stream, microfinance, investment banking, commercial banking, etc.
Licensing will also depend on the extent of the bank’s international, national and regional levels of business focus.
Having sealed this arrangement, the CBN reasoned that depositors’ funds will no longer be endangered as commercial banks will concentrate on their traditional business areas. But bankers have always stressed that what the sector needs is confidence building measures.
Sunday Vanguard Business spoke with some financial experts on their expectation on the new model which would require the banks to do away with their subsidiaries and concentrate on core banking function.
CBN needs to strengthen its supervisory and oversight functions -Johnson Chukwu, MD/CEO,Cowry Asset Management Limited
The newly-introduced Central Bank of Nigeria (CBN) banking policy, which compelled banks to cease universal banking, will certainly reduce the risk exposure of deposit money banks. With this new policy, deposit money banks are required to limit themselves to specific functional roles such as commercial or merchant banking services.
These deposit money markets are further classified into regional, national or international banks with their capital base determined by the economic space they want to operate in.
This therefore means that banks will only undertake risks which their capital base can support. Under the just repealed universal banking model, banks were spreading their capital base and assuming risks in all sorts of non-bank financial and even non-financial services such as insurance, capital market, registrars, trustees, pension funds, HMO, etc.
However, with the new banking policy, the banks are compelled to focus on their area of core competence.
It should however be stated that the reversal of universal banking/reintroduction of functional segregation is in itself not a panacea to banking industry crises. Banks can still assume risks beyond their capacity if not properly supervised. To therefore mitigate the risk of systemic crises in the Nigerian banking industry, the Central Bank needs to strengthen its supervisory and oversight functions.
CBN supervisors must be proactive, knowledgeable, upright, decisive and ready to apply necessary sanctions whenever the need arises, irrespective of the social or financial standing of the culprit/defaulting bank or its directors.
Scrapping of universal banking system unnecessary- Sunny Nwosu, National coordinator, Independent Shareholders Association?
Our position is that it was very unnecessary to scrap universal banking system. What the CBN ought to have done since there has been a lot of investment in the system is to stop granting licenses for universal banking and grant whatever licenses it want to grant to new entrants into the system based on what they want to do. You have to take that along with the situation where a lot of money, time and training has gone into the system.
As things are now, the CBN has created more problems for banking sector than they can manage. We said it very clearly at the initial stage that the crisis the sector is facing will need more than five years to get out of it. So, what I think is that the CBN should be bold enough to retrace its step, recall the managers that they have disgraced who, of course, were victims based on different decisions and sit down with them , those they don’t want again they should find a better way of asking them to formally resign from while the banks would continue to run properly.
They also know the customers who would help in the growth and turn around of the economy. It is very clear that nothing is actually working in the economy but only a few of them can talk about occupational toxic. Others are actually managing to recover some loans to now say they have made profit but those loans that are being recovered were actually loans made by those whom the CBN have disgraced out of office. If there are no loans, there would not be any recovery. So the only way out for us is to retrace our steps and be bold to say we are sorry for the steps we have taken.
It is not the nomenclature that matters- Uche Ubani- Investment and Financial Consultant.
In the last 10-12years of the democratic system, we have come to terms with the word reform in one area or the other, its impact is what we should be looking out for now . At different fora where the issue of universal banking is discussed, I have always maintained that this system is not really new . It is just being called a different name .
The problem of Nigeria and its financial system is not in the name that a system is called. Rather, the challenge is the people that operate the system right from government down to the citizens. So whether you call it universal banking or any other name, until we begin to think in terms of what works for Nigeria, and everybody having the same mind of making things work , we would keep reforming.
Prior to the introduction of the universal banking in 2005, we had regional banks in the likes of Cooperative Bank of Western Nigeria, ACB of Eastern Nigeria, Bank of the North, etc. We had national and multinational banks..
So, it is not the nomenclature that matters; it is how the system is impacting on the economy The volatility that has been experienced in the system is as a result of a number of factors namely the human beings that run it, unstable government policy; when government policy is working at cross purposes with the reality on ground, the economy can never move forward. I am not against change but change must be directed at improving the living standard of the people. So we must change our culture and for the new system to work, the regulators must be up to their billing and ensure proper regulation of the system.
We must begin to imbibe the culture of implementing our laws and learn to play by the rules as it is only then we can begin to have a purposeful direction both in government and private sector. I think the crux of the matter is that we can make universal banking work because it has worked in other climes. It is we as a people that must decide what we want the country to be.
Selfish interest is killing and dragging us back. World wide in a free market economy, it is the banking system that drives the economy as credit is the life blood of any economy and when you remove that from the economy, it would be in comatose. So we must get banking to work again as it is only then the real economy would begin to witness a change and life would come back to system.
The truth is that until the infrastructural facilities in the country begin to work, we would not cease to have problems because any person that has any type of business in Nigeria is going through hell running it . There must be a re-orientation of our thinking and way of life.
CBN has had enormous human resource challenges -Oluba Martin N, president, ValueFronteira Ltd.
It is important to state that just like any other model, the universal banking framework has its own flaws. One of the traditional arguments against it include the abuse of conflicts of interests, promotional pressures, mismanagement of bank assets, speculative financing and exploitation of investors.
The financial crisis was not a consequence of the adopted banking industry framework, but about the inability of the CBN as an institution to put in place and follow through duly established processes to ensure that people in the banks and the banks who perpetrate procedural infractions are brought to book in terms commensurate to their offences.
This therefore requires a menu of appropriate rules, requisite human capacity and processes and, on the contrary, has not much to do with the framework in place. Although the opportunity for corporate governance infractions under universal banking is high, it nevertheless does not weaken controls in order to entrench irresponsible credit risk behaviour and outright fraud.
On the contrary, it is very amenable and supportive of banking prudence and conservative behaviour. Perhaps, relative to the newly suggested model, what universal banking failed to effectively support was a robust platform for Islamic banking.
Now, if the argument is that the adoption of the universal banking in the first place was not well thought_out and thus did not anticipate its potential to escalate corporate governance risks, it will be important to ask whether the current leadership of the CBN has now clearly thought through the functionally separated banking model which it is trying to adopt to ensure that current and future risks are minimized and that there will not be a return once more to the abandoned model.
This is however difficult to believe. Firstly, the monitoring and supervisory failure of the CBN in the last regime was a consequence of inadequate human capacity both in number and professional banking specificity. The proposed model which creates different varieties of banks will equally place even more demand on the human capacity readiness of the Central Bank as specialised banks will require high levels of specificity of professional labour.
Also, even the current human capacity standing of the industry, the operators’ skills and competence levels may not reasonably support the proposed new types of institutions. Third, the costs of reversals appear not to have been adequately taken into consideration and are not only about the old model but more fundamentally the cost of reversing the 2005 consolidation policy. Fourth, perhaps in taking this decision, the Central Bank may have overlooked the fact that consolidation was intended to address the challenges of undercapitalisation and the shortage of long-term funds.
One major implication of this reversal is the diminution of these noble goals that universal bank were meant to pursue.
Our own contextual realities should define the choice we make.
Original Source: 
Original date published: 2 January 2011
Source: http://allafrica.com/stories/201101030723.html?viewall=1