The latest financial scandal in Nigeria has attracted the attention of local media and has attracted international attention from around the world. As words spread about the distribution of a $ 1 billion solution, issues of bank health began to arise in this coastal African country. Concerns continued to grow as the new Central Bank of Nigeria (CBN) governor, Sanusi Lamido Sanusi, eliminated the CEOs of five of Nigeria's largest banks. As a result of the governor's actions, many local financial institutions in Nigeria are preparing for a potentially negative blow to their finances as well as to their customers' funds.
The situation
The reason for the recent economic situation in Nigeria dates back to October last year, when CBN provides financial support to several Nigerian banks. Due to severe liquidity tension, CBN had offered an extended discount window (EDW) to these banks. EDW expanded its credit facilities on the basis of commercial paper and bank guarantees.
However, the problems increased as the banks neglected the payment of what was the loan to them under the EDW. From June this year, the total amount outstanding in EDW was N256 billion. ($ 1.6 billion). While many banks benefited from EDW, five of Nigeria's largest banks claimed the most money: Oceanic Bank, Intercontinental Bank, AfriBank, Finbank and Union Bank. CBN identified these five banks as likely sources of financial instability and is likely to face deeper problems due to unproductive loans.
When the officials reviewed the activity in the EDW, they discovered that four of these banks had been locked almost permanently as borrowers and clearly could not pay their commitment. A fifth bank had been a very frequent borrower as its profile should normally have placed it among the net depositors of funds on the market. It also became clear that the banks concerned took money from the interbank market to pay their exposure to the discount window. For CBN, it quickly became clear that the banks had no cash at all and that their balances had been reduced, both signs that the banks were declining.
As a result of this economic scandal, Sanusi issued a bailout of N400 billion on Friday, August 14, 2009. Sanusi also immediately suspended and replaced CEOs and CEOs of the five banks with CEOs. trainees to manage their management teams. According to Sanusi, these initiatives were taken to solve and stabilize all the institutions and help them continue their activities in a normal way. CBN has also reported that it will expand its investigation to cover the 24 banks in Nigeria.
The solution
Although CBN has recently implemented a recovery plan to address Nigeria's financial situation, local banks must also take action during this time to protect themselves, protect their employees and customers. The best action plan these banks can take to be sure is to provide training to all bank staff. An effective training program will help employees understand the current financial situation, especially the five banks' inability and what can be done to prevent it from happening. In addition, employees must be able to recognize the banking industry's history in their country, the past crises that the industry has shown, and the changes made to ensure stability.
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With education, employees will also become familiar with internal audit procedures and external supervisory bodies that exist. When CBN audits the bank, the employees will be better prepared to ensure a smooth and successful examination. A trained staff will show to CBN that the bank exactly meets all its functions. By implementing a comprehensive training program, Nigerian banks can train a trained and knowledgeable staff who are fully prepared not only to deal with the recent financial scandal but also to deal with any future scandal, should it arise. The implementation of a training program gives the local banks in Nigeria the following benefits.
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