Nigeria’s banking coup
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Nigeria’s banking coup

Nigeria’s home-grown banking bubble was peremptorily burst by the central bank governor last month. Five bank managing directors were summarily removed and the four that hadn’t fled were arrested on charges of financial irregularities, with their irresponsible loan policies given a public airing. Nick Kochan reports.

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FRIDAY AUGUST 14 began as an ordinary day for the managing directors of Nigeria’s 24 banks. Their agendas included a meeting with the governor of the Central Bank of Nigeria and officials of the Nigerian Deposit Insurance Corporation in Lagos. This was expected to enable the governor, Lamido Sanusi, who had been appointed only two months earlier, to present his outlook for the banking system. But the quietly spoken, even academic, Sanusi presented the meeting with a bombshell. Five of the bank managing directors were told that their banks had failed a stress test implemented by the central bank and that they were fired with immediate effect. Sanusi said they would be replaced by bankers of the central bank’s own choosing. The shares of the five banks – Union, Oceanic, Intercontinental, Finbank and Afribank – were suspended for two weeks.

The governor did not tell the managing directors that, even as he was speaking, their replacements were moving into their offices and removing their documents in the five banks on the other side of Lagos, accompanied by police. Indeed, one observer reports that police had been mustered in force to protect both the central bank office in Lagos and all the affected banks.

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