The Banking Consolidation Exercise carried out by the then Governor of the central Bank Prof. Charles Soludo has come under fire from the current CBN Governor Sanusi Lamido Sanusi who said the exercise was a sham and that many of the banks never raised the Capital which they claimed they did.
Sanusi in a 23-page convocation lecture titled, “The Nigerian Banking Industry: What Went Wrong and the Way Forward” he delivered at the Convocation Square of Bayero University Kano on Friday said the Consolidation helped to create bigger banks while it failed to overcome the fundamental weakness in corporate governance in many banks.
The Governor said, “A lot of the Capital supposedly raised by these so-called ‘mega-banks’ was Fake Capital financed from depositors’ funds. 30 per cent of the share Capital of Intercontinental Bank was purchased with customer deposits. Afribank used depositors’ funds to purchase 80 per cent of its IPO. ”
This article first appeared in Banking Oracle on November 7th 2010