The Central Bank of Nigeria (CBN) is in full support of the Federal Government’s policy on deregulation of the downstream sector of the petroleum industry due to inherent benefits and advantages to the economy. The bank made the clarification after the Press briefing addressed by the Governor of the bank,
Mallam Sanusi Lamido Sanusi on the meeting of the Monetary Policy Committee (MPC) in Abuja.
The MPC, in reviewing the outlook for the economy in the remaining quarter of the year, observed that that “while inflation had de-accelerated, it is important to recognize that seasonal factors and the planned deregulation of prices of petroleum products (through cost of transportation ) pose a major risk to inflation outlook in the near to medium term.”
The CBN also took cognizance of the moderating impact of the improved agricultural output as well as the slack in demand as a result of the slow growth in monetary aggregates in its decision to retain the Monetary Policy Rate, MRR at 6%. From the above, the CBN made it clear that there was no basis to be wary of the inflationary effects.
The Governor during the question and answer session also made it clear that while inflationary threat was there, the long term positive impact of deregulation will far outweigh the initial pain as more funds will be available to the government for key infrastructure and power which directly impact on economic growth. He concluded that the investment in infrastructure and power will positively impact on output significantly and therefore dampen the inflationary threats. (Pls read the MPC position from this link:MPC Communiqué No 66)
Meanwhile in another development the Central Bank has consented to a request from shareholders of Equitorial Trust Bank to rectify lapses identified in the bank following the special examination of all banks in the country.
In a statement by the Head of Corporate Communication of the CBN, Mr. Mohammed Abdullahi, the shareholders of the ETB executed a Deed of Covenant with five terms and conditions.
Some of the condition include: The willingness of the shareholders to recapitalize the bank by way of injection of additional capital latest by June 30, 2010; Restructuring, diversification and enlargement of the capital base of the bank either by way of a public offering of shares, securing a core investor or merger with a local bank within one (1) year period and Addressing the corporate governance issues in the bank which were mainly ascribed to the previous Executive Management team in the bank.
The Shareholders of the bank also agreed to reconstitute the Board of Directors of the bank through the retirement of two non-executive directors and the appointment of four new non-executive directors, including Dr. Mike Adenuga Jnr. (CON), an erstwhile member of the board, subject to the approval of the Central Bank of Nigeria. They are also to convene a general meeting of the bank’s shareholders to ratify, through a resolution all the nominated appointments to the bank’s board.
The statement stated that having reviewed the terms and conditions of the Deeds of Covenant, the CBN consented to the request aimed at further strengthening the bank. In granting these requests, CBN noted that the Special Examination had not raised issues of serious supervisory concern or criminal activity by any member of the Board of ETB.
The CBN promised to closely monitor the implementation of the terms of the Covenant to ensure that the lapses are fully rectified and in the overall interest of the banking system.