Investigation Reveals Where Bank Loans Went Bad

searching-manA Fortune&Class in-house panel of experts has, after a review of the bad loans accrued to the five banks currently under the Central Bank of Nigeria’s direct supervision, submitted that the Federal Government holds largest liability in repayment to the banks. The committee of experts nonetheless observed that the figures made public by the CBN also affirmed that the affected bank officials must have been heavily involved in unethical manipulation of the stock market even as the panel agreed that the banks, indeed, tried to play their economic role of financial intermediation by providing a big chunk of their facility for real sector activities.

The conclusions of the panel’s review may put the lies on the generalized opinion prevalent in the public place of the bulk of the five banks financing going into loans for stock market trading and the importation of petroleum products.

The panel reports that 51 per cent of the N747,000,000,000 alleged bad loan, approximated at N375,487,000,000 was given out by the banks to the real sector. The classification of the real sector, in the consideration of the panelists includes activities in construction, manufacturing, imports of raw materials for industries, farming and telecommunications.

Interestingly, the panel reports that a mere 22 per cent of the N747billion bad loan aggregated at N163billion can be attributed to the stock market while N218billion, about 27 per cent of the bad loan has been tracked to have been borrowed by players in the oil and gas sector.

The Case For Union Bank

barth ebongTaken on individual profiling, Fortune&Class panelists submit that the sanctioning of Union Bank managing director should raise questions because of the five banks under the CBN’s thumb, Union Bank’s hope of recovering its bad loan is more assured because the bulk of the bad loans atissue are facilities given to entities in the real sector.

Of the total N73.582billion bad loan attributed to Union bank N66billion summed up to be loans to the real sector. The bank’s only stock market related bad loan is the N1,291,737,218 granted to GMT Securities.
In the same vein, the bank’s only outstanding to the oil gas sector is the N6,251,658,228 taken by Zenon Oil and Gas. Panelists argue that Zenon has a higher likelihood of paying up because of its track record in the oil and gas sector.

It is not, however, a shared optimism, as in the hope of recovery of the bad loan from a company like Femi Otedola’s owned Zenon when compared to the N28.5billion Oceanic Bank is expecting Rahmaniyya Global resources, a company in the petroleum products marketing sector, to repay it.
Rahmaniyya’s operations are reportedly hampered at the moment.

Crosscheck of operations at the Apapa depot of the company shows that not much activities are going on there. A senior staff of the company confides that operations have been hampered because of the company’s huge indebtedness to banks. The official took time to protest that the company’s situation became bad because an appreciable percentage of the loans secured at commercial banks were usually given out as kick backs to officials of the banks where the loans originated from.

Where Oceanic Bank May Lose Out

cecilia ibruAs a stand alone, Oceanic Bank’s loans are locked into the real sector, that is about N122billion of a total N278.2billion. The worrisome aspect of the bank’s bad loan portfolio, as it were, would be the N56billion exposure to the stock market. This figure aroused much concern because just six companies, as recorded, were found worthy enough to enjoy margin loan from the bank. The panelists reasoned that what the figures suggest is that officials of the bank merely decided to employ the services of this small number of stockbrokers to help it exploit the stock market.

The panelists also submit that the larger percentage of Oceanic Bank’s expected repayment from the bad loans tracked to the oil and gas sector of about N100billion hold no prospect of recovery in consideration of the track records of most of the entities that secured the loans.

Intercontinental Bank shares the same fate that may befall the recovery efforts of Oceanic Bank. With N34billion outstanding from just seven stock-broking houses most of which have continued to dispute the figures in the public domain.

Bad Loan Recovery Challenges For Intercontinental Bank

akingbolaAs in the case with Oceanic Bank, all of the brokerage houses involved have protested that the loan accounts were opened jointly with the banks. Some even complained that they never received any cheque book on the account that was in the joint names of the brokerage house and the bank.

In different letters of protest forwarded to the banks, some of these brokerage houses had hinted at being asked to engage in stock market manipulation by the bank. One of such protest letters written and forwarded to Intercontinental bank which Fortune&Class got a copy, reads:
“…Your bank also included clauses in the contract that gives you the sole right to decide which stock can be purchased and when such can be sold. The records presented to us even show that some of the shares purchased with the margin loan included the stock of your bank.”

The letter from the lawyer tells of more worrying aspects of the margin loan where it notes that:
“Our client mentioned the fact that they never solicited the loan but rather your bank approached them with the offer of the loan…even as their accounts were debited for the processing and management fees for the transaction before they had even had any opportunity to review or sign the offer letter.”
For our panelists, it is issues like these that may stunt efforts to recover the bad loans for Intercontinental Bank. This is besides the crisis of the Federal Government non-payment of petroleum products subsidy differentiation to oil marketers that secured a large part of the N79billion loan that was used in importing petroleum products into the country.

‘Afribank played big in the Stock Market…sure to lose big’

sebastineNot even the EFCC Chairman can yet fathom how the five companies that Afribank granted about N60billion to trade the stock market, would pay back their exposure in the current lacklustre stock market.

Whose interest was the bank management advancing by farming out the huge sum of N60billion to just five entities? Again, it is believed that the bank played big in the stock market to forward its interest. “That N60billion cannot be recovered in the short term,” one of our panelists said.

Finbank Liberal Lending Policy

okeyOf the five embattled banks, Finbank Plc profiles a liberal lending culture. Though we can’t say for certain how the loans were collaterised, the fact of farming out its loan to a larger number of borrowing entities compared to other banks in the bad loan quagmire, suggests that recovery of debt may be easier Finbank.

The bank’s total non-performing loans as calculated by the CBN is approximated at N42.4billion. Of this, about N15billion was borrowed out to 83 operators in the real sector. This is just as the total sum of N11.1billion bad loan accruing from stock market activities, was granted to nine entities with the highest calculated to still owe about N3billion.

The same liberal lending policy shows in the figure of the loans repayment of N14billion from 17 entities in the oil and gas sector.

The Sector That Is Sure For Repayment

Our panel of experts are of the opinion that bad loans accrued in the real sector may easily be recovered because of the quality of collaterals that would have been provided before approval to draw down. This, however, excludes any insider related dealings.

Compared to loans to the real sector, recovery of bad debts accrued from stock trading activities may be considered hopeless in consideration of the state of the Nigerian stock market, the macro-economic environment and the harsh realities of the global economic meltdown. The collaterisation of loan assets in margin loan is linked to securities purchased, the lender is, however, supposed to dispose of with the securities in the open market when prices go below an agreed threshold. But it turned out that these banks didn’t effect the power of cashing the securities by selling off when the prices of the securities slid below the agreed threshold. Thus, the lenders are left with collaterised securities that are way below the worth of the loans.

Same is the extant downside of the oil and gas sector. With consistent sliding petroleum product prices and the unwillingness of the Federal Government the only buyer of petroleum products in Nigeria, to pay up the difference between the landing cost of petroleum products in the country and the price at which the marketers are mandated to sell to retailers, the expectation of bad loan recovery from the entities in these sector may be challenging.

Who Is Paying Up

The Economic and Financial Crimes Commission has said that it had so far recovered a sum of N25.5billion out of the N1.143 trillion of total non-performing loans of the five banks.

The break-down of recovered debt and the banks are as follows; Intercontinental bank N7, 736, 571, 744.19; Finbank.N1, 590, 417, 332.05, AfribankN7, 551, 121, 378.69, Oceanic bankN8, 033, 481, 868.65; Union bank N659, 240, 400.78.

Executive Directors Took N5bn Unsecured Loans Each

More troubling revelations have continued to emerge from the banking industry in the wake of the sack of five bank chiefs and members of their senior management cadre. Some top banking industry staff have started talking of the justification of the action of the Central Bank of Nigeria’s Governor, Sanusi Lamido Sanusi to sanction the affected bank chiefs and their senior management cadre because of their connivance to fleece the bank.

Specifically, the entire management board of one of the banks is said to being investigated by the CBN to ascertain how each Executive Director got approval of N5billion loan facility.

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IBRU FAMILY RECRUITS SENATE LEADERSHIP, PRESIDENT’S WIFE TO SAVE CECILIA

Vol 2 Issue 31 magazineThe Ibru family reportedly threw all its influence and moneyed privileges into the battle to mitigate the public embarrassment of Mrs. Cecilia Ibru, sacked Managing Director of Oceanic Bank and wife of the patriarch of the Ibru’s clan, Olorogun Michael Ibru.

Details emerging in the wake of the sudden appearance of the erstwhile Managing Director of Oceanic Bank at the office of the Economic and Financial Crimes Commission (EFCC) last Wednesday, indicate that the wife of the Chairman of the Ibru organization was advised to beat a tactical retreat to allow the family deploy its massive goodwill in the nation’s political arena to stave off the prospect of an embarrassingly long detention for Mrs. Ibru by the EFCC.

Knowledgeable insiders to the horse trading that led to the eventual emergence of the woman fondly revered as the Nigeria’s first lady of banking, confided in Fortune&Class Weekly that the Ibru family pulled all the plugs through the Senate and the Presidency to get certain assurances from the EFCC before Mrs. Ibru was given the green light to submit herself at the EFCC.

“Seriously, we have only heard about the ingenuity of the Ibru family in making money, but I was a witness to another aspect of their lives these past days when I experienced their ability to move around and lobby office holders to intervene in the roiling crisis that had claimed one of their own, Mrs. Ibru. It’s not as if you saw any of the Ibrus physically, but there were many people lobbying on her behalf especially at the Senate,” the source said.

“You know, the second day after the Governor of the Central Bank of Nigeria, Sanusi Lamido (Sanusi) made those earth shaking pronouncements about sacking five bank chief executives, the President left the country in company with his wife, Turai. The next level of authority, in the real sense of it, at that time, was the Senate. And it was to the Senators that the Ibru lobbyists took their battle to get political pressure to be applied on the EFCC boss to provide lighter treatment and shortened detention for Mrs. Ibru. The fulcrum of the argument of the lobbyists is that the Central Bank of Nigeria was making a mountain out of a mole hill by its decisions to sack the bank managing directors and their arrest by the EFCC.

“The lobbyists pleaded with the leadership of the Senate to prevail on the Chairman of the EFCC, Mrs. Farida Waziri, to make a commitment to making Mrs. Ibru’s detention before taking her to the court as short as possible.

“Of course, they got sympathetic ears in the Senate. The Senate leadership made overtures to the Chairman of the EFCC who insisted that Mrs. Ibru must first surrender herself to the anti-grafts agency before she could determine the next step.

“Hajia Binta Turai, wife of President Umar Yar’Adua also played a peripheral role in the Ibru EFCC saga. Two of the first lady’s friends were drafted to talk to the EFCC Chairman to provide a soft landing for Mrs. Ibru, the source said.

Mrs. Ibru had, as part of her battle to stop her arrest and detention, dragged the Central Bank of Nigeria and its governor, Sanusi Lamido Sanusi before a Federal High Court in Abuja over her compulsory removal from office, demanding the sum of N50 billion for “exemplary, punitive and aggravated and general damages.”

The EFCC, however, declared Mrs. Ibru and Mr. Erastus Akingbola of Intercontinental Bank wanted on Sunday, 23 August, after failing to honour invitations for interrogation, sequel to their sack on August 14 along with three other bank MDs, Mr. Sebastine Adigwe of Afribank, Okey Nwosu of Finbank and Bartholomew Ebong of Union Bank.

A statement issued by EFCC Head of Media and Publicity, Femi Babafemi, explained that Ibru and Akingbola “are wanted in connection with fraudulent abuse of credit process, insider trading, capital market manipulation and money laundering running into billions of Naira.”

Investigation Reveals Where Bank Loans Went Bad
akingbolaA Fortune&Class in-house panel of experts has, after a review of the bad loans accrued to the five banks currently under the Central Bank of Nigeria’s direct supervision, submitted that the Federal Government holds largest liability in repayment to the banks. The committee of experts nonetheless observed that the figures made public by the CBN also affirmed that the affected bank officials must have been heavily involved in unethical manipulation of the stock market even as the panel agreed that the banks, indeed, tried to play their economic role of financial intermediation by providing a big chunk of their facility for real sector activities. (read more)

SEC: MUSCLE FLEXING BETWEEN DG, AL-FAKI AND BOARD CHAIRMAN, SENATOR UDOMA


Some of the suggestions and recommendations contained in the report of the Technical Committee on the Review of Capital Market Structures set up
by the Securities and Exchange Commission are believed to be generating
some form of anxiety at the Abuja headquarters of the SEC.

The Committee which was set up, fourth quarter 2008, …

continue reading here.

March 09 Edition

Fortune&Class Weekly

Fortune&Class Weekly

Fortune&Class Weekly is a business magazine published every week in Nigeria, Africa.
The Volume 2, 5th edition of Fortune&Class Weekly is this.

Click http://fortuneandclassmag.com/?p=37 for more.

GOVERNOR/ASSEMBLY FACE-OFF: How Tinubu Pressured Fashola To Sign Appropriation Bill

When Mr. Babatunde Raji Fashola, Governor of Lagos State put pen to paper to append his signature to elevate the Lagos State appropriation bill to the State appropriation act 2009, it was as a result of a parched work on tempers and what ought not to be in governance as canvassed by the Governor on one hand and the Speaker of the Lagos State House of Assembly on the other hand.

As reported in last week’s edition of Fortune and Class Weekly, the Lagos State Governor had shunned the appropriation bill signing ceremony. Though he had provided no official reason than the explanation of his Special Adviser Legislative and Political Matters Mr. AbdulLateef AbdulHakeem to the seated audience that the Governor attention was needed somewhere else beyond the Government House venue of the signing ceremony, it later emerged that the Governor had misgiving over a certain imputation into the budget he submitted to the State Assembly especially with the addition of the proviso that the State Assembly be given its budgetary allocation every beginning of the month as a matter of priority and that it (Assembly) would only be accountable to itself. The Assembly was reported to have imputed this proviso on the strength of a self accounting bill passed by the first Assembly of the State and signed into law by the then Governor, Asiwaju Bola Ahmed Tinubu.

Fortune&Class crosschecks at the State’s Assembly complex confirmed that though the bill was signed into law by the Tinubu its imple-mentation was put in abeyance throughout Tinubu’s tenure on account of the dominance of the Assembly membership by Tinubu’s acolytes.

Probes in the Alausa seat of Lagos State Governance asserted that it is this self accounting law and some other minor inputs that roused Fashola, Tinubu’s successor to dare the State Assembly, which has an absolute majority membership of the Governor’s Action Congress. Political insiders however, opined that the Governor indeed attempted to dare the Assembly at his own risk:

“I think it is the urge to take on the Assembly on a principled position that made the Governor to dare the Assembly the way he did penultimate Friday. It is obvious that the loyalty of the Assembly members is first and foremost to Asiwaju Tinubu, I real don’t think the Governor has a voice of his own in the Assembly to dare to take on the Assembly on his own.” An Alausa insider told Fortune and Class.

As it turned out, it was at the Bourdillon residence of Asiwaju Tinubu that the tension that had arisen from the Governor’s refusal to sign the appropriation bill was doused:

“I understand that the Speaker who was also ready to flex his muscle reported the Governor’s conduct at the aborted signing ceremony to Asiwaju with a threat to take on the Governor. Asiwaju called the Speaker and the Governor to a meeting at his Bourdillon residence, Oba Akiolu of Lagos was also present with the Deputy Governor, the Commissioner for Information, Mr. Opeyemi Bamidele and the Commissioner for Environment, Dr. Muis Banire.

“The Governor was compelled to accept the appropriation bill as passed by the State’s Assembly and was persuaded of the need to preserve the outward poise of unity and harmony between the executive and legislative arms of government in the State. We don’t know yet if the Governor would treat the self accounting input of the Assembly the way Asiwaju treated it, I guess we would have to wait till next month when the first tranche of allocations are signed out.” The source added.

Perhaps, what has become more worrisome for Governor Fashola according to a source close to the State’s Executive Council is what the source described as the distraction caused the Governor by those members of the Governor’s cabinet that have become direct reporters to his predecessor in office, Asiwaju Tinubu:

“Of course it is no longer news that Asiwaju selected majority members of the State’s cabinet without recourse to Fashola, so naturally, their loyalty is heavily skewed towards Asiwaju, but I don’t think that is enough reason for some members of the cabinet to be acting as official moles to Asiwaju. We’ve heard of one or two of these cabinet members always excusing themselves during cabinet meetings to go to the toilet only to use the opportunity to phone Asiwaju and give him an update on what they were discussing at the meeting. Governor Fashola had cause at a time to reprimand these Commissioners to be focused at the task they were appointed for than acting as news carrier.” The source said.

UNSPENT FUND: FED. MINISTRIES ON LAST MINUTE SPENDING SPREE TO BEAT YAR’ADUA’s DEADLINE

Nigeria’s president, Umar Musa Yar’Adua may have placed excessive premium on the integrity of the federal ministries, government departmental and agencies to feel secured enough to inform the national assembly of part financing its budget deficit in 2009 through unspent funds taken back from federal ministries, departments and agencies.

FORTUNE&CLASS Weekly discreet investigations in Abuja, have, however, shown that the president and very senior officials in federal government ministries and agencies may be working at cross purposes.

“Even before the coming of the Yar’Adua’s administration, it has been made mandatory during the Obasanjo’s presidency for federal ministries and departmental agencies to rule off their accounts by the 15th of December.” A source in the federal ministry of finance informed. “The idea is that after the rule off, no expenditure aside salaries and allowances are allowed until the succeeding budgetary allocation are effected.” The finance ministry source added.

This year end account rule off had turned a mere paper directive until the assumption of office of President Yar’Adua who seemed to decide to make capital of the directive he had inherited from the Obasanjo administration, the seriousness of the administration in this regard was orchestrated when the erstwhile ministers in the federal ministry of health were forced to resign and prosecuted in court on account of an alleged N300million unspent fund in 2007.

FORTUNE&CLASS Weekly cross checks in Abuja, however, revealed that the frontal measures taken against the sacked ministers of health might have hardened the resolve of strategically placed civil servants that had become annual beneficiaries of unspent funds already in the kitty of the ministries.

An insider in the federal ministry of information and communication told this magazine last week that the officials in the account and audit units of the ministry have been busy over the last three weeks as they feverishly dish out contracts and supplies notes so as to eat up a large percentage of what is left of the unspent fund.

“The president thinks he can beat us to the game but we are better at it,” the source boasted. “Civil servants are smarter in these matters, is it not about filling out the appropriate vouchers and back dating them where necessary? In fact, we know how to settle the officials from the ministry of finance that usually come to supervise the account rule off.”

Another source, in an aside with this magazine explained that the cornering of unspent fund in federal ministries and parastatals is limited to very senior officials and staff members in the account and audit department. In the light of the seriousness of the present administration and the oversight function of members of the National Assembly, the source confided that these senior officials agree among themselves on a predetermined amount of unspent fund they will return to the government as unspent fund and also find the appropriate way to dispense with the percentage of unspent fund they have decided to corner.

Several civil servants also spoke of the federal government renewed efforts at ensuring accountability in service like directing that henceforth, any civil servant that was to proceed on a conference; seminar or any form of out station official duty would have the conference or seminar fee paid directly to the accounts of the facilitating body. This is contrary to the tradition where participant (s) from the ministry is/are given conference or seminar participating in cash. A curious angle to seminar or conference participation in the traditional sense is that some conference or seminar fees are inflated that after cash payment to the participating civil servant, such would just cream off the difference an pocket it while another may collect the participating fee and out of station allowance and altogether abandon the conference or seminar.

Beside, overnight and out of station allowances are now paid direct to the account of recipient civil servant than collection by cash as part of the new accountability regime.

Some of the civil servants FORTUNE&CLASS Weekly interacted with said these measures have been eroded with the opening of multiple accounts. Asserting the fact that it may be near impossible for the federal government to arrest the trend of frantically spending off unspent fund in a ministry within a short period, Mr. Nathaniel Cole, a forensic accounting expert and anti fraud specialist said that the model of conventional auditing that the government depends on to stop the diversion of unspent fund into private pockets shows that government is not serious about tracking unspent fund:

“I don’t think government is serious about this. It is obvious that the officials that are going to audit the ministries are interested parties so there is no way they can objectively audit the account to ascertain how unspent fund would have been tampered with. What government needs at such time like this is the service of forensic accountants, because, in truth, a certain aspect of civil servants efforts to corner the unspent fund has to do with some criminality in the area of filling vouchers and back dating them. Only forensic accountants can handle such case. For forensic accountant, it is easy to pinpoint the exact culprits in the account manipulation.” Cole said.

BANK MDs TROOP TO FIRST BANK FOR BAIL-OUT…FINANCIAL INSTITUTIONS REJECT SHARES AND PROPERTY AS COLLATERAL

First Bank of Nigeria might have become the unofficial lender of last resort for many banks currently experiencing liquidity problems. A bank is said to experience liquidity crisis when it can not support its short term obligation to its customers by itself. Thus to continue to serve the needs of its customers, the bank may have a recourse to another commercial bank which may lend it the short term fund, usually for a period of between seven days and 90 days.

Traditionally, the Central Bank of Nigeria is supposed to be the lender of last resort for banks and other financial institutions, but FORTUNE&CLASS cross checks in the banking industry showed that rather than many commercial banks approach the CBN to augment their liquidity position, most of the banks managing directors opted to seek the support of the management of First Bank to provide short term funding support for their operations.

“I can tell you that most of the banks managing directors, these even include so called first tier (banks that are supposed to have more than a billion dollar capital base) troop to First Bank to negotiate funding support.” A banking industry insider said.

The option of adopting First Bank in the rather unusual role of a lender of last resort might not be unconnected with many commercial banks efforts to shy away from the official channel of funding provided by the CBN so as not to be labeled as desperate to survive and consequently provide ammunition for the de-marketing campaigners that are going around the sector, insinuating the parlous state of health of some banks on account of their liquidity position.

“It is easy for bankers to know who is applying for what with the CBN.” A senior banker said. “But negotiating and securing funds from a colleague banking institution has all the trappings of confidentiality and utmost secrecy. So, I think, these other banks would rather prefer to relate with First Bank on the inter-bank lending platform. At least, there is nothing illegal about that and as far as they are concerned, other practitioners and the public are not privy to these negotiations.” The banker explained.

Though the inter-bank lending platform is an organic relationship channel in the banking industry, however, concerned members of the board of directors of the bank are becoming quite uneasy with the load of demands from other banks.

A source in First Bank informed that the bank is becoming more serious with risks control measures.

“This is not a recent development. First Bank has been experiencing a deluge of demands for lending from other banks over the last six to seven months. I think that at one of the board of directors meeting, board members directed the management team to be more circumspect about their lending to these other banks.” A First Bank insider revealed.

The irony of banks seeking out bridging funds for their operations is not limited to beseeching First Bank, the industry is already abuzzed with banks chasing after deposits from the banking public in preference to approaching the CBN. The unofficial explanation for this action has the same texture with the one given by insiders for the First Bank option. Banks, industry sources said, would rather prefer to go after deposits in the public domain than to approach the CBN where data of their application for funding could be used against them when the CBN make public such data.

On the whole, nerves are gradually getting on the edge in the banking industry as interest rates and other related data show an escalation that are, increasingly becoming alarming signals.

“Even the illiterate can read the signs.” Ori Adeyemo, a forensic accountant said. “These banks are chasing after deposits with tempting offers beyond the market rate, they are not bothered with the implication for the cost of funds both to their operations and to the borrowers. Of course, we know that they are only interested in making their liquidity position look good as their different year end draw to a close. Despite the figures the CBN make public, you won’t believe that interest rate and other charges for loan in many banks are adding to about 34 percent of the loan offered. And that is where the borrower is lucky to get a bank to provide the loan. The simple truth is that lending activities have reduced significantly. That is a fact.” Ori argued.

The general impact on the liquidity position may have been further indicated with the considerable increase in the Nigerian Inter Bank Offer Rate (NIBOR) (the NIBOR is the rate at which banks lend short term funds to each other) CBN data on the NIBOR as at the preceding week, released last week, showed that the 7-day NIBOR at the inter bank market transactions increased by 123 basis point to close at 18.14 percent from the week before figure of 16.92 percent.

The 90-day NIBOR also closed higher in the same period from 17.42 percent to 17.96 percent.

“Is it not clear that there is a situation in the banking industry if banks are lending to themselves at these high rates? You can imagine what rate they will lend to their customers. Even at that, it is becoming increasingly difficult for some banks to secure funds from the inter-bank lending platform because the strong banks are considering exposures to them as highly risky.” Bisi Iyaniwura, a lawyer with specialized practice in banking and corporate law said.

Meanwhile, it has been revealed that some financial institutions now reject collaterals in the form of shares and property and even treasury bills as securities for loans.

“FORTUNE&CLASS gathered that a second tier bank had approached a discount seeking its (discount house) assistance to secure a N150 million short term fund for its operations. However, after the discount house which is a subsidiary of a another first tier bank sought the position of its principal, the first tier bank rejected all the traditional forms of securities like shares, treasury bills and property the fund seeking bank was willing to provide.

“This, ultimately, foreclosed the funding negotiation.” A source privy to the negotiation informed that the discount house demanded for trading securities.

“They said they would prefer collateral that can be easily turned to cash like goods in warehouses and some other strange stuffs.” The source informed.