Nigeria sacks heads of five banks

The Nigerian central bank has injected 400bn naira ($2.6bn; £1.6bn) into five banks and sacked their managers.

The regulator said the banks were undercapitalised and posed a risk to the entire banking system.

Governor Lamido Sanusi said Afribank, Finbank, Intercontinental Bank, Oceanic Bank and Union Bank would be run as normal until new investors were found.

The move was unprecedented in Nigeria, sending the naira down 2% to 156.9 versus the dollar.

'Questions'

"The banks have lost their money in bad loans," Mr Sanusi told reporters in Lagos. "We have questions about the management, so we have put in new management."

"We assure every depositor that no-one will lose money and we will continue to support the banks and all Nigerian banks," he said.

Armed police secured the buildings of the five banks to protect their assets.

Mr Sanusi took over as head of the central bank over two months ago, pledging to clean up the banking system that has fuelled growth in Nigeria.

Among the executives removed were senior members of Nigeria's corporate elite, long seen as almost untouchable by the political establishment.

"The banking sector is a critical part of any economic system and we believe the steps being taken will deliver an effective solution to a very serious set of challenges," said Michael Hugman, a strategist at Standard Bank.

The five institutions account for 40% of banking sector credit in Nigeria.

Bad loans

Mr Sanusi said the five banks had accounted for almost 90% of exposure to the central bank's so-called discount window, which allows banks to borrow in the short-term from the central bank to meet their needs.

"The excessively high level of non-performing loans in the five banks ... was attributable to poor corporate governance practices, lax credit administration processes and the absence or non-adherence to credit risk management practices," he said.

Mr Sanusi added the Nigerian government had no intention of nationalising the five banks and that this was a temporary measure.

The central bank has completed audits of 10 banks, including the five being rescued, and the Central Bank of Nigeria will now probe all of the country's 24 banks, Mr Sanusi said.

Oil cos hike ATF price by 4.5 pc

Even as the aviation industry is crying for a bail-out, state-run oil firms on Saturday hiked jet fuel prices by 4.5 percent in step with firming international oil rates, the second time in a month.

Indian Oil, Bharat Petroleum and Hindustan Petroleum raised Aviation Turbine Fuel (ATF) rates in Delhi by Rs 1,662 per kilolitre to Rs 38,585 per kl effective midnight tonight, an IOC official said on Saturday.

Global crude oil prices have firmed up during August on signs of recovery in major economies of the world including India. Crude oil prices rose to USD 74 per barrel last week.

The hike in ATF or jet fuel prices comes on the back of Rs 585 per kl or 1.6 per cent hike on 1st August.

In Mumbai, home to the nation's busiest airport, the rate will go up from Rs 38,098 per kl to Rs 39,830 per kl, the official said.

The rise in ATF price, which constitutes 40 percent of airlines' operating cost, may further put pressure on cash-strapped domestic carriers.

The state oil firms had in July cut jet fuel prices on falling international rates and the two hikes this month has wiped away the decline.

Jet fuel in Kolkata will be dearer at Rs 46,819 per kl from Rs 45,060 per kl, while in Chennai the price has been raised by Rs 1,816 per kl to Rs 42,605 per kl. The average hike works out to Rs 1,742 per kl.



ATF prices had peaked to Rs 71,028.26 per kl (in Delhi) in August last year on international crude prices touching a historic high of USD 147 a barrel.

But subsequently, the rates had come down, slashed every month till October and twice a month from November.

The three firms revise jet fuel rate every fortnight based on trends in international markets.

Two days ago, Civil Aviation Minister Praful Patel had raised in the union cabinet meeting the issue of ATF prices in the overall context of the health of the aviation sector, after which it was decided to set up a Group of Ministers (GoM) soon to study the impact of high jet fuel prices on the aviation industry and recommend measures to bring down its burden on operational costs of the airlines.

Patel said the base price of ATF in India was "much higher" than in most countries.