Posted by Written by Babajide Komolafe & Peter Egwuatu, with agency reports on
CHIEF executives of banks have decided to formally request the Federal Government to intervene in the nation's financial sector to forestall the effect of the ongoing global financial crisis on the system.
*As oil price falls to $72 per barrel
CHIEF executives of banks have decided to formally request the Federal Government to intervene in the nation's financial sector to forestall the effect of the ongoing global financial crisis on the system.
Meanwhile, price of crude oil fell below $72 per barrel, the lowest in 13 months as recession fears raised concerns about a prolonged drop in energy demand.
This was one of the highlights of a meeting of Committee of Banks Chief Executive Officers in Lagos yesterday to discuss development in the industry especially the allegations that some banks were illiquid spread through text messages.
Besides, they resolved that all banks should issue internal memo, warning their staff to desist from spreading rumours aimed at de-marketing other banks, and that any staff caught in the act would be dismissed from the industry. It was also resolved that any bank caught de-marketing another bank would be blacklisted.
The committee also agreed to request the Federal Government to intervene in the nation's financial market through a package of measures similar to the those introduced in developed countries and that the Central Bank (CBN) should continue to support the interbank money market.
The banks' CEOs asked the CBN to issue a statement assuring the depositors of the safety of their money in the banks. In addition, they want the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE) to be positive in their utterances as they need to explain to investors the dynamics of the market vis-a-vis the normality of occasional up and down movement in the stock market which may result in capital lose or gain.
Against this background, the banks' CEOs referred the capital market authorities to the October 11 edition of the Economist Magazine which noted that the crisis in the developed markets was an opportunity for African markets to shine and hence Nigerian banks should not shoot one another through negative utterances and de-marketing.
Earlier in the week, governments across the globe introduced bailout plans to save their banking system from collapse. This include direct equity injection, guarantee for interbank loans, and depositors funds as well as lending to the banks.
Oil price falls to $72 per barrel
However, the price of oil slumped below $72 yesterday, its lowest level for more than 13 months, as recession fears raised concerns about a prolonged drop in energy demand, analysts said.
The global financial crisis will give a vicious twist to an economic slowdown and is hitting world demand for oil, although the effect on emerging economies is unclear, OPEC said yesterday.
The Organisation of Petroleum Exporting Countries (OPEC) slashed its estimate of growth in demand this year and shaved its estimate for 2009, largely because of an 'excessive' easing of demand in the United States, the single biggest energy market.
Prices also fell yesterday on news that a Nigerian court has ordered Anglo-Dutch energy giant Royal Dutch Shell to hand over land to locals, a key demand of Niger Delta militants. Brent North Sea crude for November delivery fell to $71.60 a barrel - the lowest level since August 2007 - before recovering to $72.41, down $2.12 compared to Tuesday's close.
New York's main contract, light sweet crude for November, shed $1.98 to $76.65.
Brent crude has fallen by more than half from a record high $147.50 in July, when prices rocketed on fears of supply disruptions.
Oil prices are sliding on 'concerns that the coordinated action by central banks over the last week will not be enough to rescue economies from falling into a global recession and hence weighing on oil demand,' Sucden analyst Nimit Khamar said.
A top US central banker, Janet Yellen, said the United States 'appears to be in a recession.' There are also growing fears Japan and Europe are heading for a spell of economic stagnation or recession.
The German economy is heading for a slowdown but the downturn will not be a long-lasting one, Chancellor Angela Merkel said Wednesday.
EU urged to rebuild World Bank, IMF
The European Union (EU) has been advised to rebuild global economic institutions, such as the International Monetary Fund and World Bank as part measures to stop current financial crisis
The Prime Minister of UK, Gordon Brown, who gave the advice yesterday, demanded the European Union to follow through on current financial crisis measures by rebuilding a 'stage two' response to tackle the roots of the financial crisis.
The current £1.7 trillion European action plan was modelled on Brown's blueprint to save British banks through recapitalisation, guaranteeing inter-bank lending and injecting cash into frozen markets.
But his new message - unpalatable to some EU leaders - is that future financial reforms must be global rather than European. He also gave no signal that Britain would soften its longstanding hostility to more European regulation.
'Phase two is to make sure that the problems that developed in the financial system, problems that we know started in America, that these problems do not return again,' he said.
'Ten or 20 years ago we had national and European capital markets. We now have global markets. If we are going to sort out global financial problems that are recognised as global so the IMF [International Monetary Fund] has to be rebuilt as fit for purpose for the modern world.'
The Prime Minister will use the Brussels summit today to rally European leaders behind a planned international summit to rival the Bretton Woods conference in 1944, which created the IMF and the World Bank to rebuild a world economy devastated by war.
Mr Brown has called for a reformed IMF to be transformed into a global early warning system, bringing together an international 'college of supervisors,' and taking a direct role in the event of a new crisis.