THE alleged "frosty relationship" between new chief executives of 'troubled" banks and their shareholders' elected boards has been linked to a directive from the Central Bank of Nigeria (CBN).

The substance of the directive, The Guardian gathered, is that the bank CEOs should disregard their boards and instead relate with the CBN appointed "interim" boards.

It was gathered that consequent upon the directive by the Sanusi Lamido Sanusi-led CBN to the new CEOs to relate with "the remnant of the board members with utmost care," the new bank heads now operate in a manner suggestive of double standards.

This gives the impression of two boards existing in a bank, thus reportedly creating problems in the banks between the CEOs and their "real" board members.

According to a source: "Whereas the CBN says it has not taken over the banks, the result of this development is that these executives see themselves as employees of the apex bank and do not report to the real owners of the banks -the shareholders - as represented by the existing boards."

Also confirming the unhealthy issues in the banks, the National Coordinator of the Independent Shareholders Association of Nigeria, Sunny Nwosu, said

"Boards, as they are today, are divided on these banks because you have the shareholders-elected boards on one side, and you have the Central Bank Governor-appointed 'boards' on the other hand.

"What we are saying now is that a letter was given to the appointed management by the CBN Governor, telling them that they should have nothing to do with the boards.

"They do not have to report to the boards, and even if they have to do so, where there is disagreement, the boards will have to succumb to that of the management appointed by the CBN. It is never done. That's a take-over; and this is not known in law.

"In effect, what I'm saying is that there is a division and it is that the owners of the investment appointed all the directors. Along the line, some of those appointed by the owners of the business have been removed, leaving some of them.

"The newly appointed ones that did not follow the principles of law have been given more powers. It is like a military coup within a democracy. That is exactly what has happened."

It was gathered yesterday that the distrust existing between the CBN appointees and the surviving board members has led to both factions going their separate ways and working at cross purposes.

The schism, which the directive is said to be generating in the affected banks, has resulted in the failure of the existing board members to meet and ratify some of the appointments and forbearance granted by the CBN.

This is coming on the heels of a statement credited to the apex bank's governor, Sanusi Lamido Sanusi, to the effect that shareholders of the banks had lost their capital.

Although the apex bank had made statements suggestive of correcting that impression, it was, however, quoted in the media as saying that the shareholders of the embattled banks had lost their banks.

Some interests in the banking sector, yesterday decried the statement, insisting that, "the fact that such comments came from the highest level of banking regulation is, to say the least, very worrisome."

An international banking expert and CEO of The Banking Group, Kurt Kendis, in an email exchange, yesterday, cautioned against forceful sale of the banks, but maintained that in critical situations, shareholders become the losers.

He called on the media to be more responsible to the task of alerting investors of possible dangers in times of investment boom.

In both phases of the reform process, the apex bank had sacked the erstwhile managing directors of eight bank - Union, Afribank, Intercontinental, Oceanic, Finbank, Springbank, Bank PHB, and Equitorial Trust (ETB) - over what it described as serious breach of corporate governance codes and wanton issuance of 'unsecuritised' loans for margin trading and energy-sector businesses.

In the final analysis, a total of 620 billion was injected into the banks. But stakeholders maintain that the banks did not actually need that kind of capital as the issues in most of them were not as bad as the apex bank wants the people to believe.

The CBN governor was reported to have said that the "shareholders need to understand what we are doing and we are merely being charitable when we talk about shareholders."

"Look, you have lost your money. If your capital is zero or negative, you no longer have a bank... If we publish what we have, they (shareholders) will see; there is no capital, it's been gambled away."

But Rewane Bismark, managing director of Financial Derivatives, told The Guardian that, as a regulator, the CBN was only meant to determine capital (in)adequacy, and not the market value of shares.

"The CBN," he said, "does not determine the value of shareholders' funds; the market determines that. If the market says that the shares are valueless, then they are valueless.

"What the CBN can establish is the level of capital adequacy or inadequacy, after which the shareholders can make a decision as to what to do.

"The CBN is not in market; it is a regulator. The market determines value while the regulator determines the level of adequacy that is necessary for you to operate," Rewane said.