The Central Bank of Nigeria (CBN) has again warned Nigerians against investing their money in wonder banks, insisting that there was no security for such investments.

Deputy Governor, Financial System Stability of the apex bank, Dr. Kingsley Moghalu who gave the warning while delivering the 6th Anambra State Government Public Service Lecture entitled, “Nigeria’s Banking Sector Reform – Implications for Governance and the Economy” disclosed that already about N100 billion has been lost by investors in wonder banks in Nigeria.

Moghalu who was bombarded with questions on wonder banks and micro banks stated that although the issue of wonder banks was not the core mandate of the CBN, it had tried to see how it could deal with it as the lead regulator in the financial sector.

He said, “About N100 billion has been lost by investors in wonder banks and one of the things I did was to set up, even though that was not our core mandate, but as the lead regulator in the financial system, I conveyed an inter-agency meeting of the heads of the various agencies including the Security and Exchange Commission, Economic and Financial Crimes Commission (EFCC), Corporate Affairs Commission (CAC) and so on. We have now come up with a strategy.”

The CBN chief said apart from undertaking public information campaign, “We are prosecuting a number of people who had been found to have established wonder banks.” He advised those that have information about wonder banks to make them available to the EFCC, just as he urged the state governments to use public education campaign machinery to advise citizens not to invest in wonder banks and such institutions as they cannot entrust their money in their hands.

Moghalu noted further that one of the major causes of the banking crisis was lack of investors’ sophistication as most of them, he said, lack the facts, largely because there was not enough disclosure and transparency. Stressing that, that was why CBN was trying to instill transparency, he said, “You have to be transparent to your investors. When you announce your results, the investors should be able to see every part of your operations and be able to make the decision on whether to invest in your shares or whether to go elsewhere.

“Investors’ education is not the job of the Central Bank; that is the job of the Security and Exchange Commission, that’s the job of Nigeria Stock Exchange (NSE). The reason why we intervened in capital market related issues is because they created a systematic risk to the banking sector. It’s not because it is the job of the Central Bank to regulate the capital market. The capital market is regulated by the Security and Exchange Commission”.