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Emma Ujah

The Nigeria Deposit Insurance Corporation (NDIC) had by December 2019 liquidated 425 financial institutions.

An Assistant Director (AD) in the Insurance and Surveillance Department of the NDIC, Mr John Abiodun, disclosed this at the Quarterly Forum of the Finance Correspondents Association of Nigeria (FICAN), in Abuja, at the weekend.

According to him, the liquidated institutions comprised 51 Deposit Money Banks (DMBs), 325 Micro Finance Banks (MFBs) and 51 Primary Mortgage Banks (PMBs).

The AD spoke on, “Speedy Bank Failure Resolution Strategies: Challenges and Prospects.”

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He said: “Through efficient and diligent liquidation activities, the Corporation has successfully paid in full the deposits of the Customers of 18 DMBs, (Both insured and uninsured) while payment to Depositors of Fortune International Bank, Triumph Bank and Peak Merchant Bank was put on hold as at end of 2019 due to litigation challenging the revocation of their operating licence.”

Mr. Abiodun regretted, however, that in spite of the efforts of the corporation, bank failure resolution was faced with a myriad of challenges that needed to be urgently addressed.

“The effectiveness of the NDIC’s efforts in failure resolution had been impaired by a number of constraints and challenges which included: delays in revocation of the licenses of terminally distressed banks; depositor and creditor apathy and ignorance (delay in filing claims); recovery of debts owed the failed banks; “legal actions of owners of closed banks; protracted litigations; disposal of low-quality physical assets of the closed banks and provision of timely liquidity support,” he said.

In addition, the AD said that the delay in the proposed amendments to the NDIC Act; poor Corporate Governance; poor record-keeping by banks; poor lending culture; uncooperative attitude with the bank closing Team; a slump in the property market and court sympathy for debtors, were inhibiting the activities of the corporation.

Mr Abiodun identified Insider abuse as a major cause of bank failures in the country.

According to him, others included, “abusive ownership and weak Board of Directors; weak Corporate Governance; poor risk management process; inadequate capital; weak regulatory and supervisory measures; and economic and political factors.”

The NDIC official said that his organization had intensified its supervisory roles over the banking sector, in collaboration with Central bank of Nigeria, with a view to ensuring that banks played by the rules and avoid actions that could cause failure.

Mr Abiodun said that the developed critical template within which that banks must play in order to avoid running into a problem and that all of them must play within the guidelines handed down by regulatory authorities.

Vanguard

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