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Tag: NDIC

  • Three banks hold 60 per cent of N700b insider bad loans, says NDIC

    Three commercial banks have been identified to have in their balance sheets, 60 per cent of the N700 billion insider-related bad loans bedevilling the industry, Nigeria Deposit Insurance Corporation (NDIC) has said.

    Speaking yesterday at the Financial Institutions Training Centre (FITC) Thought Leadership Discussion Series in Lagos, NDIC Managing Director, Umaru Ibrahim said the level of non-performing loans (NPLs) in the industry could be lower if the banks were to adhere more to sound corporate governance.

    The identities of the banks were not disclosed, but the NDIC boss said that lenders without strong corporate governance culture were already being shunned by foreign investors because of the importance they attach to sound corporate governance practices.

    The Central Bank of Nigeria (CBN) expects banks’ NPLs not to exceed five per cent, but many lenders have grown their NPLs to over 20 per cent in recent months.

    The financial industry still harbours weaknesses in governance, as seen in insider non-performing loans, unreported losses, huge exit packages for directors, over-domineering executive management, contravention of regulatory/prudential guidelines and lending limits, poorly appraised credits and weakening of shareholders’ funds, among others.

    Speaking on the theme: Strengthening the Banking System and Facilitating Sustained Economic Growth: Roles of the Regulators, Operators and the Banking Public Ibrahim, who was represented by NDIC Executive Director, Operations, Prince Aghatise Erediauwa, said a large part of the NPLs came from loans to oil and gas sector. He regretted that many of the banks’ lending to key sectors of the economy do not have the right industry knowledge needed to properly assess the loans.

    “The bad loans we see today in banks are mainly due to large exposure to oil and gas sector. They expose themselves to the sector without the right industry knowledge. The banks go with the bandwagon effect, as once there is loan syndication, every lender will want to be part of it without understanding what is involved,” he said.

    According to Ibrahim, many of the banks are also undercapitalised,  borrowing from the  Central Bank of Nigeria (CBN). Many banks still do not disclose the names of all their staff that are involved in fraud, he said.

    He added: “A lot of oil and gas loans went bad and created huge NPLs. Banks were not knowledgeable of the oil and gas industry, telecom and power sectors. The banks are running helter-skelter instead of getting experts to handle the loans”.

    The immediate past President, Chartered Institute of Bankers of Nigeria, Segun Ajibola, also called for quality regulation and examination of banks to dictate poor corporate governance issues on time. “It is lack of corporate governance that will allow credit to go out without due approval. We need to tackle this challenge at the regulatory and operators levels to achieve the desired result,” he said.

    Also speaking, Managing Director/CEO, Sterling Bank Plc, Abubakar Suleiman, called for specialisation by the banks to enable them handle credits better. He also said that the high operational cost was affecting the rates at which banks give out loans.

    On corporate governance, he said: “Governance level in banks is high. For foreign investors, the corporate governance of sovereigns is far more important.  Governance should start from the sovereigns. There are states that are attracting World Bank grants. I have the largest bank in India as a shareholder and it is on our board.”

    Suleiman said banks should get incentives for lending to the real sector. “There should be reward system that promotes lending to real sector,” he said.

    To CBN Deputy Governor, Financial System Stability, Mrs. Aishah Ahmad, an efficient, well-functioning banking system is crucial for effective economic policy transmission. She said current estimates indicate that about 80 percent of activities in the financial system are driven by the banking sector, which underscores the need to strengthen it. “Strengthening the banking system requires joint effort from all stakeholders in the industry. As regulators, we are obliged to develop and enforce sound regulatory and supervisory policies, alongside speedy resolution of disputes to foster a stable financial system. Operators within the sector must ensure full compliance with regulations, be transparent in customer dealings and operate within a sustainable framework while the banking public should strive to be financially literate and leverage on more convenient e-banking channels,” she said.

    “Bank lending to the private sector is known to stimulate economic growth and development; however, private sector credit has remained low over the years in Nigeria. While we

    acknowledge the high risks in the economic environment, I would encourage our banks to partner with the CBN in financing the real sectors of the economy directly and through its various de-risking initiatives Lending (NIRSAL) and Development Finance Initiatives,” she said. such as the Nigeria Incentive-Based Risk Sharing System for Agricultural

  • Keyamo, six others appointed as NDIC board members

    President Muhammadu Buhari on Tuesday appointed SAN, and six others as members of the board of the NDIC board members

    Senate, Bukola Saraki, disclosed on Tuesday in Abuja.

    Saraki read the letter from Buhari at the plenary on Tuesday after which he sought legislative approval for the appointments.

     

    Details shortly…

     

  • US Technical Assistance Office commends NDIC

    The Office of Technical Assistance (OTA) of the United States Department of Treasury has commended the Nigeria Deposit Insurance Corporation (NDIC) on the establishment of  academy that serves as a reference point for capacity building on Deposit Insurance System (DIS) for the African continent.

    The Regional Adviser of the US Treasury, Philip Morris made the commendation in Abuja during a meeting between the NDIC Management and delegates from the OTA convened to explore areas of collaboration towards the enhancement of training needs of the NDIC Academy.

    According to him, the corporation’s reputation in the international community was already acknowledged by the International Association of Deposit Insurers (IADI). He added that several African countries now counted on the NDIC Academy for the capacity building for members of their staff.  He expressed his confidence that the OTA’s collaboration would further strengthen the Academy’s efforts towards achieving its vision of becoming the model Deposit Insurance Training Institute in Africa and the Asia regions by the year 2020.

     

     

  • NDIC: 2017 in retrospect

    NDIC: 2017 in retrospect

    If, at the macro level, recession and devaluation defined Nigeria’s economy in 2016, the year 2017 would be remembered as one in which Nigeria exited the worst economic recession in her history. Having recorded two positive real growth rates in quarters two and three in 2017, investments in agriculture began to pay significant dividends evidenced by bumper harvests.

    In the banking sector, depositors of liquidated banks will remember 2017 as the year with the highest liquidation dividend payouts by the Nigeria Deposit Insurance Corporation (NDIC). In one instance, the NDIC paid out a whopping ¦ 13.6 billion to depositors of six banks-in-liquidation namely: African Express Bank, All States Trust Bank, City Express Bank, Hallmark Bank, Lead Bank and Metropolitan Bank.

    For 2017, depositors of these banks can aptly be seen as the luckiest Nigerians. One can only imagine the many lives touched positively, revived and notched up through this singular act of effectively guaranteeing depositors and thus ensuring confidence in the financial sector.

    To be sure, NDIC’s history is grounded on the need to protect depositors and strengthen the safety-net for the banking sector. The phenomenal increase in the number of banks from 40 in 1986 to 120 in 1992 came with its attendant problems for the budding banking sector. That meant that, even before NDIC became fully operational in 1989, after its establishment a year earlier, all the signs of distress were visible among some banks in the country. Ever since, the NDIC has saved the nation’s banking sector from collapse many times over. The interventions came through innovative and modern day deposit insurance best practices.

    Working in collaboration with other safety net participants, NDIC made remarkable progress towards restoring the stability and soundness of the Nigerian banking system. As part of its oversight function, the NDIC, in collaboration with the Central Bank of Nigeria (CBN), undertook the Risk Assessment Examination of all 25 Deposit Money Bank’s including three holding companies 2017. In the same period the NDIC also carried out maiden examination of two newly licenced banks. It also examined 300 Micro Finance Banks and 10 Primary Mortgage Banks in 2007.

    In exercise of its mandate of distress resolution, the NDIC ensures that failing and failed insured institutions are resolved in a timely and efficient manner. In that regard, it provides financial and technical assistance to eligible insured financial institutions in the interest of depositors. The financial assistance could be in the form of loans, guarantees or accommodation bills. Similarly, the technical assistance includes Assumption of Control and Management of a failing institution, Change of Management or Assisted Merger/Acquisition with another viable institution. The NDIC also decides on the least cost resolution option to adopt in the event that the licence of an insured institution is revoked. The NDIC shares the responsibility of distress resolution with the CBN.

    Undertaking this mandate by NDIC involves the orderly and efficient closure of failed insured financial institutions with minimum disruption to the entire banking system, cost effective disposal and realization of physical assets, recovery of debts owed the failed insured financial institution and settlement of claims of depositors, creditors, debtors and shareholders. Similarly, in the discharge of this mandate, depositors have priority of claim on a failed bank’s assets over other stakeholders, such as preferred creditors, general creditors and shareholders. Shareholders of various banks in liquidation, primary mortgage banks and microfinance banks also received dividend payouts in 2017. NDIC Management also commenced verification and payment of insured sums to depositors of Jubilee Building Society Limited and New Heights Microfinance Bank.

    The process of liquidation is not always easy. It is an exercise sometimes entangled in long, complicated and, if you like, annoying legal tussles. That was why NDIC had cause to celebrate the judgement against First Bank of Nigeria (FBN) Plc. in favour of depositors of Lead Merchant Bank Limited (in-liquidation) to the tune of ¦ 556.40 million at a Lagos High Court presided over by Honourable Justice Ibrahim N. Buba.

    Other achievements recorded by the NDIC under the leadership of its Managing Director/CEO, Umaru Ibrahim in 2017, included the assessment of the British Standards Institution (BSI) where the NDIC successfully obtained three certifications from the BSI for Information Security Management System ISO/IEC 27001:2013, IT Service Management System ISO/IEC 20000-1:2011 and Business Continuity Management System, ISO 22301:2012 after a rigorous process of satisfying the conditions precedent to accreditation. It is on record that the NDIC is the first public institution in Nigeria to be so certified by the BSI.

    The corporation recorded another commendable achievement with the conferment of an award as “The Best Performing Ministerial SERVICOM Unit (MSU) 2017” by the SERVICOM Office of the Presidency. This award is in consonance with the core values of the corporation in the pursuit of excellence in operational performance and service delivery to all stakeholders.

    Also, the NDIC during the year received a Commendation Award for Excellence in Banking (Public Service) during the Business Day Annual Banking Awards 2017.

    The recent accreditation of the NDIC Academy as a training service provider for the banking industry by the council of the Chartered Institute of Bankers of Nigeria (CIBN) is a pointer to this rare commitment. The Academy is currently recognized by the International Association of Deposit Insurers (IADI) as a Centre of Excellence for the teaching of Deposit Insurance Courses within the African Continent. Going forward, the academy plans to be the hub of training in Deposit Insurance Issues in West Africa and beyond.

    To encourage staff self-development, the corporation entered into partnership with the University of Bangor, Scotland, and Chartered Institute of Bankers Nigeria where staffs of the Corporation are sponsored for an MBA programme. To date, 77 staffs of the corporation have enrolled in the programme out of which 47 have successfully graduated.

    The NDIC, during the year under review, continued to pursue the achievement of its mandate of depositor protection, and the promotion of safe and sound banking practices. The corporation remains an active component of the Nigerian financial safety-net, particularly in the area of engendering confidence and contributing to financial system stability. In the face of increasing Non Performing Loans, the corporation is partnering with the CBN to float a private sector-led Asset Management Company to buy the NPL at commercial rates.

    The NDIC in collaboration with other regulatory authorities continues to educate the public on the risks of patronising wonder banks and the danger inherent in patronising Block Chain/Digital currencies for example BITCOIN,  which are rapidly gaining currency in the Nigerian landscape leading to possibility of serious financial losses.

    The year 2017 has gone, but it has left depositors thanking the NDIC for standing by them and ensuring that they get their dividends; no matter how long it takes and no matter the extent of complication imposed by legal hurdles. As it is, the corporation will continue to monitor the performance of banks in order to promote their safety and soundness in such a manner that the banking sector will continue to contribute to the recovery and development of the economy.

     

    • Hassan is a financial Analyst
  • NERFUND’s collapse: Reps summon CBN, NDIC, BoI chiefs

    NERFUND’s collapse: Reps summon CBN, NDIC, BoI chiefs

    Three Chief Executive Officers of financial institutions, including the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, are to appear before the House of Representatives ad hoc Committee investigating the status of the N17billion non-performing loans of the defunct National Economic Reconstruction  Fund (NERFUND).

    The invitation, involving Umaru Ibrahim of the Nigeria Deposit Insurance Corporation (NDIC),  and Olukayode Pitan of the Bank of Industry  (BoI), as well as the Executive Officers of participating Money Deposit Banks, followed the closure of the premises of NERFUND despite the mandate of the House that the planned closure of the Fund be put on hold until the conclusion of the House’s investigation.

    While Emefiele is expected to explain why it failed to recover the N17billion loans despite the provisions of the law, the BoI chief, is to explain the roles ascribed to it on the activities of NERFUND by the law.

    The Minister of Finance, Mrs. Kemi Adeosun, who appeared before the Ayodele Oladimeji – led committee yesterday however insisted that NERFUND was not merged with BoI.

    At the hearing, Oladimeji expressed fears over the fate of the newly inaugurated Development Bank of Nigeria (DBN), BoI, Bank of Agriculture  (BoA) and others, if NERFUND could be ran aground by its operators.

    He said the House of Representatives will not allow the fate of NERFUND to befall DBN and the others, wondering why the Fund, with an initial capital of N300m could not survive, while share capital for commercial banks was N12.5million (citing Zenith Bank among others) when NERFUND was founded in 1989.

    Oladimeji said following the resolution of the House on the need to investigate the Fund, it was alleged that loans were given to acolytes of management staff of the agency which contributed largely to its collapse.

    The lawmaker also sought explaination to allegations of a N500million facility extended to staff of the agency at one per cent interest for a 20 year tenure.

    He expressed regret that NERFUND’s premises was locked when his Committee went on a fact-finding mission to the agency on 5th December, 2017 with its assets allegedly  transfered to BoI in contravention of the law.

    He sort for explanation behind the resignation of the entire workforce of the agency and why the 49 junior workers pleaded with the Ministry of Finance to explore means of being reabsorbed into other agencies of government.

    The Committee also expressed skepticism over the role of BoI in the recovery of the non-performing loans, while the Act setting NERFUND up has clear provisions on how the CBN should debit the account of participating banks on any loan default.

    “With all the precautions taken by the Act, NERFUND was not supposed to be distressed, what has the CBN done to recover the loans through the participating banks as prescribed by the Act.

    The committee queried if the fate that befell NERFUND will not happen to other agencies like DBN and BoI, saying merging NERFUND with BoI was illegal.  Oladimeji assured that the committee will not allow DBN, BoI and the others to collapse  like NERFUND did..

    Director (Home Finance ) Olubunmi Siyanbola represented the Permanent Secretary (PS), who was supposed to represent the Minister said NERFUND was not merged with BoI, though the process to wound down the agency began in 2013.

    She explained that BoI’s role was to recover the non-performing loans, adding that its involvement was due to the resignation of the entire workers of the agency.

    She said: “NERFUND had 82 workers but the entire 33 senoir management staff resigned in August 2016 on the verge of the presentation of the report of the Presidential Committee that investigated the Fund.

    “Because the agency has no board, the Federal government constituted an Interim Management Committee (IMV) to oversee its affairs and by  October 2017, the entire 49 junior workers also resigned after which they pleaded that we assist in their absorption into other Federal government agencies.

    “The IMC was only involved in debt recoveries because loan disbursement stopped long ago”.

    The Committee however mandated the Minister to make her formal presentation on the subject matter to it as soon as possible while adding that key participants in the NERFUND saga must appear before it to explain their roles in the collapse of the agency.

  • ‘NDIC has zero tolerance for corruption’

    The Nigeria Deposit Insurance Corporation (NDIC) has zero tolerance for malpractice, its Managing Director/Chief Executive, Umaru Ibrahim, has said.

    He spoke during the inauguration of the re-constituted coporation’s Anti-Corruption and Transparency Unit (ACTU) by the Acting Chairman of the Independent Corrupt Practices and other related Offences Commission (ICPC), Abdullahi Bako.

    Ibrahim, represented by the Head of Anti-Corruption and Transparency Unit, Mr. Justin Kuatsea, said the NDIC is at the forefront of the fight against corruption through the enforcement of good corporate governance, transparency and accountability to minimise the risk of bank failure to protect depositors and ensure safety and soundness of the financial system.

    He described the inauguration of the NDIC Anti-Corruption and Transparency Unit (ACTU) as good development as it would further strengthen the corporation’s resolve and its partnership with other government agencies involved in the anti-corruption fight towards promoting credible and effective service delivery in the public sector.

    Ibrahim further noted that the NDIC has been organising seminars in financial crime investigation for strategic stakeholders, such as the ICPC, Economic and Financial Crimes Commission (EFCC), Special Fraud Unit and Nigeria Financial Intelligence Unit of the Nigeria Police Force.

    He expressed the readiness of NDIC to sustain its participation in the capacity building programmes organised by the ICPC Training Academy.

    Bako said ACTU was created by the ICPC in 2001 in all government agencies to curb corrupt practices and to establish transparent processes and procedures in the public sector.

    He commended the NDIC for its commitment to transparency and accountability. He added that the inauguration of the unit would create a synergy for effective collaboration between the two agencies.

  • NDIC challenges IoD on corporate governance

    The Institute of Directors (IoD) has a role to play in addressing the poor corporate governance practices in the banking sector, the Managing Director/Chief Executive of Nigeria Deposit Insurance Corporation (NDIC), Umaru Ibrahim, has said.

    Ibrahim stated this during a visit by IoD Governing Council members led by its Chairman/President, Rufai Ahmed Mohammed.

    He said corporate governance was central to banking since the 2009 banking crisis when the Central Bank of Nigeria (CBN) and NDIC Joint Special Examination of the 24 banks identified the issue as one of the flaws of banking.

    Ibrahim stressed the need for the IoD to step up efforts towards developing a more transparent and rigorous selection for independent directors in banks and strengthening their capacity through continuous training focused on international best practices, excellence in management and service delivery, environmental sustainability and inclusive growth.

    He added that this would not only contribute towards better quality of corporate governance, but also build a solid foundation of businesses.

    Ibrahim assured the IoD of the corporation’s readiness to partner the institute. He advised the institute to collaborate with the CBN, Financial Institutions Training Centre (FITC), the Society for Corporate Governance (SCG), and the Chartered Institute of Bankers (CIBN) in promoting capacity building for independent directors, especially of banks.

    He expressed the desire to also collaborate with the institute in building capacity of the corporation’s management most of who were engaged in bank examination to appreciate the dynamics of board performance.

    Mohammed said the visit was part of the council’s initiative to promote collaboration with key institutions through effective interaction and advocacy. He congratulated the NDIC on its contribution to the stability of the banking system.

  • Adeola praises NDIC over banking stability

    Managing Director/Chief Executive Officer of Sterling Bank Plc Yemi Adeola has praised the Nigeria Deposit Insurance Corporation (NDIC) for its contributions to the safety of the  banking system.

    Adeola spoke during a courtesy call and  introduction of Sterling Bank’s new Managing Director/CEO Abubakar Suleiman to the corporation.

    He noted that NDIC is renowned for the excellence of its bank examiners and its quality reports.

    The Sterling Bank team was received by NDIC Managing Director/Chief Executive Officer (MD/CEO) Umaru Ibrahim along with the two Executive Directors (EDs) of the corporation, Prince Aghatise Erediawa and Mrs. Lola Abiola-Edewor.

    Adeola informed the NDIC management that the procedure for the selection of the new CEO of the bank was rigorous and ably handled by the reputable consulting firm KPMG. While expressing the hope that the visit would further strengthen the excellent relationship between the bank and the corporation, the bank also briefed the corporation on the future outlook of the bank, which includes the planned expansion of its Non-Interest Banking (NIB) window.

    He informed the NDIC management of the plan by Sterling Bank to apply for a licence for a stand-alone NIB soonest, adding that the decision was informed by the feasibility studies conducted by the bank, judging from the potential market and financial resources of customers expected to embrace NIB. The meeting also provided a platform for the discussion of the prospects and opportunities in the Nigerian Banking system along with challenges.

    Ibrahim thanked the bank’s management for the visit and promised to sustain the cordial relationship. He expressed the hope for the appointment of capable hands into the banking system to improve the performance of the sector. He assured Suleiman of his support to ensure the growth of the bank.

     

  • NDIC achieves ISO certification

    The Nigeria Deposit Insurance Corporation (NDIC) has obtained three certifications from the British Standards Institution (BSI) for Information Security Management System ISO/IEC 27001:2013, IT Service Management System ISO/IEC 20000-1:2011 and Business Continuity Management System, ISO 22301:2012 after a rigorous process of satisfying the conditions precedent to accreditation.

    The British Standards Institute, thoroughly engaged and audited the corporation’s  operational processes between April and July 2017 to determine its conformity with the standards.

    The formal presentation of these certificates is however postponed till first quarter of 2018. The NDIC is the first public organisation in Nigeria to be so certified with three standards simultaneously. By these achievements, the corporation is poised to enhance the level of operational readiness to deliver on its core mandate while   continuously improving on the service delivery to meet the expectations of its stakeholders through sound information security, efficient IT management system and a robust business continuity system.

    The corporation stands to benefits from those ISO certification standards are of strategic importance in peer review.

    Amongst others, there would be improved information deliverables, availability and efficient services, effective communication as well as sound internal processes that would further engender public confidence in the banking system which would deepen financial system stability.

     

  • NDIC achieves ISO certification

    NDIC achieves ISO certification

    The Nigeria Deposit Insurance Corporation (NDIC) has obtained three certifications from the British Standards Institution (BSI) for Information Security Management System ISO/IEC 27001:2013, IT Service Management System ISO/IEC 20000-1:2011 and Business Continuity Management System, ISO 22301:2012 after a rigorous process of satisfying the conditions precedent to accreditation.

    The British Standards Institute, United Kingdom, thoroughly engaged and audited the corporation’s operational processes between April and July 2017 to determine the conformity of the corporation to the standards.

    The presentation of the certificates is, however, postponed till first quarter of 2018. It is worthy to note, that the NDIC is the first public organisation to be so certified with three standards simultaneously in Nigeria.

    By these achievements, the corporation is poised to enhance the level of operational readiness to deliver on its core mandate while continuously improving on the service delivery to meet the expectations of its stakeholders through sound information security, efficient IT management system and a robust business continuity system.