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Tag: NDIC

  • ‘NDIC pays depositors of failed banks N18.254bn’

    THE Nigerian Deposit Insurance Corporation (NDIC) has paid about N18.254bn to depositors of failed banks in the last two years.

    Its Managing Director and Chief Executive Officer, Alhaji Umaru Ibrahim, disclosed this yesterday during the NDIC special day at the Yenagoa Trade Fair in Bayelsa State.

    He said the amount was paid to 1,203,538 depositors after verifying their claims.

    Ibrahim, who was represented by the acting NDIC Zonal Controller, Port Harcourt, Mr. Dawodu Samuel, said the depositors were customers of failed commercial and micro- finance banks.

    He said while a cumulative insured deposit of N6.82bn was paid to 528,212 insured depositors of closed banks as at December 12, 2012, N6.68bn was paid to 527,942 as at December 12, 2011.

    Breaking down the figures further, he said 75,322 depositors of 95 out of 103 micro finance banks in December, 2012, received N2.505billion while N2.249billion was paid to 72,062 in December 2011.

    According to him, another N73.58bn had been paid as liquidation dividend to 250,209 depositors of Discounted Mortgaged Banks (DMBs).

    Ibrahim said: “It is pertinent to indicate that a total of 14 out of the 34 banks in liquidation prior to 2006 had declared a final dividend of 100% of their total deposits, indicating that all depositors of the affected closed banks had fully recovered their deposits.”

    He advised depositors yet to recover their trapped funds to file their claims to NDIC.

     

  • NDIC report: Experts score regulators low

    NDIC report: Experts score regulators low

    Mixed reactions have greeted the Nigeria Deposit Insurance Corporation (NDIC) last year’s Annual Report & Statement of Accounts, which ranked 10 banks sound, nine satisfactory and one marginal. While some analysts see it as an indication of a poor performance despite the huge funds committed to the reforms in the sector, others see it as a clarion call on regulators to be alive to their responsibilites, writes COLLINS NWEZE.

    The disclosure by the Nigeria Deposit Insurance Corporation (NDIC) in its last year’s Annual Report & Statement of Accounts, that only 10 out of 20 Deposit Money Banks (DMBs) in the country are sound shows that regulators of the financial system have failed, analysts have said.

    They said given the amount of money sunk into the reforms by the Federal Government and the ongoing contributions from banks to the Asset Management Corporation of Nigeria (AMCON), having only sound 10 banks, is a poor outing. The result represents a 50 per cent score. The regulators were adjudged as having performed poorly considering the volume of money committed to the reforms. The report, however, gave nine banks satisfactory rating while one lender was rated as marginal.

    The Central Bank of Nigeria (CBN) had in 2009 injected N620 billion into eight banks to keep them afloat. In August 2011, AMCON spent N679 billion to acquire the bridged banks- former Afribank (Mainstreet Bank), Bank PHB (Keystone Bank) and Springbank (Enterprise Bank).

    The capital provided by AMCON through shares subscription was meant to strengthen the banks’ liquidity to enable them to carry on business and meet all their obligations. The fund was to enable them to meet the minimum capital base of N25 billion and the minimum capital adequacy ratio of 15 per cent.

    Former Executive Director, Bank PHB, Richard Obire, said the fact that only 50 per cent of the banks are sound means that Nigerians have not got value for their money.

    He said any performance that is below 80 per cent is unacceptable, and should be improved on by both the CBN and NDIC.

    “Nigerians should demand 80 per cent result because of the huge sums of money spent on the reforms. Tax payers’ money went into the funding of the AMCON and banks are still funding the corporation,” he said.

    He further said many thought that AMCON would be a quick resolution mechanism, but has been foot dragging with banks contributing 0.5 per cent of their total assets into its operation, which is also indirectly passed to banks’customers as fees. “Remember that whatever the banks are contributing to AMCON is also passed to their customers as fees. So, in all, the banking public are not getting value for their money,” he said.

     

    Banking assets Vs loans

    According to the NDIC report, the total industry’s assets of N24.58 trillion, out of which total loans and advances of N8.15 trillion, represent over 33 per cent (or one-third).

    The report further noted that of the industry’s total loans, N4.48 trillion or 54.97 per cent was extended to the real sector of the economy in 2012 compared to N3.88 trillion or 53.37 per cent and N3.51 trillion or 48.95 per cent in 2011 and 2010.

    Obire said 33 per cent loan advances is poor. Noting that the primary responsibility of a bank is to offer loans to the real sector of the economy, the banks should strive to achieve between 60 and 70 per cent of their assets as loans. He advised banks to strengthen their risk management to enable them to lend more to customers. “Banks should be able to deploy loans to those who need them at the right time,” he said.

    But the NDIC said the report gave it a pat in the discharge of its mandate in payment guarantee, supervision, failure resolution and liquidation. “The achievements attained in 2012 were due to many factors, which include the deployment of a robust performance management system, enhancement of the enterprise risk management system as well as enhanced capacity building in risk-based supervision (RBS) and other areas of operations, among others,” it said.

    Also, the Managing Director, Financial Nigeria International Jide Akintunde said the reforms have not performed badly, given that the 10 sound banks may hold 70 per cent of the sector’s assets.

    This does not suggest that the banking reforms have not worked, urging the regulators to be alert to ensure that any anomaly on the part of banks is corrected.

    He said the 33 per cent loans by banks is not a bad for the lenders, adding that majority of them are being more careful in advancing credits. “The 33 per cent loan position is not a bad outing. But many of them are looking at environmental factors and are also being more careful to avoid repeat of past mistakes when they created bad loans,” he said.

    Akintunde also said banks are still conservative; in some cases, they lack the expertise to handle some specialised loans.

     

    Microfinance banks

    Last year, the NDIC conducted routine examination of 246 microfinance banks (MfBs); six were found to have closed shop. It also conducted risk-based exam of 40 primary mortgage banks (PMBs); three were found to have voluntarily closed shop.

    A total of 302 MfBs had capital adequacy ratio of more than 10 per cent. The remaining 555 did not render returns and this has continued to be a source of concern to NDIC as it was impossible to assess their financial condition and performance on continuously during review.

    An operator in the MfB sector, who asked not to be named, said though the CBN is planning to launch the Microfinance Development Fund (MDF) next month, it is even coming too late. He said the fund would have been provided four years ago, to enable operators to use it in enhancing their operations. The MDF is expected to provide funding for the sector.

    The source said many of the MfBs lack working capital, adding that there is no way such operators could lend to the economy. He added that it is only MfBs with foreign financial bulwark that are doing well.

    Also, Managing Director, CRC Credit Bureau Limited, Tunde Popoola said the MfB subsector, is agging behind and that less than 10 per cent of them has access to credit bureau services. He said many of the MfBs lack the infrastructure to key into some services.

    Popoola said many of the MfBs do not have software that can take information like date of birth and sex of the customer, making it difficult for them to make progress.

    According to Afrinvest West Africa, DMB’s last year’s profitability report showed that all Tier-1 banks recorded gross earnings in excess of N200 billion compared to Tier-2 banks’ N102 billion average. The Tier-1 banks are First Bank of Nigeria Limited, GT Bank, Zenith Bank, United Bank for Africa and Access Bank.

    It said last year, banks’ management tried to beat high earnings expectations, causing them to focus on fixed income securities like treasury bills because of their high yield capabilities. The report projected that the “treasury focused” investment strategy would moderate in the year as outlook on yields and fee income decline.

    The report listed key pillars of the reforms to include enhancing the quality of banks, establishing financial stability, enabling healthy financial sector evolution and ensuring the financial sector contributes to the real economy.

    The Afrinvest report said the future of the banking space will rest on ancillary banking services such as merchant banking and primary mortgage institutions. There are also renewed hopes in retail banking and Small and Medium Scale Enterprises (SMEs) banking. The industry, it claimed, is confronted with the reality of declining fee incomes, mobile money and dollar denominated capital sourcing.

    It predicted that in the next five years, outlook on yields and fee income will remain downwards, necessitating the need for banks to focus on lending to the real sector. Also, banks are expected to develop and grow the depth of their core retail banking businesses to retain and amplify cheap deposits.

     

    Banks-in-liquidation

    The NDIC continued to pay depositors of banks-in-liquidation during the review. It paid N6.82 billion to 528,212 insured depositors of closed banks by December 31, last year as against N6.68 billion paid to 527,942 insured depositors the previous year. That feat was achieved in spite of the long closure of the banks and the unwillingness of many depositors to file for their claims.

     

    Risk-based-examination

    The report said NDIC, in collaboration with the CBN, conducted Risk-Based Examination of 16 deposit money banks (DMBs) during the year. The NDIC led the examination of six of the banks while the CBN led in 10. Beside, the two institutions conducted a maiden examination of Keystone Bank, Mainstreet Bank and Enterprise Bank during the year.

    While the CBN led the examination of Mainstreet Bank and Enterprise Bank, NDIC led the examination of Keystone Bank. The corporation in collaboration with the CBN also conducted the maiden examination of Jaiz Bank Plc and the Stanbic-IBTC Non-Interest window during the year under review.

     

    Capital adequacy ratio

    Furthermore, the banking industry was adequately capitalised in the year with capital adequacy ratio of 18.07 per cent compared to 17.71 per cent recorded in 2011. All the DMBs also met the minimum liquidity threshold of 30 per cent.

    The asset quality improved during the year as the ratio of non-performing loans to total loans decreased from 4.95 per cent in 2011 to 3.51 per cent last year. The improvement in the industry’s asset quality was because of the purchase of the non-performing loans of DMBs by AMCON and the enhanced credit risk management by DMBs.

     

    Fraud

    The DMBs reported 3,380 fraud cases involving N17.97 billion with expected/contingent loss of about N4.52 billion. The expected/contingent loss had increased by N455 million about 10.9 per cent, as against N4.072 billion reported in 2011.

    Notwithstanding the 43.7 per cent increase in the number of reported fraud cases from 2,352 in 2011 to 3,380 last year, it decreased by 36.4 per cent from N28.40 billion in 2011 to N18.04 billion in 2012.

     

    PMBs

    The licences of 24 PMBs, which closed shop and were unable to meet obligations to their depositors and creditors were revoked by the CBN and NDIC was subsequently appointed as liquidator.

    As at December last year, 310 out of the 323 MFBs that rendered returns had met the minimum paid-up capital of N20 million.

  • NDIC chief seeks support for women

    The Managing Director and Chief Executive Officer, Nigeria Deposit Insurance Corporation (NDIC) Alhaji Umaru Ibrahim has called on Nigerians to support women as they strive to take up high level corporate responsibilities.

    He spoke at the parley with the theme: ‘It is possible’in Abuja.

    He said many organisations and governments are beginning to situate the importance of women in the achievement of set objectives, adding that the era of perceiving women as home-makers was gone.

    Acknowledging the roles of NDIC’s female staff in the achievement of the corporation’s objectives, he reiterated that the forum was organised to sensitise the female staff on the key attributes needed for career growth in the corporation.

    He stressed the role of women in the nation building, involvement of women in community service, poverty alleviation and how to understand the importance of work-life balance by female staff.

    He said gender diversity in management is aimed at enhancing sound corporate governance, good corporate social responsibility to boost sustainable banking and financial inclusion.

    He said: “In keeping with NDIC’s core values of professionalism, transparency, team work as well as respect and fairness, the Corporation has always upheld gender equity, inclusion and equal opportunities in all areas of its operation.

    “In line with this commitment, the Corporation had achieved 70:30 ratio between male and female staff in recent recruitment exercises conducted between 2010 and 2013.’’

    He also said it was a deliberate policy to achieve the affirmative action threshold of 35 per cent.

    He expressed the delight that the corporation had articulated robust code of conduct and culture handbooks to forestall unwholesome practices against its female staff and urged them to acquaint themselves with the document to seek redress through appropriate channel when any career-inhibiting practices are observed.

    He urged them to sharpen their skills and exhibit high sense of commitment and diligence which are traditional qualities of women.

    Executive Director, Corporate Services, NDIC Mrs Omolola Abiola-Edewor said it was instructive that many contemporary organisations were beginning to appreciate the role of women in the workplace.

    In a statement from NDIC’s Head, Communication and Public Affairs, NDIC Hadi Birch said during the event, speakers presented three papers on topics on gender diversity and women empowerment .

     

     

     

     

     

     

     

  • NDIC’s report on banks’ fraud worrisome – ASSBIFI

    The Association of Senior Staff of Banks, Insurance and Financial Institutions (ASSBIFI) on Friday described as worrisome the level of bank fraud as recently reported by the Nigerian Deposit Insurance Corporation’s (NDIC).

    The National President of ASSBIFI, Mr. Olusoji Salako, told the News Agency of Nigeria (NAN) in Lagos that the report indicated that the level of fraud in banks was high.

    The NDIC’s annual report and statement of accounts released on Tuesday said that bankers committed fraud amounting to N17.97 billion in 2012.

    “This development calls for concern from every stakeholder.

    “We have the report, and we are considering the steps to take to prevent a reoccurrence in the future.

    “In most cases, these bankers are mobilised by outsiders to commit fraud in the system.

    “We are not going to sleep with this report; we will work on our members, “ Salako said.

    He said the union would intensify education of its members on the dangers of allowing outsiders to use them for fraudulent purposes.

    Salako said that fraud in the banking industry escalated due to reckless deposit mobilisation, casualisation and outsourcing of workers.

    “Casualisation and outsourcing are two key factors.

    “If you employ a person on a casual basis, and the person has to handle a lot of cash, yet, he or she is being paid peanuts, there will be the temptation to steal.

    “Also, in the last decade, aggressive marketing came in and people with questionable characters were employed in the industry to source for deposits.

    “Our flanks have been opened by this practice, all safety measures thrown overboard, and all that the bank executives are concerned about is the amount of deposits brought in,“ he told NAN.

     

     

  • Why banks fail, by NDIC

    What is responsible for bank failures? Banks failbecause of insider abuses, weak internal control system, poor corporate governance, says Nigeria Deposit Insurance Corporation (NDIC).

    NDIC Deputy Director Research, Usman Wali told members of the National Association of Banking and Finance Students (NABAFS), of Federal Polytechnic, Nasarawa that the corporation’s role in protecting depositors’ interest was key to the nation’s financial stability and economic development.

    He said the visit was crucial to the enhancement of NDIC’s public awareness on its mandate and activities, adding that the corporation is focusing on its core mandate of deposit guarantee, banking supervision, distress resolution and liquidation.

    He said the NDIC insured deposit liabilities of Deposit Money Banks (DMBs), Microfinance banks (MfBs) and licenced Primary Mortgage Banks (PMBs). Depositors of insured banks will get N500,000 for DMBs and N200,000 for MfBs and PMBs in the event of failure.

    Representatives of Bank Examination Unit (BEU) Shehu Aladire said on-site and off-site activities of the corporation are aimed at efficiency and compliance with rules.

    He listed four types of on-site bank examination as maiden, routine, target and special examinations.

     

  • Banks recorded 3,380 fraud cases in 2012 – NDIC

    Deposit Money Banks reported 3,380 fraud cases involving the sum of ₦17.97 billion with expected/contingent loss of about ₦4.52 billion in 2012.

    This information is contained in the 2012 annual report of the Nigeria Deposit Insurance Corporation (NDIC) released on Tuesday.

    According to the report, “the expected/contingent loss had increased by ₦455 million (10.9 per cent) as against ₦4.072 billion reported in 2011.”

    The report stated that “notwithstanding the 43.7 per cent increase in the number of reported fraud cases from 2,352 in 2011 to 3,380 in 2012, the amount involved decreased by 36.4 per cent from ₦28.40 billion in 2011 to ₦18.04 billion in 2012.”

    The Corporation, the report said, “paid a cumulative sum of ₦6.82 billion to 528,212 insured depositors of closed banks by December 31, 2012 as against ₦6.68 billion paid to 527,942 insured depositors as at December 31, 2011.”

    This feat the NDIC said was achieved in spite of long closure of the banks and the unwillingness of many depositors to file for their claims.

    Similarly, a total sum of N2.505 billion was paid to 75,322 verified depositors of 95 out of 103 closed Micro Finance Banks (MFBs) during the year as against the sum of ₦2.249 billion paid to 72,062 verified depositors in 2011. In addition, the sum of N73.58 billion was paid as liquidation dividend to 250,209 depositors of DMBs as at December 31, 2012.

     

     

  • NDIC frets over MfBs’ poor rendering of returns

    NDIC frets over MfBs’ poor rendering of returns

    The Nigeria Deposit Insurance Corporation(NDIC) has expressed concern about poor rendering of returns by some of the 880 microfinance banks (MfBs) operating in the country.

    NDIC Managing Director, Umaru Ibrahim raised this alarm yesterday at a workshop organised by Corporation for MfBs in Lagos. He noted that since the extension of deposit insurance to MfBs in 2008 to date, only N1.1 billion has been collected as premium by regulators from the sub-sector.

    He said that so far, N2.5 billion had been paid to depositors of the closed MfBs, out of total insured deposits of N4.5 billion. The NDIC boss said, the figure is by far, lower than the insured deposits in the sub-sector, citing the case in September 2010 when 103 MfBs were closed by the regulatory authorities.

    Ibrahim, who was represented by Bashir Dada Umar, NDIC Director Special Insured Institutions Department, said regulatory authorities will continue to take measures to enhance their effectiveness in the discharge of their mandate to the sub-sector to ensure the realisation of policy objectives.

    “We are concerned that many MfBs are not operating as they should, neither are they playing by the rules. As many as 15 per cent of the over 880 MfBs operating in the country fail to render returns to the supervisory authorities, as and at when due, while as many fail to pay their annual premium as required by law,” he said.

    However, he said that to tackle failure to pay premium by some MfBs, the corporation has proposed tripartite agreement whereby the correspondent banks of the MfBs will  be required to debit their accounts and credit the corporation with the premium due.

    The NDIC boss said the regulators are however, not unaware of the challenges facing the MfB subsector in the country.

    He cited issues relating to undercapitalisation, illiquidity, high cost of funds, high operating cost, poor infrastructure, false life style of managers, among others.

    Ibrahim said the regulators are taking appropriate measures to provide relief to the sub-sector. He said that with an estimated 160 million population in the country, 70 per cent of whom are involved in the informal sector and 76.8 per cent of the rural residents unbanked, it shows that there exists a huge untapped potential for financial services at the micro level of the economy.

  • Consolidated supervision: Banks’ examiners for training

    Consolidated supervision: Banks’ examiners for training

    To actualise the objectives of consolidated supervision, the training of banks’ examiners will soon begin, the Nigeria Deposit Insurance Corporation (NDIC) has said.

    The training will be undertaken by the Financial Regulatory Service Sector Commission (FRSSC) comprising the Central Bank of Nigeria (CBN), Securities and Exchange Commission (SEC), National Insurance Commission (NAICOM) and National Pension Commission (PenCom).

    Director, Banking Supervision, NDIC, AdedapoAdeleke, told The Nation that the framework for the implementation of the scheme is in the pipeline.

    The regulators, he said, had agreed to come up with examiners who will be trained on how to implement the guidelines.

    He said the training of the examiners was crucial to the implementation of the guidelines on consolidated supervision, adding that each regulator would provide examiners to meet the needs of its sector.

    Adeleke said the CBN was at the vanguard of driving the initiative for its overall success. He said consolidated supervision would help in diagnosing sectoral problems, monitoring them, and providingcommon and proactive solutions.

    NDIC, he said, was working with the CBN to ensure proper supervision of the banks and also ensure that the industry’s problem does not spill over to other arms of the financial services’sector.

    He said: “We are working with other regulatory bodies to foster the growth of the consolidated supervision project.  We found out that there are banks that have subsidiaries that are not in the mainstream banking. This would hinder the supervision of the industry. Though no date has been fixed for the training of such examiner, all the regulators will have their own examiners.

    “Different areas in the financial service system require supervision. We have set up a consolidate supervision such that any bank, insurance company, stock broking firm, quoted companies, among others, that are exposed to risk would be quickly checked. The idea aimed at preventing crisis from snowballing in the financial system.”

    This is one of the ways of preventing a re-occurrence of the crisis that rocked the capital market and the banking industry in 2008. “Consolidated supervision would help in seeing, checking, and proffering solutions to problems in each sector.  Its framework would be executed by the examiners trained by the regulators,” he explained.

    Adeleke said the FRSSC would be able to intervene in any part of the financial services sector that is having problem, without going through the National Assembly for solutions. He said when this happens, the growth of the financial service sector and the economy would be fast-tracked.

    He said the commission would do a good job, stressing that it would not get involved in politics.

    On Savannah Bank, Adeleke said the NDIC does not have much role to play on re-opening the bank, arguing that CBN has the capacity to determine the fate of the bank.

    “With respect to the issue of Savannah Bank, NDIC cannot pay its depositors. CBN is still persuading the bank to pay the necessary fund before it can reopen for business,” he said.

     

  • NDIC to sanction unruly staff

    NDIC to sanction unruly staff

    The Nigeria Deposit Insurance Corporation (NDIC) has threatened to sanction any of its staff who fails to take positive advantage of its academy.

    Speaking at the commissioning ceremony of the NDIC academy in Abuja over the weekend, the chairman of the corporation, Ambassador Hassan Adamu, stated that “Those who do well will be recognised and those who come to waste time will be sanctioned.”

    Ambassador Adamu expressed the desire to see the academy become “a centre of excellence dedicated to the training and development of not only NDIC staff but those of other sister agencies and stakeholders in the financial services industry.”

    Also speaking at the occasion, the Managing Director of the NDIC, Alhaji Umaru Ibrahim, stated that “with the current emphasis on risk-based banking in Nigeria and the global concerns for the supervision and regulations of SIFIS and domestically important banks, the NDIC cannot afford to ignore the training and retraining of its staff to ensure on a regular basis, adequate supply if highly skilled and professional staff that will enable it cope with the emerging supervisory challenges in the financial system.”

    The choice of the rented property that will serve as the temporary base of the NDIC academy Umaru said is meant to mitigate the disruptions the corporation’s academy in Lagos suffers, allow for maximum concentration of all participants and lead to cost savings.

    The training programme being conducted by the academy he said are based on a revised and updated curricula designed to cater for both the technical and managerial competencies of the staff.

    To this end, the academy has two schools, management and technical schools with qualified resource persons drawn from both local and international institutions.

    The academy, Umaru added, would be equipped with state of the art teaching aids with plans to install a digital library.

  • NDIC boss on banking reforms

    NDIC boss on banking reforms

    The Chief Executive Officer, Nigerian Deposit Insurance Corporation, Alhaji Umaru Ibrahim, has said the banking reforms have failed to address the needs of the poor in the country.

    Speaking during the Business Day Annual Banking Conference in Lagos yesterday, Ibrahim said most Nigerians were still living in poverty inspite of the reforms introduced by the Central Bank of Nigeria (CBN).

    He said: “You will agree with me that reforms measures undertaken by the regulatory agencies in the country such as the banking consolidation, establishment of the Assets Management Corporation of Nigeria (AMCON), risk-based supervision for banks, introduction of the International Financial Reporting Standards (IFRS), transformation of the payment system through cashless policy, adoption of a common year-end, introduction of codes of corporate governance and review of the universal banking model, among others, have brought about remarkable transformation of the banking industry.

    “These modest achievements notwithstanding, it leaves much to be desired as the majority of Nigerians still live below the poverty line.”

    Represented by the Director, Banking Supervision Department, NDIC, Mr Adedapo Adeleke, Ibrahim said the corporation had made substantial payments to depositors of the Deposit Money Banks (DMBs), Micro Finance Banks (MFBs) and Primary Mortgage Institutions (PMBs).