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Tag: NDIC

  • Nigeria lacks experts in sustainable banking, says NDIC

    Nigeria lacks experts in sustainable banking, says NDIC

    The Nigeria Deposit Insurance Corporation (NDIC) has lamented the absence of qualified resource persons in the field of sustainable banking.

    The Managing Director of the NDIC, Alhaji Umaru Ibrahim, said this while responding to questions from reporters on why the corporation engaged the services of foreign resource persons to train its directors at the end of the NDIC Board retreat.

    He said: “With due respect, I don’t think there is a well known qualified resource person in Nigeria in the area of sustainability or sustainable banking for us to engage.”

    As a result, the NDIC, he said, had to engage an expert that “is well known. She consults for the Bankers Committee; she also consults for the Central Bank. She is well known worldwide in that area. With time we believe we will have people who are experts in this area in Nigeria.”

    The NDIC believes in capacity building and knowledge sharing for building strong institutions, and attaches a lot of importance to the training of its human resources, including its directors so as to tool them adequately in their numerous roles, which include oversight, team building, mentoring and strategic planning, he added.

    The NDIC boss noted that keeping track of recent developments in the country’s financial system and understanding the reasons for adopting certain policy measures at different points in time would assist the corporation tremendously in shaping collective judgements and improving strategic thinking and decision-making for the betterment of the system.

    Recent banking reforms, to which the corporation contributed immensely, he explained, “is aimed at building a safe and sound banking system which supports economic growth and development of our country.”

  • ICAN recognises NDIC’s role in reforms

    ICAN recognises NDIC’s role in reforms

    The Institute of Chartered Accountants of Nigeria (ICAN), Abuja District Society has acknowledged roles played by the Nigeria Deposit Insurance Corporation (NDIC) in bringing sanity to the financial system, especially in the course of the banking reforms.

    ICAN Chairman, Abuja District, Shehu Usman Aladire, said NDIC’s role in the reforms inspired depositors’confidence in the nation’s banking system.

    Aladire spoke at a gala night in Abuja to honour the Managing Director/ Chief Executive Officer, NDIC, Umaru Ibrahim.

    The ICAN chairman cited the increase of deposit insurance coverage levels from N50,000 to N200,000 per depositor of deposit money banks (DMBs) and the extension of insurance coverage to depositors of microfinance banks (MfBs) as well as the primary mortgage banks (PMBs) at N100,000 per depositor of the MfBs and PMBs including the second upward review to N500,000 and N200,000 per depositor of DMBs and MfBs/PMBs. This, he said, had met the economic realities and promoted public confidence in the financial system.

    Another achievement of the corporation, he said, was the establishment of the bridge bank as a failure resolution option in the interest of depositors and other stakeholders.

    “While stressing that the NDIC’s initiative was internationally applauded, ICAN also noted with delight that the bridge bank approach adopted in 2010 prevented systemic crisis and outright liquidation of the affected banks. Such it said, would have had dire consequences for depositors and other stakeholders in the nation’s banking system,” a statement from NDIC said.

    The ICAN National Vice-President, Kabir Alkali Mohammed, also presented an award to Ibrahim for his contributions toward the safety, soundness and stability of the financial system.

    He described the recipient as an embodiment of hard work, integrity and humility. He said the vision of ICAN with its merit awards was to promote exemplary leadership by identifying and honouring individuals with outstanding achievements and enviable contributions toward the growth and development of the nation.

  • Non-interest banks to start paying premiums soon, says NDIC

    Non-interest banks to start paying premiums soon, says NDIC

    Non-interest Deposit Money Banks will soon start making premium contributions to the Nigeria Deposit Insurance Corporation (NDIC), the Managing Director, Alhaji Umaru Ibrahim, has said.

    Ibrahim, who spoke yesterday at the sensitisation seminar for NDIC solicitors in Abuja. said these bank’s deposit insurance coverage is different from other conventional banks since it is governed by non-interest banking philosophy and regulations.

    He said: “We will soon request them (non-interest deposit money institutions) to start making their contributions. In a couple of weeks, Jaiz bank will soon start paying premium or contributions having clocked one year, and also, Stanbic-IBTC Bank’s non-interest window will also attract coverage.”

    What the NDIC will do is that the monies collected by way of premium will be separated from monies or premiums collected on interest bearing deposits, he said, adding that such collection will be invested in non-interest bearing instruments that the Debt Management Office and the Central Bank of Nigeria are trying to float.

    He explained that should “such a bank go under and we come to reimburse depositors, monies that would be paid will also be compliant with the regulations of non-interest banking.”

    On how much depositors of non-interest organisations would be entitled to in the event of such institutions failing, the NDIC boss said, “it will be within the normal threshold for conventional banks and financial institutions.

    “If it is a normal interest bearing institution, we pay you N500,000 upfront if the bank fails, and then subsequent payments would be made as we recover debts, and if it is a microfinance bank or a primary mortgage institution, we pay N200,000 upfront. So it is the same threshold for non-interest deposits.”

    The NDIC boss lamented that the corporation was having difficulties recovering debts owed to failed banks due to the corporation’s “inability to trace the debtors, lack of collateral and other related challenges.”

    He identified other challenges the corporation is facing to include; “the problems of excessive litigations which makes it difficult for the corporation to wind up failed banks and settle depositors and other creditors within reasonable time; execution of court judgements against the assets of the corporation as the liquidator of failed banks based on the misunderstanding of the role of NDIC, and the lack of proper understanding of the distinction in the legal status of NDIC as liquidator/deposit insurer by legal practitioners, the court and the public,” he said.

  • Why banks fail, by NDIC

    The Nigeria Deposit Insurance Corporation (NDIC) has blamed bank failures in the country on insider abuses, weak internal control system, poor corporate governance in many lenders.

    Its Deputy Director, Research, Usman Wali, disclosed this when members of the National Association of Banking and Finance Students (NABAFS) of the Federal Polytechnic, Nasarawa visited the corporation in Abuja.

    In a statement, he said the role of the corporation in protecting depositors’ interest is key to the nation’s financial stability and economic development.

    Wali emphasised that the visit was crucial to the enhancement of the NDIC’s public awareness on its mandate and activities.

    The Deputy Director said the corporation’s operation is focused 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) licensed depositor of insured banks are entitled to up to 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 operational efficiency and compliance with banking rules and regulations in the system. He identified the four types of on-site bank examination as maiden, routine, target and special examinations.

  • NDIC and depositors

    NDIC and depositors

    •Payouts to depositors was long awaited, but it was, in most instances, too little and too late.

    To the Managing Director of the Nigeria Deposit Insurance Corporation (NDIC), Alhaji Umaru Ibrahim, the corporation may well be on course to bringing the saga of failed banks to a closure. Speaking at the 24th Enugu International Trade Fair, he claimed that the corporation had paid N90.13 billion to depositors of 48 failed banks as at December 2012, out of which over N10 billion was paid in 2012 alone. Another N2.50 billion was said to have been paid to depositors of the 103 closed micro finance banks (MFBs). The shareholders of the defunct Alpha Merchant Bank, Nigeria Merchant Bank and Pan African Bank (in-liquidation), got a largesse in the cumulative liquidation dividend of N373.04 million, N620.0million and N293.0million, respectively, during the period.

    For the hordes of frustrated depositors and shareholders it is, no doubt, a case of being better late than never. Unfortunately, the corporation failed to state the amount outstanding in favour of the depositors, which would have provided a basis to evaluate its performance.

    However, the corporation still deserves some credit for pushing relentlessly to bring the unfortunate saga to a closure.

    But the question, of course is – what kind of closure? The question is pertinent because the banks in this category were those that actually had their licences revoked by the Central Bank of Nigeria (CBN) between 1994 and 2006. We consider it unimaginable that a class of depositors would have to wait for nearly 18 years to get their deposits refunded to them. How will the NDIC compensate those that have died? And did the corporation make adjustments for the factor of inflation in the final payment?

    The above, however, nowhere compares to the fact that a definite date is even far from set for closure to the saga.

    No doubt, the larger portion of the blame would go to the intransigent shareholders who tied down the banks’ liquidation process through court actions. The managers who ran the banks aground would also share in equal measure. Litigation of course meant that the NDIC – even if it wished to – could not proceed with the winding down process until the cases were disposed of. Unfortunately, the NDIC itself seems to have been ill-served by its own tardy bureaucracy soon after some of the cases were decided.

    The entire saga cannot but bring to mind the crass delinquencies that typified the era. This was no doubt compounded by the stark inability of the regulators to come to speed with the dynamics of the period, the result of which the process of banking consolidation became an avenue for some smart Alec operators to prey on the system. We saw instances in which capital issues were aborted after which the issuers vanished into the impunity-suffused atmosphere of the era. Till date, no steps were taken by the regulatory authorities to get the issuers to refund prospective investors their money, not to talk of the issuers and their cohorts being brought to book.

    If only for the sake of the industry and the investing public at large, an early resolution of the failed banks saga has become imperative. Settling the depositors is however only one of two-parts to the closure; the other part is for the authorities to revisit and punish the iniquities of the era. Without both, there can be no talk of a closure.

  • NDIC can’t trace failed banks’ debtors

    NDIC can’t trace failed banks’ debtors

    The Nigeria Deposit Insurance Corporation(NDIC) yesterday accused banks of giving loans to people without collateral and traceable addresses. The corporation’s Managing Director/CEO, Alhaji Umaru Ibrahim, said this was one of the numerous problems confronting its operation in the banking system.

    He spoke at the Sensitisation Seminar for judges on ‘The Challenges to Deposit Insurance Law and Practice,’ in Abuja.

    He appealed to the judiciary to assist it in protecting the banking system to restore depositors’ confidence.

    He lamented the challenges facing the NDIC.

    For NDIC to achieve its mandate, Ibrahim emphasised the need to address the menace of liquidation-related litigations, execution of court judgments, vulnerable funding base, difficulty in recovering debt owed to failed banks by debtors, poor public awareness and inadequate legal frame work.

    He said the seminar was one of the steps being taken to involve stakeholders towards achieving greater efficiency.

  • Be hard on bank fraudsters, NDIC urges judges

    The Nigeria Deposit Insurance Corporation (NDIC) on Monday urged judges of the Federal High Court to be “hard on Bank fraudsters,” so as to restore depositors’ confidence.

    The Managing Director of the Corporation, Alhaji Umaru Ibrahim, made the call at a sensitisation seminar on “The Challenges to Deposit Insurance Law and Practice,’’ for judges.

    Ibrahim said the judges’ understanding was needed to abate the fraud in the banking system.

    He said that deliberate efforts should be geared towards quick dispensation of all pending liquidation-related cases.

    Ibrahim said the corporation was faced with difficulties in the execution of court judgments.

    He said the corporation had a vulnerable funding base, as well as difficulties in recovering debt owed to failed banks by debtors.

    According to Ibrahim, most of the problems stem from poor public awareness and inadequate legal framework.

    “The Nigerian judiciary, legal practitioners and other esteemed stakeholders have important roles to play in ensuring that the mandate of the Corporation is realised.

    “As our partners and stakeholders, I urge you to use your good offices and privileged positions to ensure that the corporation is empowered to safeguard the Nigeria banking system,” the News Agency of Nigeria quoted the NDIC boss as saying at the workshop.

    In his opening address, the Chief Judge of the Federal High Court, Justice Ibrahim Auta, said the seminar was necessary to keep judges abreast with the operations of the NDIC, and the sustenance of the country’s economy.

    “Acquiring such technical capacity will certainly enable us to make efficient, effective and informed decisions based on law for the interest of the nation’s economy,’’ Auta said.

     

  • Depositors get N73.5b ‘liquidation dividends’ from NDIC

    The Nigeria Deposit Insurance Corporation said it had paid N73.55 billion as liquidation dividends to 250,119 depositors as at December 31, 2011.

    The corporation made this known in its 2011 Annual Report, saying that the payments were made to 11 banks out of the 13 liquidated banks within the period under review.

    NDIC said that it declared additional liquidation dividends to depositors of Cooperatives and Commerce Bank, Commercial Trust Bank, Commerce Bank and Ivory Merchant Bank.

    It said the capital adequacy ratio of commercial banks rose from 4.06 per cent in December 2010 to 17.71 per cent in December 2011.

    It added that the banking industry’s capital base was strong during the year under review as equity capital decreased by 11.81 per cent from N249.71 in December 2010 to N220.21 billion in 2011.

    NDIC said that banks’ reserves with the Central Bank of Nigeria increased to N2.266 billion in 2011 from N179.89 billion in 2010.

    The report, according to the News Agency of Nigeria, stated that adjusted shareholders funds increased to N1.93 trillion in 2011 from N312.36 billion in 2010.

    It said that the improvement in the banking industry’s capital adequacy was primarily due to the activities of the Asset Management Corporation of Nigeria (AMCON).

     

  • CBN, NDIC to monitor banks’ compliance with ATMs’ directive

    CBN, NDIC to monitor banks’ compliance with ATMs’ directive

    The Central Bank of Nigeria(CBN) is to monitor compliance with its directive stopping the N100 depositors pay for using other banks’Automated Teller Machines (ATMs).

    CBN will deploy examiners in banks to ensure compliance, Managing Director, Nigeria Deposit Insurance Corporation (NDIC) Umaru Ibrahim said.

    He was speaking at a workshop for finance reporters in Dutse, the Jigawa State capital.

    Last Tuesday, CBN stopped the N100 charge for the use of ATMs other than those of a depositor’s banks.

    The decision followed a meeting at the lenders’ committee comprising executives banks directors and top CBN officials.

    Depositors hitherto paid N100 per withdrawal for rising other banks’ ATMs.

    The NDIC boss said the decision to stop the charge would increase the patronage of ATMs and deepen the financial inclusion strategy.

    He listed the other projects meant to promote financial inclusion to include the cash-less policy designed to bring low-cost, secure and convenient financial services to urban, semi-urban and rural areas in the country.

    Ibrahim called for the promotion of all-women microfinance banks, adding that evidence from other countries indicate that such institutions have the potential to promote easy access to credit among rural women, especially at the group levels.

    He said the platform could also be used to mobilise more funds from the group. He said out of the total number of provisional and final microfinance bank licences issued by the CBN, the north, including Federal Capital Territory had only 24.75 per cent, and therefore called on the state governments in the region to establish more grassroots banks.

    According to him, financial inclusion, alternatively characterised as ‘access to finance’ has been defined as ‘universal access at reasonable cost, to a wide range of financial services to everyone needing them, provided by a diversity of sound and sustainable institutions.’

    He said the CBN and NDIC have and uphill task in improving financial inclusion given the relatively low level of penetration of financial services in the country.

    The NDIC boss said the rising trend in bank customers’ complaints is a source of worry to the regulators.

    He said such complaints arising mainly because of poor customer service, high bank tariffs, frauds and forgeries as well as bank distress could threaten confidence in the banking system.

    He said banks are aware of whom their customers are but many of them do not appreciate the need to determine their expectations and how to manage them.

    “The inability to manage customers coupled with the serious corporate governance issues could explain the high frequency of complaints among bank customers in Nigeria. To determine the causes of customer complaints and design appropriate strategies for preventing and controlling it, the need to determine customer expectations and how to effectively manage them cannot be overemphasised,” he said.

  • NDIC advocates safe, stable financial sector

    NDIC advocates safe, stable financial sector

    The Nigeria Deposit Insurance Corporation (NDIC) has said the safety and stability of the financial sector cannot be compromised if the economy must improve.

    Speaking at the NDIC Day during the Lagos International Trade Fair, it’s Managing Director, Umaru Ibrahim, said the corporation would support the Central Bank of Nigeria (CBN) and other regulators to ensure that the financial system achieves the set objective of building a strong economy.

    He said the corporation was established by the Federal Government to insure deposit liabilities of licensed financial institutions.

    “The key mandate is to provide financial guarantee to depositors of the insured financial institutions in the event of failure to enhance confidence in the nation’s banking system. The corporation has contributed greatly to the various banking sectors in the country,” he said.

    The cumulative liquidation dividends of N77.38 billion, he said, had been paid to depositors whose claims were in excess of the insured amount in the 48 closed commercial banks as at last August 31. This is against N73.55 billion that was paid in the same period last year.

    Ibrahim said a total of N2.45 billion had been paid to depositors of the 103 closed microfinance banks as at August 31, this year while N2.25 billion was paid to insured depositors of the closed MfBs as at December last year.

    He said a cumulative liquidation dividend payment to shareholders of Alpha Merchant Bank, Nigeria Merchant Bank and Pan African Bank stood at N373.04 million, N620 million and N293 million during the period.

    The NDIC boss said deposit insurance has been facing low-level public awareness in most jurisdictions worldwide, adding that the corporation has mapped out some public awareness initiatives to sensitise the public about its activities.

    He said the theme of the fair “Promoting trade for sustainable economic transformation” was an indication of the government’s commitment to Vision 20: 2020.

    He said the safety, soundness and stability of the financial sector cannot be downplayed in the economy of any nation. He added that the key mandate of the corporation is to provide financial guarantee to depositors of the insured financial institutions in the event of failure to enhance public confidence in the nation’s banking system. “The NDIC has a crucial role to play towards the safety, soundness and stability of the financial system,” he said.

    ‘’The NDIC expresses its profound appreciation to the Lagos Chamber of Commerce for its support and co-operation since 2008 when the participation in the Lagos International Trade Fair started, and also to the press which has continued to be partner in their progress,” he added.