How depositors in liquidated banks will remember NDIC in 2017 By Bashir Ibrahim Hassan

 

How time flies. So, it is farewell to 2017 and all the good, the bad and all the politically induced upheavals that came with it! But for the lucky ones, memories of the past year will not be easily forgotten. As a financial analyst, I have closely monitored most of our financial institutions, especially the regulatory bodies, and gauged the economic impulse of the nation more generally.
If, at the macro level, recession and devaluation defined Nigeria’s economy in 2016, 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. Also in 2017, investments in agriculture began to pay significant dividends evidenced by bumper harvests.
At the macro level of 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, in 2017, 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 the entire 2017, the depositors of these banks can aptly be seen as the luckiest Nigerians. One can only imagine how many lives have been touched positively, revived and notched up through this singular act of effectively guaranteeing depositors and thus ensuring confidence in the financial sector.
NDIC’s history is grounded in the need to protect depositors and strengthen the safety-net for the banking sector. NDIC’s existence was motivated by the adoption of the financial liberalization policy as a result of the introduction of the Structural Adjustment Programme (SAP) in 1986. 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 went into action and saved the nation’s banking sector from collapse many times over. The interventions came through innovative and modern day deposit insurance best practices.
The NDIC, working in collaboration with other safety net participants, made remarkable progress towards restoring the stability and soundness of the Nigerian banking system. The NDIC’s has recorded major achievements consistent with the aforementioned mandate.
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 Banks including three holding companies 2017. In the same period the NDIC also carried out maiden examination of two newly licenced banks. Furthermore, the NDIC examined 300 micro finance banks and 10 primary mortgage banks in 2007.
The NDIC is the sole liquidator of failed/closed insured financial institutions in Nigeria. The NDIC discharges this mandate of liquidation only after the revocation of the license of an insured financial institution by the CBN. 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. The relentless 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 by the NDIC under the able leadership of its Managing Director/CEO, Alhaji Umaru Ibrahim, FCIB mni in 2017, included the assessment of the British Standards Institution (BSI) where the NDIC successfully obtained three (3) 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 dedication of the Management to take the NDIC to greater heights through training and re-training of its staff is not in doubt. 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.
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.
Indeed, time flies but it always leaves its shadow behind. 2017 has gone, but it has left depositors of banks-in-liquidation, counting their luck and 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.
It is obvious that 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 which is coming out of recession.

Hassan is a financial analyst

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