By Tony Obiechina, Abuja
The Nigeria Deposit Insurance Corporation, (NDIC), said it has successfully liquidated a total of 425 financial institutions as at December, 2019.
A breakdown of the number comprises 5 Deposit Money Banks (DMBs), 325 Microfinance Banks (MFBs), and 51 Primary Mortgage Banks (PMBs).
NDIC Assistant Director, Insurance and Surveillance Department, Mr John Kayode Abiodun made the disclosures in a lecture he delivered at the Annual General Meeting organised by the Finance Correspondents Association of Nigeria (FICAN) in Abuja, weekend.
In the lecture titled “Speedy Bank Failure Resolution Strategies: Challenges & Prospects”, Abiodun also disclosed that the NDIC “through efficient and diligent liquidation activities has successfully paid in full the deposits of the customers of 18 DMBs, (both insured and uninsured”.
According to him, “payment of depositors of Fortune International Bank, Triumph Bank and Peak Merchant Bank was put on hold as as end of 2019 due to litigations challenging the revocation of their operational licences”.
The NDIC Asst Director explained that the Central Bank of Nigeria CBN, revoked the operating licence of the troubled Skye Bank by using Bridge Bank mechanism through the establishment if Polaris Bank, acquired the assets assumed the failed Skye Bank.
“The establishment of Polaris Bank Ltd ensured that the depositors of Skye Bank continued to operate their accounts with the new bank and about 6000 jobs were saved. Polaris was later acquired by AMCON for subsequent sale to interested investors”, he stated.
On why banks are distressed, Abiodun listed, Insider Abuse; Abusive Ownership and weak Board of Directors, weak corporate governance, poor management process, and inadequate capitalization as some of the causes for bank failures.
“Liquidation of a failed bank through revocation of licences becomes the final bus stop when all efforts made made by the shareholders and regulatory authorities do not yield the desired results”, he added.
According to him, Section 38(c) (ii-iv) & DE of the NDIC Act “allows the Corporation to take over a failing bank, grant it a long term loan for the purpose of restructuring and sale”.
“This involves change of management, restructuring of Risk Assets, rationalization of staff, branches and inviting prospective new investors to acquire the bank”, he pointed out.
