NDIC Moves to Quicken Resolutions in Distressed Banks




*L-R: Prof Muhammad Sani Bello, Kaduna State University; Muhammad Kudu Abubakar, S A to the Director General (NTA) on National Assembly Matters; President/CEO, Niger Valley Resources Limited, M K Ibrahim; Managing Director/CEO, Nigeria Deposit Insurance Corporation (NDIC) Mr Bello Hassan; Director SIID (NDIC), Vera Ogbo-Ikwue and Director Corporate and Public Affairs Department (NDIC), Mr Bashir A Nuhu at the 2021 Fican workshop in Ibadan

By Tony Obiechina, Abuja

The Nigeria Deposit Insurance Corporation (NDIC) says it has put in place strategies, that will ensure swift resolutions in the event the Central Bank of Nigeria (CBN) revokes the licence of a distressed and insured financial institution.

Managing Director of NDIC, Mr Bello Hassan disclosed this in Ibadan on Wednesday while declaring open the 18th Finance Correspondents Association of Nigeria (FICAN) workshop sponsored by the Corporation themed: “Enduring Extreme Disruptions: Resilience & Reinvention for Banking System Stability & Deposit Insurance”.

He said, it has become necessary for the Corporation to close ranks with its partners including the media and civil society organisations to quickly dismantle some of the obstacles bedevilling the efficient and timely resolutions of liquidated institutions.

Such impediments according to him, include, slow recovery and realisation of assets, as well as litigation by erstwhile shareholders and creditors of closed banks, stressing that such an impasse can only be addressed through effective collaboration.

Hassan said, “Our key focus is, therefore, to scale up the deposit insurance framework; provide timely support to insured institutions as and when required; ensure faster and orderly resolutions of liquidated insured institutions; as well as continue to assist the Central Bank in promoting the stability of the banking system.

“In the area of deposit insurance, as a key mandate of the Corporation, we have evolved a strategy which accentuates our existing framework. The initiative strives to ensure that the insurance cover is adequate to support this objective within the banking sector. In addition, considering the importance of the optimum funding ratio in deposit insurance, we are developing an effective methodology for determining a realistic Target Funding Ratio for the Corporation”.

“Our key focus is, therefore, to scale up the deposit insurance framework; provide timely support to insured institutions as and when required; ensure faster and orderly resolutions of liquidated insured institutions; as well as continue to assist the Central Bank in promoting the stability of the banking system.

“Additionally, we have commenced the review of our approach to the determination of premium by banks to make it more risk-based, such that, the probability of the risk crystallising, becomes a major factor in the pricing methodology of our premium going forward.

“Furthermore, there have been recent calls on the Corporation to enhance the provision of support to insured institutions that are facing financial difficulties. To this end, we have identified the need to reconsider our framework, to provide realistic terms and conditions that will enable qualifying insured financial institutions to promptly access technical and or financial support, in line with S.(2)(1)(b) of the NDIC Act, whilst also protecting the Corporation from possible downside risks”, he explained.

Hassan described the workshop as an important part of the Corporation’s capacity building initiative for the media, towards ensuring their better understanding of their role in ensuring financial system stability.

‘It is also aimed at strengthening and broadening their ability to interrogate and interpret current developments in the financial services sector in general. I am extremely delighted that in the 19 years of this laudable engagement, the objectives of the workshop are continuously being met, judging by the knowledge imparted on participants, as demonstrated by the high quality of reportage that we read in the media on a daily basis,’ he added.

“Furthermore, there have been recent calls on the Corporation to enhance the provision of support, to insured institutions that are facing financial difficulties. To this end, we have identified the need to reconsider our framework, to provide realistic terms and conditions that will enable qualifying insured financial institution promptly access technical and or financial support, in line with S.(2)(1)(b) of the NDIC Act, whilst also protecting the Corporation from possible downside risks.

“We are equally collaborating with relevant stakeholders, to ensure that the Corporation discharges its responsibilities efficiently without hindrances, following revocation of licenses of any insured institution by the CBN. This has become more important to us, giving the need to improve on our processes in resolving liquidated financial institutions.

“Some of the obstacles bedeviling the efficient and timely resolutions of liquidated institutions, such as slow recovery and realization of assets, as well as litigation by erstwhile shareholders and creditors of closed banks can only be addressed through effective collaboration.

“In all these collaborative efforts, the media, the civil society groups, along with the insured financial institutions that are represented at this workshop, will remain the most strategic and critical stakeholders that we cherish the most.

“Through the better understanding of our programmes and policies, it is hoped that you will not only be better informed in the coverage of our activities, but also be well-equipped to contribute to our advocacy and mobilization for a resilient financial system. I therefore call on you, to continue to support the Corporation in its resolve to fully deliver on its core mandates. On our part, we promise to keep our doors open to your suggestions and observations, while partnering with you on capacity building and other areas of mutual benefit.

The MD reiterated the determination of the current management of the NDIC, to work harmoniously with all stakeholders, to enhance the capacity of the Corporation in the discharge of its statutory obligations towards the fulfilment of the public policy objectives for which it was established.

“Our key focus is therefore to scale up the deposit insurance framework; provide timely support to insured institutions as and when required; ensure faster and orderly resolutions of liquidated insured institutions; as well as continue to assist the Central Bank in promoting the stability of the banking system.

“In the area of Deposit Insurance, as a key mandate of the Corporation, we have evolved a strategy which accentuates our existing framework. The initiative, strives to ensure that the insurance cover is adequate to support this objective within the banking sector.

“In addition, considering the importance of the optimum Funding Ratio in deposit insurance, we are developing an effective methodology for determining a realistic Target Funding Ratio for the Corporation. Additionally, we have commenced the review of our approach to the determination of premium by banks to make it more risk-based, such that, the probability of the risk crystallizing, becomes a major factor in the pricing methodology of our premium going forward.

The 3-day workshop ends on Friday with a Syndicate Session to be presided over by NDIC Executive Director (Corporate Services) Mrs Omolola Abiola-Edewor.

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