CBN Threatens Banks Over Insider Abuses
The Central Bank of Nigeria (CBN) will no longer spare top officials and stakeholders of Deposit Money Banks (DMBs) caught in the web of insider abuses.
Already, the apex bank is breathing down the necks of bank chief executives and some key actors fingered in high level abuses perpetrated in most financial institutions in the country.
Governor of CBN, Mr Godwin Emefiele said the regulator would, without any restrain, sanction offenders given the evident hazard posed by massive corporate governance abuses perpetrated by top ranking banks’ officials.
Speaking at this year’s edition of the CBN-Financial Institutions Training Centre (FITC) Continuous Education Programme for Directors of Banks and Other Financial Institutions in Lagos on Tuesday, Emefiele said fit and proper persons must henceforth be appointed into the boards of banks to sanitize the system and promote accountability.
The CBN boss, in a presentation titled: “The Next Level of Corporate Governance Practice”, said “corporate governance is undoubtedly an essential pillar in financial system stability.”
In expressing the apex bank’s dismay over the ugly development which he described as unhealthy for the nation’s banking sector, Emefiele blamed failure of banks’ boards to effectively carry out their oversight functions of checking management excessive risk taking, conflict of interest, undue concentration on short term gains and excessive executive compensation for institutions’ inability to deliver on their core mandates.
He said a safe and sound financial system is subject to the quality of corporate governance practices as well as the calibre of board members and their ability to discharge their responsibilities honourably and transparently.
According to him, the time has come for independent bank directors to be more responsible and proactive in their duties as the conscience of their institutions in the overall interest of depositors and minority shareholders.
The apex bank chief, who insisted that ‘Independent directors do not need to be friends of the managing directors’, said, “They can’t fire you but the CBN can remove you if you don’t do your job well.”
He said the sector needs independent directors who ‘are bold, sound and experienced to do what we want them to do’, warning that the CBN will get tougher on insider related loans, especially the practice where most top officials borrow from their institutions at very low interest rates and without any intention of repaying such loans.
