Curbing Banking Risks: Osinbajo Tasks NDIC, Others On Tech-driven, Innovative Ideas
- As Corporation remits N212.71bn to CRF
BY COBHAM NSA, ABUJA – The Vice-President Professor Yemi Osinbajo has challenged regulatory authorities in Nigeria’s banking industry to be proactive and creative in envisioning workable strategies to tackle existing and emerging risks within the system.
He said the fast pace of technological developments in the global financial sector demand the regulators are on top of their game as not to be caught napping by the huge risk factors.
This is as the Minister of Finance, Budget and National Planning Hajiya Zainab Shamsuna Ahmed confirmed that in line with provisions of the Fiscal Responsibility Act, the Nigeria Deposit Insurance Corporation (NDIC) has remitted over N212.7 billion into Consolidated Revenue Fund (CRF) since its establishment about 30 years ago.
Vice President Osinbajo, who was the Special Guest of Honour at the Public Lecture and Book Presentation marking NDIC 30th Anniversary in Abuja, said efforts must be focused on creating innovative ways and strengthening regulatory infrastructure to manage all risk factors going forward.
While praising the robust collaboration between NDIC and the Central Bank of Nigeria (CBN) for effective regulation of the banking sector, Prof Osinbajo noted that the most significant challenge experienced so far in the nation’s financial system remained the bank crisis of 2008 and early 2009.
He said “going by the manner of the resolution, it appears the preferred touch was the establishment of AMCON, an option that cost something in the range of N5 trillion of money at that time”, but added that the reality of today indicate with its huge financial cost, such an option can no longer be on the table in the event any systemic distress.
The Vice President admitted that with such disturbing scenario staring the industry daily, only technological innovations and creativity on the part of the regulators would be good enough to ensure continued stability in the sector
However, in commending the Corporation on its 30 anniversary, Prof Osinbajo said by dint of hard work and excellence service delivery, NDIC has earned an enviable reputation among its peers in Africa and beyond.
“I have already heard of the various institutional achievements by the NDIC in the past three decades of its existence. The part it played in stabilizing the financial system, especially the period immediately after the early days of privatization and private ownership of banks and its role in the failed banks crisis that followed immediately after. Also, the various professional and standard distinctions that it has received through the years. All these are quite laudable and you must therefore work harder to maintain this high standards and rating” he said.
In her goodwill remarks, the Finance Minister, Hajiya Zainab Ahmed said the NDIC remains a dependable public institution that deserved support in order to achieve its mandate of protecting depositors’ in the banking industry.
The Minister, represented by Director, Homes Finance, Mr. Okon Udo, commended the Corporation for its selfless contribution to the economy as a key finance regulator, adding; “I want to commend NDIC for being at the forefront of activities that promote financial system stability. It’s on record that since its inception the corporation has worked in close collaboration with others in the financial safety system to record significant progress.
“As a member of the financial services regulatory coordinating committee, the committee is a statutory one comprising the regulators in the Nigeria financial services industry. The mission of the committee, is to proactively promote a sound and stable financial systems in Nigeria through effective inter agency collaboration. Ladies and gentlemen as a supervisory Minister of this efficient and highly agency, I stand to commend the contribution of the NDIC to enhancement of the revenue base of the federal government of Nigeria.
“Today, its accumulative remittances to the consolidated revenue fund stands at over N212.71billion. The executive arm of government is also aware of remarkable effort of the importance of cooperation to enhance financial inclusion in the country”, she said.
Delivering the anniversary lecture, the Guest lecturer, Mr. Aigboje Aig- Imoukhede blamed weak corporate governance for banks failure, even as he lauded both NDIC and CBN for enthroning strict corporate governance structure within the banking industry.
Speaking on: “Emerging corporate Governance and risk management issues in banking”, he said improved processes have actually helped the country’s banking system to be virile, strong and reliable.
“Together, and in collaboration with a number of other regulators, the CBN and NDIC have superintended a remarkable improvement in the conduct of banking corporate governance over the last decade. They have been guided and supported by a range of legislative and regulatory tools and including the CBN Act, the NDIC Act, and other regulatory institutions, such as the Financial Reporting Council, the Chartered Institute of Bankers, and if the Banks are public then the Securities & Exchange Commission and the Nigeria Stock Exchange”.
“Indeed, the Nigerian regulatory community must be commended for the way in which the approach to corporate governance has been refined and developed over time, ensuring coherence in oversight and managing any potential overlaps in jurisdiction and interpretation.
“This process has helped us move from a time when bank’s board room discussions led to fisticuffs and broken bones to today when three of our five largest banks are chaired by women. A reflection of the gender diversity that we have embraced, amongst many other best practices. With economic growth, deeper and more internationally exposed financial markets, both the regulators and the operators have recognized that they are goldfish in a very transparent bowl.
“The understanding that governance is mission critical has enabled a more seamless move towards best practice as the regulated willingly become much more adherent, as they see its value. During the course of my career, there have been a number of notable milestones as our banking industry improved its governance and risk management practices and I would like to recognize two of them in particular, one the NDIC and the other from the CBN”, he said.
The former Access Bank Managing Director said; “It is imperative that the regulator of a systemically important sector like financial services, have a constantly evolving view of the future and understands the emerging trends, technologies and disruptive business models that it will bring. If a regulator does not, then the sector outpaces them and the level of confidence in governance, and risk management that we enjoy today, will be disappear”.
Also giving his opening remarks earlier, NDIC Managing Director, Mallam Umaru Ibrahim, said in its three decades of existence, “The Corporation introduced significant reforms during the period, such as Enterprise Risk Management, Differential Premium Assessment Systems (DPAS), built capacity of staff in Risk Based Supervision (RBS) and deployed a new performance management system.
“The Corporation also extended DIS coverage to Microfinance Banks (MFBs) and Primary Mortgage Banks (PMBs). It also reviewed the maximum coverage for different categories of deposit taking financial institutions.
“In the first decade of its existence, the NDIC was saddled with the onerous responsibility of managing distress in the banking system. It adopted multiple distress resolution options including provision of financial assistance to deserving institutions, imposition of holding actions, change of management of affected banks, and assisted mergers. It also became necessary to undertake the orderly liquidation of 33 banks whose licenses were revoked by the CBN. The Corporation also implemented the Failed Banks (Recovery of Debts) and Financial Malpractices in Banks Act 1994, which established Failed Banks Tribunals to prosecute those who were responsible for the failure of the banks”.
“The second decade in the Corporation’s evolution was defined by its responses to the regulatory challenges of bank consolidation policy of 2005. The Corporation adopted the Purchase and Assumption (P&A) system to resolve the problems of 13 banks whose licenses were revoked for failing to meet the N25 billion capital requirement”, Umaru said
The event had Vice President Osinbajo unveiling special book on NDIC 30 years anniversary titled: ‘Thirty years of Deposit Insurance System (DIS) in Nigeria”
Dignitaries that graced the occasion included: Senate President, Ahmad Lawan, representative of the Rt. Hon Speaker, House of Representatives Hon. Victor Nwokolo; Guest Lecturer, Aigboje Aig-Imoukhuede; Minister of State for Labour and Employment, Barrister Festus Keyamo (SAN); NDIC Board Chairman, Ronke Sokefun; Minister of Water Resources, Engr. Suleima Hussein Adamu; CBN Deputy Governor (Corporate services) Mr Edward Adamu; Ooni of Ife, His Imperial Majesty Oba Adeyeye Enitan Ogunwusi (Ojaja II); Alake of Egba Land, HRM Oba Adedotun Aremu Gbadebo; Emir of Kazaure, HRH Najib Hussaini Adamu; HRM Oba Adejimi Adu Alagbado and Rep. of IADI Sec Gen, Nikolay Remchukov; past Managing Directors and staff of NDIC as well as captains of industry.