NDIC, CBN Commended For Prevention Of Banks Failure In Nigeria

L-R: Managing Director, NDIC, Mr. Bello Hassan, Governor, CBN, Mr. Godwin Emefiele, Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed and Chairman, Board of Directors, NDIC, Mrs Ronke Sokefun at the 2022 International Association of Deposit Insurers (IADI) Africa Regional Committee (ARC) Technical Assistance Workshop, yesterday in Abuja.

The Nigeria Deposit Insurance Corporation (NDIC) and the Central Bank of Nigeria (CBN) have been commended for strategic roles in the prevention of banks failure in Nigeria.

Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed gave the commendation Tuesday while delivering her keynote address at the 2022 International Association of Deposit Insurers (IADI) Africa Regional Committee (ARC) Technical Assistance Workshop currently holding in Abuja.

Hosted by NDIC, the event brought together leaders of African Deposit Insurance Agencies to share knowledge and expertise on ways to strengthen the implementation of Deposit Insurance Systems (DIS) on the African Continent.

Declaring the workshop open, the Finance Minister said, the collaborative strategy of NDIC and CBN in efficient supervision of insured institutions has promoted sound risk management, reduced likelihood of failure and effective resolution of failing banks.

She said, the collaboration has “helped to improve public confidence, protect depositors and promote the stability of the Nigerian financial system”.

She noted that the Nigerian economy has so far shown signs of resilience in the face of economic headwinds like inflation, climate change and the conflict between Russia and Ukraine, which affected the global economy.

This, she said, could be seen from the 3.54% Gross Domestic Product (GDP) year-on-year, recorded in the second quarter of 2022, adding, that the GDP growth marks the seventh consecutive quarter of GDP growth, since the recession in Q3 2020.

The Minister said, “the Nigerian economy, like others, felt the brunt of the global economic distortion, having to go into recession twice in the space of five years. However, given the resilience of the nation’s financial system, we came out within months.

“We also make bold to say that despite these economic challenges, no depositors’ fund was lost given the effectiveness of our agencies, most especially the CBN and the NDIC’, she said.

Earlier, the Managing Director and Chief Executive Officer, NDIC, Mr. Bello Hassan said, growing financial inter-connectedness has shown that banking crisis can have contagion effects, therefore, a system-wide approach to crisis management involving collaborative efforts of the Financial Safety Net participants and regional deposit insurance systems was  highly imperative.

Mr. Hassan said,  NDIC as one of the resolution authorities in Nigeria, has adopted different resolution mechanisms in resolving the failure of distressed deposit-taking financial institutions in the country.

This, he said could be seen from “the liquidation activities of the NDIC which involved 467 insured banks in-liquidation, comprising 49 Deposit Money Banks (DMBs), 367 Micro Finance Banks (MFBs), and 51 Primary Mortgage Banks (PMBs), at end-December 2021”.

The NDIC boss noted that the successes recorded by the NDIC in the execution of its mandate, would not have been possible without the strong support and collaborative efforts of other financial safety-net players in Nigeria like the CBN, the Federal Ministry of Finance, Budget and National Planning and other members of the FSRCC.

He said, the theme for this year’s ARC Workshop: “Normality in Turbulent Periods: The Stabilizing Role of Deposit Insurance” was carefully chosen, considering the current and emerging developments in the global financial landscape, with a special focus on Africa.

He expressed hope that at the end of the Workshop, strategies for system-wide crisis preparedness and resolution options in promoting financial stability in the region would emerge.

In his Goodwill Message, the Governor, Central Bank of Nigeria (CBN), Mr Godwin Emefiele said, while the Nigeria’s economy was grappling with the COVID-19 pandemic in the aspect of growth trajectory, the Russia-Ukraine war sets in.

He said, Nigeria, like other economies of the World was not left out in the current crisis, therefore, efforts should be intensified towards addressing those challenges.

Speaking on the evolution of financial technology (fintech) in Nigeria, the apex bank Governor said, the CBN had released a series of fintech-based policies and guidelines including the regulatory sandboxes, open banking and cybersecurity, among others, in a quest to ensure a robust regulatory landscape without stifling innovation.

He insisted that fintechs who want to be deposit financial institutions, should come forward with N25 billion and become a bank.

Also in her Goodwill Message, the
Chairman, Board of Directors, NDIC, Mrs Ronke Sokefun, said, the event presents an opportunity for participants from across the world to dissect pertinent issues, share experiences, compare notes and elevate understanding of the role of deposit insurers.

Mrs Sokefun attributed the weakened global financial and economic growth to the lingering effects of the COVID-19 pandemic and the truncation of nascent recovery from the pandemic-occasioned recession by the Russia-Ukraine war.

She said, despite the challenges,
“the Nigerian banking system remained healthy overall as the capitalisation level is above the prudential requirement and the Non-Preforming Loans ratio is also within the requirement at the end of second quarter 2022”.

The board chairman assured that workshop would bring out useful communique that would further enhance the role of the deposit insurer in Early Detection & Timely intervention, Contingency Planning & Crisis Management, and fostering financial system stability in both ‘normal’ and turbulence periods.

Deposit Insurance organisations from more than 15 African countries including Angola, Botswana, Burundi, Ghana, Kenya, Senegal, Somaliland, Sudan, Tanzania, Uganda, Zimbabwe amongst others were present at the event.

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