Gentlemen of the Press,
This address is to acquaint you with the activities and achievements of the Corporation in the first nine months of the year from January – September, 2012. The Corporation during the period continued to discharge its mandate in an efficient and effective manner.
As you are all aware, the Nigeria Deposit Insurance Corporation (NDIC) has a broad mandate that includes Deposit Guarantee, Banking Supervision, Failure Resolution, and Bank Liquidation. This discharge of its mandate in the nine months of 2012 was done within the context of the Corporation’s 2011 – 2015 Strategic Plan which was articulated within four strategic thrusts that represent its pillars of excellence. The four strategic thrusts are: Operational Readiness; A Culture of Continuous Performance Management; Strategic Partnering and Collaboration, and Promoting Public Confidence on Deposit Insurance System (DIS). The rest of this address presents the performance report of the Corporation in its core mandate areas as well as the challenges facing it and prospects for the future.
1.0 Deposit Guarantee Activities
Deposit Guarantee is the primary responsibility of the NDIC. The Corporation guarantees payment to depositors of all participating institutions up to a maximum limit in accordance with the provisions of its enabling Act in the event of failure of an insured financial institution so as to engender confidence in the banking system. During the period under review, the NDIC continued to provide deposit insurance coverage to the twenty (20) Deposit Money Banks (DMBs), 880 Microfinance Banks (MFBs) and 77 Primary Mortgage Banks (PMBs) in operation. The insured amount had remained at N500, 000.00 and N200, 000.00 for DMBs and MFBs/PMBs respectively. All insured depositors of the MFBs closed in 2010 were reimbursed using the new coverage level of N200, 000.00.
Following the revocation of the operating licences of insured banks in 2006, 2008 and the 103 MFBs in 2010, the NDIC continued to play its role as deposit insurer by ensuring the prompt payment of insured sums and dividends to uninsured depositors and other eligible claimants of the closed deposit money and microfinance banks. Details of the Corporation’s deposit guarantee activities are as presented below:
1.1 Payment of Insured Deposits to Depositors of Closed Deposit Money Banks
The cumulative amount of insured deposits of N6,682.34 billion was paid to 527,950 depositors of the 48 DMBs in-liquidation as at 30th September, 2012 against N6, 636.61 billion paid to 527,942 depositors as at 31st December, 2011. That represented 0.70% increase over the December, 2011 figure.
1.2 Payment of Insured Deposits to Depositors of Closed Microfinance Banks
Similarly, the sum of N47, 418,682.14 was paid to 748 insured depositors of the 103 closed MFBs during the period under review. That brought the total amount paid to depositors of the 103 closed MFBs to N2.45 billion as at 30th September, 2012 against N2.25 billion paid as at December, 2011. That was an increase of N0.20 billion representing 8.89 % over the December, 2011 figure.
2.0 Supervisory Activities
During the period under review, the NDIC continued with its supervisory activities of insured institutions in conjunction with the CBN. The supervision was done through on-site examination and off-site surveillance in order to promote safe and sound banking practice and also engender depositor confidence in the financial system. For the on-site examination, the Corporation conducted routine, special and target examinations. Since its inception in 1989, the Corporation had adopted compliance-based system of supervision, which was mainly a reactive approach until 2009, when it migrated to Risk-Based Supervisory (RBS) approach. The new approach allowed for the optimization of supervisory resources as well as encouraged prudent risk management by banks.
2.1 Examination of Insured Financial Institutions
The Joint CBN/NDIC Risk Assessment Examination of Deposit Money Banks (DMBs) which commenced in February, 2012 was concluded during the period under review. The CBN led eleven (11) while the NDIC led seven (7) banks. Draft reports of the examination of the seven (7) banks led by the NDIC were finalised during the period under review. The objective of the exercise was to ascertain the asset quality of the banks so as to determine the provisions required; a pre-condition for approving their accounts for publication.
A Risk Based Supervision (RBS) of 16 deposit banks was carried out as at 30th September, 2012 with the CBN leading in ten (10) banks while the NDIC led in six (6) banks. This was routine examination to assess all risks being carried by the banks, on and off their balance sheets as well as evaluate their risk management systems to ascertain their adequacy before making recommendations on areas of improvement. A Joint Maiden Examination was also conducted on Jaiz Bank.
The field work of the maiden examination of the three (3) acquired banks by AMCON commenced on Monday 7th May, 2012. The CBN was leading the examination of two (2), namely: Mainstreet Bank Ltd and Enterprise Bank Ltd while the examination of Keystone Bank Ltd was being led by NDIC. The examination was meant to assess the regulatory compliance and financial condition of the banks in the first five months of their existence.
Furthermore, the field work of the Joint Monitoring Exercise of 11 DMBs was also concluded during the period under review. The NDIC led 5 banks while the CBN led 6 banks. Report writing also commenced within the period under review.
Similarly, out of the 291 banks (MFBs and PMBs) assigned for examination by the NDIC, a total of 207 had been examined. The examination of the remaining 84 banks slated for the last quarter of 2012 was on-going. Meanwhile, the report of the 186 out of the 291 institutions scheduled for examination in the year had been concluded and forwarded to the Boards of the respective MFBs and NDIC management for appropriate supervisory action.
2.2 Off-site Supervisory Activities
The off-site supervisory activities of the Corporation revealed that the financial condition and performance of the deposit money banks improved during the period under review compared to its performance as at 31st December, 2011. The banking industry total assets grew by 5.44% from N18.20 trillion in December 2011 to N19.19 trillion as at 30th September, 2012. Similarly, Net Loans and Advances increased by 16.20% from N6.42 trillion as at 31st December, 2011 to N7.46 trillion as at 30th September, 2012, 2012. Industry total deposit liabilities also grew by 6.57% from N12.33 trillion as at 31st December, 2011 to N13.14 trillion made up 53,031,565 depositors as at 30th September, 2012, 2012. All banks met the CBN prescribed minimum liquidity ratio of 30% during the period under review. The three AMCON banks had a combined total assets of N928.7 billion or 476% of industry assets; total deposits of N12,190 billion or 4.45% of industry deposits and total credits of N126.27 billion or 1.60% of industry credits. The banking industry was well capitalised, adequately liquid with improved asset quality. Table 1 presents highlights of major developments in the banking industry during the period under review.
Table1. Conditions and Performance of the Banking Industry
As at December 2011
September, 2012 (N B’n)
Total Net Loans
Total Deposit Liabilities
Total Number of Accounts (Absolute Nos.)
Number of Accounts Fully Covered (Absolute Nos.)
Proportion of Accounts Fully Covered to Total Number of Accounts (%)
Source: Bank Returns
2.3 Investigation of Petitions/Complaints
During the period under review, seventy-three (73) petitions/complaints bordering on excessive and arbitrary interest charges, breach of trust, abuse of trust of AMCON appointed Directors and failure to credit accounts were received from various organizations including banks. Investigation of sixty-five (65) out of the seventy-three petitions had been concluded. As a result of the findings of the special investigations, some of the affected banks were directed to make some refunds to their customers. Following the intervention of the NDIC, some customers expressed their gratitude to the Corporation for responding effectively to their petitions. Through such investigations, the Corporation was able to promote public confidence in the system and equally send a signal to bank operators against unethical banking practices.
3.0 Statutory Returns and Premium Assessment
All the 20 banks had paid their premium for year 2012 through direct debit by the CBN. The sum of N61.303 billion was collected as premium from DMBs as assessment for year 2011 as at 30th September, 2012. The DIF stood at N415.393 billion as at 30th September 2012 against N354.09 billion recorded as at December 2011. That shows an increase of N61.303 representing 17.31% recorded in 2012 over the 2011 figure.
Also, the sum of N980.79 million was collected as at 30th September as premium from 698 MFBs and PMIs in 2012 as against N1, 066.41million collected from 765 MFBs and PMIs in 2011 which represented 8.02% decrease over the 2011 figure. The cumulative SIIF stood at N4.639 billion as at 30th September, 2012 against N3.262 billion as at December, 2011 representing 42.21% increase over the 2011 figure.
As at 30th September, 2012, 130 MFBs and 20 PMBs could not be assessed for premium collection because the institutions neither submitted their certified deposit statements nor their call reports as at December 31, 2011. However concerted efforts were on-going to ensure that the Corporation obtained their certified deposit liabilities statements or call reports.
4.0 Failure Resolution Activities
Following the earlier restoration of the banking licences of both Savannah Bank of Nigeria (SBN) Plc and Societe Generale Bank of Nigeria (SGBN) Limited through court actions, the NDIC, in close collaboration with the CBN, made strenuous efforts to get the two banks to resume operations in the interest of their depositors and customers who had suffered untold hardship since the banks closed shop. In that regard, the Joint Committee of the CBN and NDIC had made substantial progress by working with both the Savannah Bank and SGBN Bank Teams to facilitate commencement of operations of the banks. During the period under review, SGBN had indicated its intention to commence as a regional bank operating under a new name, Heritage Bank Ltd.
5.0 Bank Liquidation Activities
The NDIC continued to play its role as liquidator of the closed insured banks through asset realisation and payment of liquidation dividends to un-insured depositors and other eligible claimants of the closed insured banks. The liquidation activities of the Corporation within January and September 2012 are as follows:
5.1 Debt Recoveries
The cumulative debt recovery for the closed DMBs from 1994 to date stood at N23, 334.36 million as against N22,260 million recovered as at 31st December, 2011. That showed an increase of N1, 074.36 million representing 4.83% in debt recovery between January and September 2012. Similarly, total cumulative debt recoveries from the closed MFBs as at 30th September, 2012 stood at N41.97 million against N13.57 million recovered as at December, 2011. That showed an increase of N28.40 million representing 209.29% as at 30th September, 2012.
5.2 Physical Asset Disposal
The sum of N19,691.06 million had been realised from the disposal of physical assets as at September 2012 for closed DMBs. That showed an increase of N237.98 million when compared with the cumulative value of N19, 453.08million representing 1.22% increase over the figure recorded as at December 2011. Also, the sum of N154.54 million had been realised from the sale of physical assets of closed MFBs from January to September, 2012. The total cumulative proceeds from the sale of physical assets of the closed MFBs as at 30th September, 2012 stood at N19, 891.52 million against N19, 562.23 million as at December, 2011. That showed an increase of N329.29 million representing 1.68% increase over the figure recorded in December 2011.
5.3 Payment of Un-insured Deposits
(i) Payment to depositors of DMBs: A cumulative Liquidation dividend of N78,347.90 million had been paid to un-insured depositors of closed DMBs as at September, 2012 as against the sum of N73,553.93 million paid as at 31st December, 2011. That showed an increase of N4, 793.97 million representing 6.52 % increase over the figure in December 2012.
(ii) Payment to Creditors: A cumulative Liquidation dividend of N1, 122.1 million had been paid to 421 creditors of closed DMBs as at September, 2012 out of N1,534.40 million declared for creditors of 8 banks.
6.0 Enhancement of Capacity, Processes and System
The following activities were undertaken during the review period to further enhance the Corporation’s capacity, processes and system.
6.1 Capacity Building Activities
During the period under review, the NDIC continued to place great emphasis on staff training and development to ensure that its staff continued to remain highly competent, motivated and competitive. In that regard, 411 benefited from various courses during the period under review. Some of the courses organized for staff are as outlined below:
(i) Training on Risk Based Supervision (RBS) organised by the Office of Technical Assistance (OTA).
The six-week Risk Based Training Program conducted by Mr. Hamilton, the Technical Adviser on Risk Based Supervision from the Office of Technical Assistance (OTA), US Treasury, that commenced in Abuja was concluded in Lagos during the period under review. Also, training programmes for new examiners on RBS was carried out during the period.
(ii) Other Training Programmes: Some other training programmes that were carried out for staff during the period under review included the following: Consolidated Bank Supervision, Advanced Bank Analysis, IFRS – Implication for Risk Management, Treasury Management, Corporate Fraud Detection, Prevention and Control, Fundamentals of Islamic Finance and Takaful, Budget Implementation, IT fundamentals & Microsoft Office Suite 2007, Report Writing and Presentation Skills, Problem solving and Decision making.
The training programmes were aimed at enhancing the capacity of staff and fill skill gaps in the identified areas for better performance.
6.2 Information Technology Security Systems and Architecture (ITSSA)
During the period under review, the NDIC continued with the development of the Information Technology Security Systems and Architecture (ITSSA). The development of the ITSSA was aimed at addressing identified IT security vulnerabilities in the Corporation. On this project, the Corporation had achieved the following milestone as at June through the “Quickfix” initiatives.
•Stable internet access;
•Reliable corporate e-mail; and
•Robust Local Area Network (LAN).
6.3 Enhancement of FILMS
The vendor for the development of a new web enabled Financial Institutions Liquidation Management System (e-FILMS), deployed the hardware and also submitted a detailed Business Requirement Document (BRD) to the Corporation under phase 1 of the agreement. Creation of e-FILMs prototype and local training on tools for the e-FILMs software development was conducted during the period under review. The software coding of the enhanced e-FILMs had commenced. The enhancement of the system is aimed at facilitating prompt depositor reimbursement.
6.4 Electronic Document Management System (EDMS)
In order to digitize the NDIC archives, the Corporation commenced the development of an Electronic Document Management System. The development of the system commenced with information gathering and analysis of the needs of departments in order to prepare data for the document automation. The procurement and delivery of some hard and software were achieved during the period under review. Also, pilot test of the solution with staff of the relevant departments was carried out while 35 staff of the Corporation were trained on the use of the software by the vendor. The implementation of the EDMS solution for Departments and Units in the Head Office of the Corporation had commenced.
6.5 Performance Management System (PMS)
In order to improve upon the productivity of staff and by extension that of the Corporation as well as adequately appraise staff on an objective basis, the implementation of the PMS commenced during the period under review. The vendor had installed the Oracle Hyperion software for the PMS. Servers meant for the test environment had also been acquired. The project was scheduled for completion in six (6) months. As at 31st August 2012, 100% data required for the consultants had been supplied for its implementation. The PMS project has three modules which included: a) PMS proper – the user acceptance test had been completed. b) SLA – the user acceptance test was on-going; and c) Hyperion score card – acceptance test had not commenced due to the non completion of module b.
6.6 Enterprise Risk Management (ERM)
The NDIC continued to place premium on effective management of significant risks likely to impede the effective discharge of the Corporation’s mandate by implementing the Corporation’s ERM framework during the year under review. In that regard, the Corporation continued to monitor the effectiveness of established risk mitigants in addressing identified risks. As part of initiatives to effectively manage its risks, the Corporation continued to liaise with the Departmental Risk Facilitators/Pairing partners in monitoring the trend of risks in the various offices across the NDIC. It also commenced the process of automating the implementation of the framework during the period under review. The automation would allow for quicker exchange of risk information with the various offices and analysis of risks. However, the training and implementation had not been done due to visa challenges of the trainer.
7.0 Public Awareness Initiatives
The Corporation continued to carry out a number of public enlightenment programmes aimed at sensitizing the public and stakeholders on its activities during the period under review. Some of these initiatives included:
•Press briefings/interviews by the Corporation’s MD/CEO;
•Organization of sensitization seminar for Judges;
•Airing of radio and TV jingles tagged ‘NDIC Calling’ and ‘Depositor Awareness Programme’ in the three major Nigerian languages, namely; Igbo, Hausa and Yoruba;
•End of Year 2011 special report on NTA, News 24;
•Special report on closed PMBs;
•Advisement of several programmes in the print media of the Corporation’s activities;
•Participation in the trade fair organized by the Kaduna Chamber of Commerce and Industry (KACCIMA) between April and May, 2012.
•Hosting of students of higher institutions, amongst others.
8.0 Development of Supervisory Framework for Systemically Important Financial Institutions (SIFIs)
The Corporation developed a draft supervisory Framework for Systemically Important Banking Institutions in Nigeria during the period under review. The Framework aimed at setting criteria for the identification and resolution of such insured institutions in Nigeria. An exposure had been circulated to members of the FSRCC for their comments.
9.0 Development of Framework for Integrated DIS for Sensitization
The Corporation commenced the development of a draft supervisory Framework for the practice of Integrated Deposit Insurance System in Nigeria. The Framework would assist in setting criteria for the effective implementation of integrated DIS in Nigeria such that all financial services industry consumers would enjoy some level of protection with a view to further enhancing confidence and creating an enabling environment for orderly growth and development of the nation’s financial system.
10.0 Collaborative Efforts (Local and International)
Since it commenced operations in 1989, the NDIC had recognized the need for an effective collaboration between it and other financial safety-net participants locally and internationally. It had particularly sustained the cordial relationship with the apex regulatory institution in the financial sector, i.e. the Central Bank of Nigeria (CBN). That was done through joint planning and scheduling of bank examinations, joint deliberation at both the technical and executive committee levels on regulation, supervision and resolution of problems of banks and other deposit-taking financial institutions. Similarly, the NDIC had continued to collaborate actively with other members of the Financial Services Regulation Coordinating Committee (FSRCC) i.e the Security and Exchange Commission (SEC), National Insurance Commission (NAICOM), National Pension Commission (PENCOM), Nigeria Stock Exchange (NSE) and Federal Ministry of Finance so as to facilitate information sharing and harmonize regulatory standards.
At the international level, the NDIC collaborated with IADI at various fora and benefited from its membership through experiences of other sister Deposit Insurance Agencies through seminars and other collaborative activities. The Corporation hosted a staff of the Central Bank of Lesotho who was on attachment between 28thMay – 8th June 2012. The attachment was to enable Lesotho set up DIS.
Also, the Corporation hosted a one week learning visit for officials of the Reserve Bank of Malawi. The learning visit which took place between September 3 and 7, 2012 in Abuja was to assist them in establishing a deposit insurance system in their country. During the visit, staff of the Reserve Bank of Malawi were exposed to the various functions of the Corporation to enable them understand the basics of DIS.
The NDIC had in the nine months of 2012 recorded notable achievements in the protection of depositors and promotion of safe, sound and stable banking system in Nigeria. There is ample evidence that with careful formulation and adoption of appropriate strategies, the Management and staff of the Corporation are committed to ensuring that the Corporation fulfils its statutory mandate. The Corporation is committed to remain an active component of the Nigerian financial safety-net, particularly in the area of engendering confidence and contributing to financial system stability. The NDIC will continue to partner and collaborate with relevant local and international agencies in that regard.