It is a great delight for me to be here today on the occasion of the Nigeria Deposit Insurance Corporation, NDIC’s Special Day at the 33rd Kaduna International Trade Fair. I like to congratulate the President and the entire Kaduna Chamber of Commerce for this year’s fair which has turned out to be a success. Most importantly, the theme of the fair: “Reawakening Nigerian Enterprises towards Global Competitiveness” bears eloquent testimony to the posture of the Chamber as a virile player in the quest for the achievement of the Vision 20:2020 and the transformation agenda of the Federal Government of Nigeria. It is against this background that I urge you, to sustain the tempo of your programmes and activities, and further raise the bar by continuing to break new grounds in your partnership with other ministries, departments, agencies (MDAs) and other stakeholders towards the transformation of the Nation’s economy.
Arising from this, the role of a safe, sound and stable financial sector cannot be downplayed in any economy. The Nigeria Deposit Insurance Corporation was therefore established by the Federal Government in 1989 by NDIC Decree22 of 1988 replaced by NDIC 16 of 2006 as one of the nation’s financial safety-net participants. The Corporation’s key mandate is to provide financial guarantee to depositors in insured deposit-taking financial institutions in the event of failure with a view to building confidence in the banking system and to administer the deposit insurance scheme in the country. It is therefore unequivocal that the NDIC has a crucial role to play in the stability of the financial system.
Distinguished ladies and gentlemen, it is instructive for me to say that the NDIC has been resolutely committed to its mandate over the last two decades, especially within the context of the various banking reforms that had been witnessed in the Nigerian banking sector in particular and the dynamics of the global landscape in general.
Going down memory lane, you would recall that following the adoption of Universal Banking Model (UB) in 2004, the dichotomy between commercial and merchant activities was abolished. You would also recall that in July 2004, the Central Bank of Nigeria (CBN) articulated a 13-point Agenda that eventually heralded the banking sector consolidation programme.
Arising from the effects of recent global economic meltdown coupled with the challenges posed by the consolidation exercise as well as and other developments within the economy, the nation went through another bout of financial crisis in 2008/2009 as revealed by the CBN/NDIC joint Special Examination carried out in 2009. In particular, the examination revealed 10 banks were in grave condition which was capable of degenerating into systemic crisis. Some of the identified problems exhibited by the banks were weak corporate governance; massive insider abuse; imprudent dissipation of depositors’ fund; undisclosed large credit exposures to related entities; inadequate capital; poor risk management; and illiquidity position. The need to address the associated problems and stabilize the banking system prompted the Regulatory Authorities to intervene in order to save the economy. The intervention in 2009, included the replacement of the Executive Managements of eight (8) of the banks and the injection of N620 billion which culminated in the adoption of bridge banks to save the depositors of failed banks.
While five (5) of the intervened banks had since merged with different healthy banks following the successful consummation of their merger and acquisition (M & As) deals with their respective partners, the regulatory Authorities had had to intervene in the affairs of the 3 other banks that could not meet the CBN recapitalization deadline of September 2011.
Based on the foregoing, on August 5, 2011, the Nigeria Deposit Insurance Corporation, pursuant to the provisions of the enabling Act, in collaboration with the CBN, established three bridge banks namely Mainstreet Bank Limited, Keystone Bank Limited and Enterprise Bank Limited for the subsequent transfer of assets and liabilities of Afribank Plc, Bank PHB Plc, and Spring Bank Plc respectively.
The bridge bank option was adopted by the NDIC in the interest of depositors to prevent outright liquidation which would have had dire consequences for depositors, and other stakeholders.
Distinguished ladies and gentlemen, let me use this opportunity to highlight some of the landmark achievements of the Corporation despite the daunting challenges in the nation’s financial market. It is on record that the NDIC had paid N3.303 billion out of N5.241 billion insured deposits of 35 deposit money banks that were liquidated since 1994. In addition, the Corporation had paid N6.151 billion out of N11.576 billion dividend declared to depositors of the 35 deposit money banks. Similarly, the Corporation has concluded payment of N2.19 billion to over 71,000 depositors of 91 out 93 microfinance banks (MFBs) who came forward to claim their deposits. Arrangements have also been concluded to continue with the payment through eight (8) agent banks across the country. I am also happy to state that we have concluded arrangements to commence payment of insured depositors of Fortune and Triumph Banks through the agent banks.
The NDIC, a body charged with the responsibility of administering deposit insurance system in Nigeria, also contributes to the attainment of the objectives of the current banking reform through:
v Creation of level playing field for all operators in the banking system by extending deposit insurance coverage to microfinance banks (MFBs), primary mortgage institutions (PMIs)
v Enhanced public awareness initiatives which include:
ü the development of a new robust and interactive Website – www.ndic.ng.org;
ü Establishment of a toll-free 24-hour Help-Desk, 080063424357;
v Boosting confidence through increase in coverage levels. The deposit insurance coverage levels were increased from N200,000 and N100,000 to N500,000 and N200,000 for deposit money banks (DMBs) and Microfinance Banks (MFBs)/Primary Mortgage Institutions (PMIs) respectively. The new coverage level was used to settle depositors of the MFBs closed in 2010.
MD/CEO, NIGERIA DEPOSIT INSURANCE CORPORATION
THURSDAY, MAY 3, 2012