NDIC warns banks against 2009 era abuses
Ibrahim, who gave the charge in Lagos, while delivering an address at the 2015 Executive Breakfast Meeting of the Society for Corporate Governance Nigeria, identified the failure of sound corporate governance as one of the factors responsible for the 2009 banking crisis in the country.
In a statement by the corporation’s Head of Public Communications Unit, Alhaji Hadi Birchi, Umaru recalled how a special examination conducted then on the 24 banks by the Central Bank of Nigeria (CBN) and NDIC, revealed that 10 of the 24 banks were critically distressed as a result of many factors, among which was poor corporate governance.
“The special examination revealed that boards and executive managements in some banks were not equipped to run their institutions as their ineffectiveness manifested in the form of overbearing influence of some board members, ineffectiveness of board committees; non-adherence to the CBN code of corporate governance and weak ethical standards amongst others,” he said.
The NDIC boss then reminded them that the problems of the affected banks informed comprehensive reform embarked upon by the CBN, which emphasised enhancing quality of banks, financial stability and ensuring that the financial sector contributes to the real economy.
He reviewed the various laws governing banking operations in Nigeria- the Banks and Other Financial Act 1991, the Companies and Allied Matters Act, the NDIC Act, the CBN Act and the Failed Banks Act and expressed the need for stringent sanctions to serve as deterrent to irresponsible and greedy behaviours.
He cited the case of the recent move by the regulatory authority in the United Kingdom to enhance supervision and management of banks with emphasis on personal responsibilities of directors.
“In this regard, both the UK companies Acts 2006 and the recent tough new banking rules are compelling some bank directors to rethink their suitability and competence to remain as bank directors. Some board directors actually resigned,” he said.
Umaru noted that in their bid to establish a robust and stable financial system to promote national development, supervisory and regulatory authorities also accorded priority attention to sound corporate governance in their own operations.
According to him, some of the initiatives put in place by the corporation to promote soundcorporate governance, according to him, included adoption of a charter and code of corporate governance for its Board, compliance with the code of corporate governance for all regulators under the auspices of the Financial Services Regulation Coordinating Committee, code of conduct for its bank examiners and compliance with provisions of relevant Acts of Federal Government on disclosure and accountability.
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