NDIC blames managers for banks failure in Nigeria

The Nigeria Deposit Insurance Corporation (NDIC), has blamed the failure of banking institutions on the officers entrusted to look after them.

The Managing Director, Bello Hassan, said this yesterday at a three-day Capacity Building Workshop organised by the NDIC Legal Department for law enforcement agencies, themed: “Effective Investigation and Prosecution of Banking Malpractices that led to Failure of Banks,” in Lagos.

He stressed that bank failure would not be welcomed by the Corporation, saying: “As you all know, the human element is the greatest culprit in bank failure. It has been said over and over that banks do not on their own fail; rather they are destroyed and brought to their knees by acts of officers entrusted to look after the institutions.

“Consequently, it is the responsibility of the authorities to ensure that the effects of the actions of these culprits are mitigated by bringing such people to book to serve as a deterrent to others,” he said.

Hassan called on regulators/supervisors and the law enforcement agencies to collaborate and ensure that those who contributed to the demise of banks were thoroughly investigated and if found guilty should be duly prosecuted in accordance with the laws of the land.

He noted that the investigation and prosecution of failed banks’ offences was provided for under various legislations such as the: NDIC Act, 2006, the Failed Banks Act, 2004, the Banks and Other Financial Institutions Act (BOFIA) 2020, and under the Companies and Allied Matters Act (CAMA) 2020, among others.

Also speaking, the Director, Public Prosecution of the Federation, Mohammed Abubakar, described the theme of the workshop as apt, saying it underscored the continuous need for stakeholders to be committed to the exigencies of combating banking malpractices in Nigeria.

According to him, the integrity of the banking system is central to the socio-economic wellbeing of the country.

“Therefore, the need for the effective regulation of the sector through formulation of cohesive legal framework and enforcement mechanism cannot be over emphasised.

“May I remind us all that the theme of this workshop is a poignant reflection on the reckless years of banking malpractices that led to the failure of several banks, with the attendant unremitted consequences on our country’s socio-economic life.

“We recall the pains and despair that many Nigerians had to go through, and I pray that we will continue to strive to ensure that such a sad chapter of our national life would never be repeated,” he said.

…the theme of this workshop is a poignant reflection on the reckless years of banking malpractices that led to the failure of several banks, with the attendant unremitted consequences on our country’s socio-economic life.

Why banks fail

Also speaking, the Executive Chairman, Economic and Financial Crimes Commission (EFCC), Abdulrasheed Barwa, urged stakeholders to educate themselves and learn from investigative reports of the banks that failed in the past.

Barwa, represented by the Zonal Commander, Lagos Office, Ahmed Ghali, said investigative reports of failed banks will provide answers to why banks fail.

“But why do our banks fail? That is one of the questions that we need to offer ourselves. Are there warning signs before the failure? Have we learnt enough lessons from investigative reports of the banks that have failed in the past?

“Can we protect banks from failing? These and many more questions are what we suppose in these two or three days to deliberate upon,” he said.

Barwa said many households, as well as small, medium and large businesses relied on the banking sector to provide funds and other financial needs, adding that in most cases, the banks fail to meet their expectations.

“If we look back in history in Nigeria, we first recorded failure of banks between 1930 and 1958, when some banks failed and liquidated, as a matter of fact, more than 21 banks failed during that period.

“So, when the Central Bank of Nigeria was established, some of these reforms started, if you check back, there are some banks like Alpha Bank, Financial Merchant Bank, and Republican Bank, which were some of the banks that failed then.

“Why is this till today a problem? There are some of the reforms that are not effective; there are some regulatory measures that are not also effective because of the fraud and then also, the management themselves,” he said.

Barwa also urged the Corporation to take control of supervising the banks as their problems were enormous.

The annual workshop, the 11th in the series, affords NDIC the opportunity to share ideas with the law enforcement agencies on developments within the banking landscape that will enhance their skills in the discharge of their responsibilities. (NAN)

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