Nigeria: Operators Task CBN, NDIC On Ailing Banks

8 February 2019

Capital market operators have urged the Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC) to map out strategies to manage ailing banks rather than outright liquidation.

They stated this yesterday in separate interviews with the News Agency of Nigeria (NAN) in Lagos while reacting to the liquidation of Fortis Microfinance Bank.

The operators said CBN and NDIC should rather manage the affairs of any distressed financial outfit instead of resorting to liquidation in the interest of depositors, shareholders and the economy in general.

NAN reports that NDIC recently announced the official liquidation of Fortis Microfinance Bank and its branches nationwide.

The corporation, in a statement posted on its website, assured insured depositors of the repayment of their money.

The statement reads: "NDIC, the official liquidator of Fortis Microfinance Bank whose license was recently revoked, has concluded arrangement to close the bank and its branches and pay the insured depositors.

"We are, therefore, calling all depositors of the bank to visit the bank's branches and meet NDIC officials for the verification of their claims, commencing from February 4 till 8, 2019," NDIC said.

The Managing Director of APT Securities and Funds, Malam Garba Kurfi, said operators expected CBN and NDIC to manage the affairs of Fortis Microfinance instead of liquidation.

Malam Kurfi said management of the bank's affairs would have been better for the depositors and existing banks that had business relationship with Fortis.

"We expected the CBN and NDIC will rather manage the affairs of the bank before liquidation as that could have been better for the depositors.

"Liquidation will affect the existing banks that have business relationship with Fortis Microfinance Bank; which can extend to other banks," he said.

Kurfi said appointing a new management and resale of the bank would have been better for the entire economy rather than liquidation.

He, however, commended the Nigerian Stock Exchange (NSE) for being proactive in suspending the bank from trading in November, 2018, due to non-compliance with post listing requirements.

The National Coordinator of Progressive Shareholders Association of Nigeria (PSAN), Mr. Boniface Okezie, said shareholders remained the victims without any compensation. Mr. Okezie said regulators must device other means of solving problems in the financial industry instead of aggravating them through liquidation.

"Our regulators must device other means of solving the problems in the financial industry rather than aggravating it, most especially microfinance banks," Okezie said.

He said microfinance banks must be adequately protected at all times by NDIC and CBN, noting that not much had been done.


See What Everyone is Watching

More From: Daily Trust

Don't Miss

AllAfrica publishes around 600 reports a day from more than 150 news organizations and over 500 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.