NDIC defends resolution procedures for failing banks

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The Assistant Director of Insurance and Surveillance at the Nigerian Deposit Insurance Corporation (NDIC) John Abiodun, defended the corporation’s bank failure resolution procedures, during the finance correspondents’ association of Nigeria (FICAN) quarterly conference in Abuja this weekend.

According to him, all the approaches adopted by the NDIC are holistic because the corporation, which was established in 1989, is committed to ensuring that bank depositors’ interests are protected by all means.

He went further explained that an effective resolution process entails all the necessary and systematic actions that are specifically designed to remedy a bank’s distress. These actions should not be allowed to disrupt speedy payment to insured depositors.

“Effective resolution is a series of systemic action designed to end a bank’s distressed condition and it is aimed at ensuring minimum disruption to the payment system, speedy payment to insured depositors and quick realization of assets for the benefits of uninsured depositors and creditors.”

The effective use of the various bank distress resolution options has contributed immensely towards ensuring stability in the Nigerian banking industry, Abiodun claimed. It has also helped to instill confidence in Nigerian depositors over the safety of their monies.

He also clarified that the NDIC is mostly interested in resolution efforts that try to rescue a failing bank, instead of just allowing it to collapse. Daily Trust quoted him as saying that liquidation has always been a last resort. Liquidation involves the revocation of operating licenses, among other things.

 “So far, the NDIC has liquidated a total of 425 financial institutions, including 51 deposit money banks, 325 microfinance banks, and 51 private mortgage banks. The liquidation activities have helped the NDIC to successfully pay back the deposits of some of the failed banks”, He said.

“Through efficient and diligent liquidation activities, the Corporation has successfully paid in full the deposits of the Customers of 18 DMBs, (Both insured and uninsured) while payment to Depositors of Fortune International Bank, Triumph Bank, and Peak Merchant Bank was put on hold as at end of 2019 due to litigation challenging the revocation of their operating license.”