|
New Page 8
CBN chief tackles bank directors
over fraud
Kenneth Madueke, Okey Nwankwo and David Agba, Enugu
UNLESS bank
directors change their attitudes towards fraudulent activities and comply with
laid down code of conduct of the industry, the banking sector may not solve its
problems in the nearest future.
Director, Banking Supervision Department
of the Central Bank of Nigeria (CBN), Mr. Ignatius Imala, stated this yesterday
at the Nigeria Deposit Insurance Corporation (NDIC) workshop for finance
reporters in Enugu.
Mr. Imala noted that if only the bank
directors comply, the myriad of problems facing the sector will be solved,
stressing that it was important that banks expose dubious customers and not hide
them under any guise as hiding them posed a dangerous trend for the industry.
Speaking on the N25 billion capital base
for banks, he said that this was not the paid-up capital but shareholders fund
that will come in handy in times of problems with the bank and it includes the
banks’ assets.
Mr. Imala explained that the totality of
assets of Nigerian banks today was less than $3 billion, insisting that by
December 31, 2005, any bank that cannot comply will fade out.
He hinted that the CBN and the NDIC were
collaborating to come out with "Risk-based-Supervision" to improve on the
supervision of banks and refocus as well as channel more resources to the
critical areas of banks’ operations and their risk assets.
To this end, Imala added that the apex
bank and other stakeholders were working towards the establishment of Asset
Management Company (AMC) as an interventionist agency to acquire the risk assets
of bank to free such banks from provisioning requirements inherent in the
impairment of such assets.
In his paper entitled: "The role of
Chartered Institute of Bankers of Nigeria (CIBN) in promoting professionalism
and ethical standards in Nigeria’s Banking Industry", Mr. S.E. Kolawole,
President CIBN, expressed the institute’s support for the newly approved capital
base for banks.
This, he said, will re-engineer,
strengthen and make the industry more efficient and viable. He stated that
government account for over 70% of business in Nigeria, hence banks take
advantage of that to depend on public-sector funds.
Earlier speaking at the opening ceremony
of the workshop, Managing Director of the Nigerian Deposit Insurance Corporation
(NDIC), Mr. Ganiyu Ogunleye, had said that contrary to reports that the
corporation has so far withdrawn N76 billion from the public sector deposits,
only N10 billion was withdrawn.
According to Ogunleye, the phased
withdrawal of public-sector deposits was created by the Central Bank of Nigeria
(CBN) to be used as an instrument for liquidity management.
He also said that the recent announcement
of the new reforms in the financial sector by the apex bank brought to the fore
the fragility of the nation’s banking sector as it elicited mixed reactions by
economic agents.
Ogunleye urged the media to exercise
restraint in reporting certain issues in the sector in order not to create chaos
or panic as such will not augur well for the industry.
He said on the part of bank management,
recent events have underscored the need for sound corporate governance through
effective risk management process.
"The regulatory authorities have always
emphasised the need for a diversified liability profile through the designing of
liability generation product targeted at various segments of the banking
public", he said.
Ogunleye added that some banks preferred
to rely heavily on the public-sector and interbank market that are very
sensitive to the policy shocks for their funding.
He advised banks to re-examine their
assets and liabilities management frameworks and review them to enable hem cope
with the emerging challenges.
The NDIC boss specifically counselled
banks to monitor their volatile lability dependence closely, expressing disgust
that some banks have virtually reduced banking to liability generation in terms
of career advancement driven by ability to meet deposit target while little
attention is paid to volatility of such funds.
Ogunleye charged banks to implement their
contingency plans in order to mitigate unexpected shocks as well as show greater
commitment in such areas.
|
