NDIC advocates sanctions against banks

In from Ali Smart…

The Nigeria Deposit Insurance Corporation (NDIC) is advocating for stringent sanctions against banks with weak or poor corporate governance to discourage employees from greedy behaviours.

Managing Director/Chief Executive of the organization, Alhaji Umaru Ibrahim gave the charge while delivering an address at the 2015 Executive Breakfast Meeting of the Society for Corporate Governance in Nigeria, where he identified the failure of sound corporate governance as one of the factors responsible for the 2009 Nigerian banking crisis.

While charging stakeholders in the banking sector to pay greater attention to sound corporate governance practices to prevent systemic crisis in the sector, Ibrahim recalled that the special examination conducted on the 24 banks in Nigeria 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 amongst which was poor corporate governance.

According to him: “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 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.”

The NDIC boss emphasised that the problems of the affected banks informed the 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.

Umaru Ibrahim 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.

Already, some of the initiatives put in place by the NDIC to promote sound corporate governance, Ibrahim said, “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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