BY NKECHI NAECHE-ESEZOBOR–The Nigeria Deposit Insurance Corporation (NDIC) said it has has liquidation 425 financial institutions in the country.
The Assistant Director, Insurance and Surveillance Department of the NDIC, Mr. John Abiodun, disclosed this during the 2020 Finance Correspondents Association of Nigeria forum in Abuja.
According to the corporations the 425 liquidated banks during the period showed that 51 of them were Deposit Money Banks, 325 Microfinance Banks and 51 Primary Mortgage Banks.
He said through efficient and diligent liquidation activities, the corporation had successfully paid in full the deposits of customers of 18 DMBs that were both insured and uninsured.
He also said payments had been put on hold to depositors of Fortune International Bank, Triumph Bank and Peak Merchant Bank due to litigations challenging the revocation of their operating licences.
He said the effectiveness of the NDIC has been hampered by some challenges such as delays in revocation of the licences of terminally distressed banks, depositor and creditor apathy and ignorance, delay in filing claims, and recovery of debts owed the failed banks.
He said some of the causes of bank failure include insider abuse, abusive ownership and weak board of directors, weak corporate governance, poor risk management process, inadequate capital, weak regulatory and supervisory measures as well as economic and political factors.
“Liquidation of a failed bank through revocation of licence becomes the final bus stop when all efforts made by the shareholders and regulatory authorities do not yield the desired result.
“Once a bank’s licence is revoked, NDIC takes over for liquidation.”
Others are failure to meet the minimum Capital Adequacy Ratio of 10 per cent, rising non-performing loans to total credit ratio of above five per cent, failure to meet the prevailing minimum liquidity ratio of 30 per cent, high total expense to total income ratio and high incidences of fraud.