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Recapitalisation: We’re not eager to liquidate PMIs, MFBs -NDIC chief

By on April 9, 2013

Ahead of the eight months’ extension recently given by the Central Bank of Nigeria (CBN) for primary mortgage institutions and microfinance banks in the country to meet new capital thresholds, the Nigeria Deposit Insurance Corporation (NDIC) says it is never eager to liquidate any financial institution.

In a chat with Daily Independent at the weekend, Chief Bisi Ilaka, a member of the NDIC board said the nation’s banking industry is today healthy, safe, secure and reliable, unlike in the not-too-distant past, when many were tagged weak and incapable of offering modern banking services.

On what would happen at the expiration of the latest deadline, Ilaka said liquidation, which is one of the mandates of NDIC, is the last of several options that is considered in its bid to rescue depositors’ funds from going down the drains.

“We are not eager to liquidate any bank, whether commercial bank, PMIs of micro finance banks. We will explore other avenues before we apply the liquidation option. We are currently weighing options in this regard and I am so confident that our decisions of PMIs and micro finance banks will be one that will be beneficial to the Nigerian depositor,” he said.

According to him, “things that banks did in those days when we had over 100 banks are no longer acceptable now. Out of the 20 banks that are currently operating in the country, 10 of them are found to be sound, nine satisfactory, while one is marginal,” he added.

He applauded the CBN and other relevant bodies, including NDIC for ensuring that sanity returns to the nation’s banking sector, which has been bedeviled with series of unpardonable abuses by unprofessional operators.

“The good story of banks in the country was made possible by the sagacity and relentless efforts of the CBN, NDIC and other relevant agencies who were united in their resolve to restore sanity in the sector.

“I can tell you without any doubt that Nigerian banks are now safe. The banking sector in recent times had gone through rigorous regime of inspections where some banks were identified as falling below the standard.

“It was evident then that there was liquidity problem and some were told to recapitalised, while others were advised to shore up their asset base. In some extreme cases, some were taking over by others and we used the ‘bridge bank’ options for some, and AMCON is now looking for buyers for them.”

He added that at a time when there were over 100 banks operating in the country, some banks, instead of facing statutory core banking business , were engaged in mobilizing funds to do trading, thereby negating their primary duty of making funds available for assist the real sector of the economy.

( Daily Independent)