ADDRESS BY THE MANAGING DIRECTOR/CHIEF EXECUTIVE OF THE NIGERIA DEPOSIT INSURANCE CORPORATION (NDIC), UMARU IBRAHIM FCIB, mni, AT A PRESS CONFERENCE TO KICK-START EVENTS SCHEDULED TO COMMEMORATE THE 30TH ANNIVERSARY OF THE CORPORATION ON FRIDAY 18TH OCTOBER, 2019 AT THE NDIC HEAD OFFICE, ABUJA.
1.0 Distinguished Ladies and Gentlemen of the media, good morning. It gives me great pleasure to address you on this auspicious occasion of the 30th Anniversary of the Nigeria Deposit Insurance Corporation (NDIC). I extend a warm welcome to all invited guests for graciously joining us to celebrate 30 years of the NDIC. Your presence no doubt, confirms your commitment and interest in identifying with the Corporation in its drive to protect depositors and deepen the Stability of the nation’s financial system.
2.0 I wish to assure distinguished members of the fourth estate of the realm that the NDIC values the role you play in the socio-economic development of the nation. That is one reason why the NDIC sponsors the annual Workshop for Financial Correspondents Association of Nigeria (FICAN) as well as the Editors’ Forum. NDIC sees media practitioners as strategic partners. Consequently, one of our four themes for the execution of NDIC’s strategic objectives is “creating the desired public awareness for the implementation of the Deposit Insurance System (DIS) in Nigeria”.
3.0 Your presence today, in large numbers, is indeed, indicative of the cordial working relationship that has evolved between us in the onerous task of building and sustaining a safe and sound banking system in the country.
4.0 Gentlemen of the Press, anniversaries are an important part of life, whether for Individuals or Organisations. They remind us of important events, and put a record on the Calendar to prompt us on things that matter to us. In NDIC, this is an opportunity to look back and trace our journey over time and shine the light on the extent to which the Corporation has contributed to Financial System Stability in Nigeria.
5.0 Commemoration of our 30th Anniversary provides an excellent opportunity to undertake a comprehensive review of our past legacies and a platform to fine-tune our Vision and Mission. It also enables us to cast a searchlight on the future, particularly the challenges and Opportunities.
6.0 NDIC was established in March 1989 following the promulgation of Decree No. 22 of 1988, now replaced with NDIC Act 16 of 2006. The public policy objectives of the Corporation are to contribute to financial system stability as well as to protect small and less financially sophisticated depositors by providing an orderly means of resolution and compensation in the unlikely event of failure of their insured financial institutions.
7.0 The Corporation was established to provide a further layer of protection to depositors and complement the role of prudent bank management as well as the Central Bank of Nigeria (CBN) supervisory activities in ensuring a safe and sound banking system.
8.0 To provide the right impetus that drives its philosophy and operations, the Corporation adopted a propelling Vision for itself: “To be the best deposit insurer in the world by 2020”; and a lucid Mission: “To protect depositors and contribute to financial system stability through effective supervision of insured institutions, provision of financial/technical assistance to eligible insured institutions, prompt payment of guaranteed sums and orderly resolution of failed insured financial institutions”.
9.0 NDIC was designed as a Risk-Minimiser with the mandate of Deposit Guarantee, Banking Supervision, Distress Resolution and Bank Liquidation. The Corporation had in the last 30 years achieved some milestones in the discharge of its mandate to the satisfaction of its Stakeholders. It is in the light of this that I present the Corporation’s scorecard on its mandate and other achievements in last three decades.
9.1 Deposit Guarantee
Deposit Guaranteeis a key and distinct mandate of the Corporation. The NDIC guarantees payment of deposits up to a maximum limit in accordance with its statute in the event of failure of an insured financial institution. The DIS covers all deposit-taking financial institutions licensed by the CBN which include Deposit Money Banks (DMBs), Microfinance Banks (MFBs), Primary Mortgage Banks (PMBs), Non-Interest Banks (NIBs) and subscribers of Mobile Money Operators (MMOs). Accordingly, the NDIC, currently provides Deposit Insurance cover to 27 DMBs, 918 MFBs, 34 PMBs and 2 (Two) NIBs.
- Since its inception, the Corporation successfully responded to economic realities and yearnings of Depositors by periodically increasing the Maximum Deposit Insurance Coverage to enhance the confidence of the public in the Nigerian financial system. On average, this is done every five years in line with Global best practice.
Corporation increased the maximum deposit insurance coverage twice, from ₦50,000.00
per depositor per deposit money bank (DMB) at inception, to
N200,000.00 in 2006 and N500,000.00 in 2010. Similarly, maximum coverage per depositor of PMBs/MFBs was increased from N100,000.00 in 2006 to N200,000.00 in 2010. Coverage per depositor per PMB had since been increased to N500,000.00 to reflect the increased deposits structure in the sub-sector and to stimulate Mortgage Savings.
- To date, the NDIC has paid a cumulative sum of over ₦8.25 billion as insured amount to 442,999 depositors of closed DMBs; paid over ₦2.97 billion to 83,415 depositors of closed MFBs, and over ₦70.53 million was paid to 869 depositors of closed PMBs.
9.2 Banking Supervision
The NDIC collaborates with the CBN to ensure that the Institutions remain healthy at all times and/or where there are problems, they are detected and addressed promptly. Supervision guarantees stability, integrity, soundness and efficiency in the banking system and is employed by NDIC for the protection of depositors’ interest. The supervisory activities of the Corporation are carried out through a combination of On-site Examination and Off-site Surveillance. The collaboration between CBN and NDIC over the years has reduced the bank examination cycle, enhanced monetary policy, promoted safe and sound banking practices as well as assist in resolving Troubled Financial Institutions.
NDIC and CBN, proactively respond to developments and challenges in banking operations through appropriate policy framework which have produced great results in the interest of the banking industry. The success recorded by the Corporation in this area include: Adoption of Risk-Based Supervision Framework, Development of Framework for Early Warning Signals to detect problem banks, Development of Framework for the Identification and measurement of Systemically Important Banks (SIBs) and Articulation of a Framework for the Provision of Financial and Technical Assistance to deserving Insured Institutions.
9.3 Failure Resolution
This is one area in which the NDIC continues to demonstrate great ingenuity and sagacity. At inception in 1989, the banking system was already in distress with seven technically Insolvent state-owned banks. The experience garnered by the Corporation in those early years have proved invaluable. Depending on severity and peculiarity, NDIC in collaboration with the CBN had adopted multiple resolution options to resolve failures in the system.
- The options range from Open Bank Assistance (OBA),
Purchase and assumption (P & A), Bridge Bank, and reimbursement (payout) of
Insured Depositors. The NDIC used
Purchase and Assumption (P & A) to resolve problems of 13 banks
closed by the CBN in 2006 as a result of their inability to meet the
Consolidation/Recapitalization requirement of
N25 billion. The P&A option was adopted by the Corporation to resolve the problems of banks affected by the Global Financial Crisis of 2009, which manifested in poor Asset Quality and Weak Risk Management, as well as weaknesses in Corporate Governance.
- Furthermore, in the discharge of its statutory role under Section 39 (i) of the NDIC Act 16 of 2006 and in consultation with the CBN, the Corporation adopted the Bridge Bank mechanism to resolve the failure of three (3) DMBs namely Afribank, Spring Bank and BankPHB in 2011. Similarly, in 2018, that mechanism was used to resolve the failure of Skye Bank Plc. Indeed, the merits of the bridge bank to the nation’s economy are numerous.
- It should interest you to note that the bridge bank initiative safeguarded 12,667 jobs, protected deposit liabilities of over ₦1.759 trillion which ensured that depositors had uninterrupted access to their funds, and prevented the systemic repercussions of the failure of the bank on the entire financial system. The Bridge bank option engendered macro-economic stability, sustained daily operations of the failed banks including meeting maturing obligations and enhanced the confidence of Depositors and other Stakeholders.
9.4 Bank Liquidation
The Corporation is identified with ensuring that Depositors of liquidated banks suffered little loss or pain. Between 1994 to date, 53 DMBs, 325 MFBs and 51 PMBs were put under liquidation without disruption to the nation’s payment system.
Other achievements include:
- NDIC’s liquidation activities involved recovery of debts and realization
of assets of closed banks. To date, a
cumulative amount of over
₦29.112 billion was recovered from debtors of DMBs in-liquidation. ₦129.10 million was realized from debtors of failed MFBs, while that of PMBs stood at N300 million.
- On realisation of assets, currently ₦21.502 billion was collected from the
disposal of physical assets of closed DMBs, while
N404.74 million and ₦78.17 million were realised in respect of MFBs and PMBs, respectively.
- Debt collection and Assets sales culminated in the payments of over ₦116.258 billion as Liquidation Dividends to Depositors, Creditors and Shareholders of closed DMBs, MFBs and PMBs as at today. It is important to stress that through sustained and diligent liquidation activities, NDIC has realized assets to pay in full, deposits of the customers of 17 of the DMBs (in-liquidation). In effect, all the depositors of the 17 defunct banks who came forward to file their claims have been paid all their monies (both insured and uninsured) erstwhile trapped in those banks.
10.0 Response to contemporary developments in the Banking System
The banking system is upwardly dynamic, sophisticated and Complex. The dynamism and complexity in the last three decades resulted in the emergence of different operational models, products and services. Inevitably, such developments challenged the Corporation’s capacity to protect depositors in its role as a key member of the Nigerian financial Safety Net. I am happy to note that NDIC was not found wanting in its response to such developments, some of which include:
- Increase in Maximum Deposit Insurance Coverage (MDIC) at various times to ensure coverage of over 95 per cent of Depositors;
- Creation of Special Insured Institutions Deposit Insurance Fund (SIIF) and extension of Deposit Insurance cover to depositors of MFBs and PMBs in 2006;
- Corporation in 1992 spearheaded the issuance of circular on BAs/CPs to DMBs to sanitise credit creation in DMBs.
- Extension of cover to depositors of Non-Interest Banks (NIBs) through the Framework for Non-Interest Deposit Insurance and creation of Non-Interest Deposit Insurance Fund (NIDIF) for Non-Interest Banks.
- Extension of cover to subscribers of Mobile Money Operators (MMOs) through the Pass-Through Deposit Insurance Framework;
- Adoption of Risk-Based Supervision in Banking Examination;
- In Collaboration with CBN, the Corporation jointly developed the Framework on Consolidated Supervision for DMBs.
- Assessment of banks financial condition and performance through Financial Analysis System (FinA)
- Introduction and Adoption of Differential Premium Assessment Scheme (DPAS) to DMBs and PMBs to strengthen Enterprise Risk Management Framework of DMBs, PMBs and MFBs.
- Reduction in Premium Assessment rate for DMBs from 50 to 40 and further to 35 Basis Points and 30 Basis points for PMBs as contribution for Financial Stability Fund.
- In collaboration with CBN, funding the establishment of National Association of MFBs Unified Information Technology (NAMBUIT) for MFBs Digital Financial Services.
- Development of Financial Institution Liquidation Management Software (FILMS) to enhance liquidation activities etc.
11.0 Capacity Building for the Media
NDIC regards the members of the media as its strategic partners. Since 2002 the Corporation has invested in the Annual Workshop for Business Editors and Members of the Finance Correspondents Association of Nigeria which has become an annual event. In the same vein, the Annual Editors Forum was instituted to focus on Publishers and Editors of major Print and Electronic Media. I believe you all can bear testimonies to the relevance of the training programmes in the last seventeen years. Be that as it may, I want to assure you that the Corporation will not relent in supporting the Media in any capacity within its means and power.
12.0 Institutional Growth and Development
In the past 30 years, NDIC exhibited a strong determination to maintain a high level of professionalism and excellence in its operations. The Corporation had gone through a series of structural and operational reforms necessary to align its activities with global best practices and also give the right impetus to the realisation of its mandate. With the reforms, the Corporation has been able to institute Systems, Processes and Procedures that makes it operationally ready to effectively discharge its mandate.
To build a robust skilled Human Resource Base to deliver the Corporation’s mandate, the NDIC Academy was established and commissioned in June 2013. The NDIC’s Academy, was recently accredited as a Training hub for the financial services industry by the Council of the Chartered Institute of Bankers of Nigeria (CIBN) after a rigorous accreditation process. By that certification, the Academy is poised to fulfil the goal of serving as a ‘’Centre of Excellence’’ on DIS for sister Agencies in Africa.
In the past 30 years, the Corporation adopted several innovations to enhance internal control and strengthen its processes and procedures. They include sound Risk Management Framework leading to the establishment of Enterprise Risk Management Department, adoption of Sustainable Banking Principles in its operations, Zero-Based budgeting and many other operational systems in line with International best practices.
In 2011, the Corporation articulated a Strategic Plan (2011 – 2015), now reviewed and replaced with 2016 – 2020 Strategic Plan. The 5-year plan is designed in line with the Balanced Scorecard Performance Management System aimed at achieving its mandate through four key perspectives, namely: Stakeholders’ Satisfaction, Process Improvement, Financial Planning and Organisational Learning and Growth. The discharge of the NDIC’s mandate has been within the context of this articulated plan, which is based on four thrusts of Operational Readiness; a Culture of Continuous Performance Management; Strategic Partnering and Collaboration, and Promoting Public Confidence on Deposit Insurance System (DIS). The Strategic Plan ultimately guides the setting of corporate objectives and the allocation of resources in the Corporation.
In 2017, the Corporation was awarded the best performing Ministerial SERVICOM Unit (MSU) in the country, following an assessment of its public service delivery by SERVICOM Office in the Presidency. The rejuvenated system and procedure led to three best-practice standards awarded to the NDIC by the British Standards Institution (BSI) in IT Business: IT Service Management System (ISO 20000), IT Security Management (ISO 2701) and Business Continuity Management (ISO2301) in 2018. NDIC thus became the first public institution in the country to be certified with all three ISO certifications simultaneously.
13.0 The NDIC has done a lot in the areas of promoting financial literacy and consumers protection in the system. For example, the NDIC has published several books including two (2) story books (“The Little Piggy” for Nursery and Primary schools and “The Money Tree” for junior secondary schools). The NDIC adopted the “Catch Them Young” approach in Financial Education to instil the right values, attitudes and perceptions towards financial management in children and youth. Also, the NDIC established a 24-Hour Enterprise Help-Desk with the toll free number 080063424357 to facilitate interactions with its stakeholders. The Corporation promotes its online presence through its website www.ndic.gov.ng as well as its social media platforms on Facebook, Instagram, Twitter and Linked-in to further deepen and expand engagement with depositors and other stakeholders in the digital space. The NDIC has introduced DIS Courses in Nigerian Universities and is in Partnership and Collaboration with stakeholders so as to foster effective working relationship to further enhance Depositors and Consumers protection in the banking system.
Annually, the Corporation Sponsors Capacity Building for PMBs and MFBs Operators in areas of “Moveable Collaterals”, Enterprise Risk Management as well as Assets & Liabilities Management (ALM).
14.0 The NDIC is involved in several International Exchange and Cooperation Activities, geared towards effective experience-sharing and capacity building with Local and International partners, since its establishment. The Corporation is a co-founder of the esteemed International Association of Deposit Insurers (IADI) and serves as the current Chair of IADI’s Africa Regional Committee (ARC). The NDIC participates at several IADI Executive Council (EXCO) Meetings and Conferences as well as provides Technical Assistance to other African deposit insurance agencies. A recent commendable event is the hosting of the 2018 IADI-Africa Regional Committee (ARC) Technical Workshop by the NDIC.
15.0 Over the years, the Corporation confronted and successfully resolved many challenges. Such challenges include lack of enforcement powers; protracted litigation initiated by owners of closed banks; recovery of debts owed failed banks, inadequate public awareness, amongst others. Our proposed solutions to these are contained in our proposed amendment to the NDIC Act, 2006.
In light of the foregoing, it is gratifying that in 30 Years since its establishment, the Corporation has fulfilled the public policy objectives for which it was established. Therefore, the Corporation has lined up a series of activities to celebrate its remarkable achievements in the past 30 years as well as give honour to its founders who have left a legacy of Excellence in service and commitment to the stability of the financial system. The celebration will be marked with the following events:
- Special Anniversary prayers during the Juma’at Prayers at the National Mosque in Abuja later today, Friday, 18th October, 2019.
- On Saturday, 19th October, 2019, NDIC staff will come out en masse to promote health and wellness as well as the spirit of healthy competition during the Anniversary Health Walk and Novelty Football Match between the Corporation and Debt Management Office (DMO) staff.
- Special Anniversary Thanksgiving Service on Sunday, 20th October, 2019, at the National Ecumenical Centre, Abuja.
- Highlight of the Anniversary celebrations will be the NDIC 30th Anniversary Public Lecture/Book Presentation which will be crowned by the Anniversary Dinner later that same evening on Monday, 21st October, 2019.
- There will also be various commemorative activities taking place in Lagos and all NDIC Zonal Offices which includes visits to Orphanages.
As the Corporation marks the milestones of the past three decades, we would like to assure Stakeholders in the banking system in particular and the economy in general of its readiness, not only to sustain the high standard recorded, but to raise its bar in line with our core values of Honesty, Respect & Fairness, Discipline, Professionalism, Teamwork and Passion.
I thank you all for your attention.