The Managing Director/Chief Executive of the Nigeria Deposit Insurance Corporation (NDIC), Umaru Ibrahim, has charged stakeholders in the banking sector to pay greater attention to sound corporate governance practices to prevent systemic crisis in the sector.
Ibrahim, who gave the charge in Lagos while delivering an address at the 2015 Executive Breakfast Meeting of the Society for Corporate Governance Nigeria, identified the failure of sound corporate governance as one of the factors responsible for the 2009 Nigerian banking crisis. He 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 of overbearing influence of some board members, ineffectiveness of board committees; non-adherence to the CBN code of corporate governance and weak ethical standards among others.
The NDIC boss emphasized 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.
Ibrahim reviewed the various laws governing banking operations in Nigeria i.e the Banks and Other Financial Act 1991, the Companies and Allied Matters Act, the NDIC Act, the CBN Act and the Failed Banks Act and expressed the need for more stringent sanctions to serve as deterrent to irresponsible and greedy behaviours. He cited the case of the recent move by the regulatory authority in the United Kingdom to enhance supervision and management of banks with emphasis on personal responsibilities of directors.
Ibrahim, who gave the charge in Lagos while delivering an address at the 2015 Executive Breakfast Meeting of the Society for Corporate Governance Nigeria, identified the failure of sound corporate governance as one of the factors responsible for the 2009 Nigerian banking crisis. He 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 of overbearing influence of some board members, ineffectiveness of board committees; non-adherence to the CBN code of corporate governance and weak ethical standards among others.
The NDIC boss emphasized 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.
Ibrahim reviewed the various laws governing banking operations in Nigeria i.e the Banks and Other Financial Act 1991, the Companies and Allied Matters Act, the NDIC Act, the CBN Act and the Failed Banks Act and expressed the need for more stringent sanctions to serve as deterrent to irresponsible and greedy behaviours. He cited the case of the recent move by the regulatory authority in the United Kingdom to enhance supervision and management of banks with emphasis on personal responsibilities of directors.
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