HIGHLIGHTS OF THE MAJOR ACTIVITIES AND

Report
HIGHLIGHTS OF THE MAJOR
ACTIVITIES AND ACHIEVEMENTS OF
THE NIGERIA DEPOSIT INSURANCE
CORPORATION (NDIC)
FROM JANUARY – DECEMBER 2011
AND THE PLAN FOR 2012
1. INTRODUCTION
 NDIC Established as Risk Minimiser With Broad Mandate.
 Mandate includes Deposit Guarantee, Banking Supervision, Failure
Resolution and Bank Liquidation.
 1n 2011, commenced the implementation of its second strategic
plan, spanning 2011 to 2015.
 Plan was articulated within four strategic thrusts, namely:
Operational Readiness; Culture of Continuous Performance
Management; Strategic Partnering and Collaboration, and
Promoting Public Confidence on Deposit Insurance System (DIS).
 Below are highlights of achievements as well as plan for 2012
2.0. DEPOSIT GUARANTEE
 Provided deposit insurance cover to twenty-four (24)
Deposit Money Banks (DMBs), 882 Micro-Finance
Banks (MFBs) and 100 Primary Mortgage Institutions
(PMIs).
 Insured amount had remained at levels set in 2010 at
N500, 000 and N200, 000 for DMBs and MFBs/PMIs
respectively.
 All insured depositors of the closed MFBs were
reimbursed using the new coverage level of N200,
000.00.
3.0. Banking Supervision
3.1 Risk Based and Target Examination of
Deposit Money
Banks
Joint (CBN/NDIC)routine Risk-Based
examination of the 16 non-intervened banks.
NDIC led in 6 banks.
Joint (CBN/NDIC) Risk Assessment (Target)
Examination of the 24 DMBs: the Corporation
led in 9 banks.
3.0. Banking Supervision Cont.
3.2.
Special Assignment for the Federal Ministry of
Finance on the 24 Deposit Money Banks
(DMBs)
 The Corporation carried out special assignment for the
Federal Ministry of Finance by reviewing the business
relationships of the 24 Deposit Money Banks (DMBs) with
Global Infrastructure Services Nigeria Limited; Global Steel
Holding Limited; Ajaokuta Steel Co. Ltd; Delta Steel Co. Ltd
and other related entities/subsidiaries in order to ascertain
the extent of exposure of the banks to the companies.
 Findings of the exercise had been submitted to the
Ministry.
Banking Supervision Cont.
3.3. Special Investigation of 9 DMBs on
Petitions/Complaints
 The Corporation carried out special investigations
of complaints/petitions received from bank
customers and other stakeholders in respect of 9
out of the 24 DMBs.
 As a result of the findings of the special
investigations, some of the affected banks were
directed to make some refunds to their
customers.
Banking Supervision Cont.
3.4
Routine Examination of Microfinance Banks (MFBs)
 The Corporation completed examination of 159 MFBs.
 As at the end of November 2011, the examination reports of 148
MFBs had been completed and issued out.
 Findings of the exercise revealed that most of the MFBs violated
the basic principles of corporate governance in several respects.
 Reports also disclosed gross disregard for recommendations made
in previous examination reports.
Banking Supervision Cont.
3.5
Routine Examination of Primary Mortgage
Institutions (PMIs)
 The Corporation conducted routine examination of
sixty-two (62) PMIs in 2011.
 The examination revealed that 22 were technically
insolvent while another 16 had closed shop.
 The Corporation, in collaboration with the CBN,
commenced work to resolve the problems of the
identified institutions.
4.0. Failure Resolution
4.1.
Adoption of Bridge Bank Option
 Three bridge banks established to takeover the assets and
liabilities of Afribank Plc, Bank PHB Plc and Spring Bank Plc,
which could not recapitalised on or before September 30,
2011 deadline given by the CBN.
 The takeover was occasioned by the deteriorating financial
condition of the banks and inadequate efforts on the part
of the former owners to recapitalize accordingly.
 Takeover was sequel to due consultation with the CBN and
the Federal Ministry of Finance.
4.0. Failure Resolution Cont.
The 3 bridge banks were:
Mainstreet Bank Lit.
Afribank (Nigeria) Plc
Keystone Bank Ltd.
Enterprise Bank Ltd.
Bank PHB Plc
Spring Bank Plc.
Transfer of assets and liabilities of the 3 banks
effected on August 5, 2011.
4.0. Failure Resolution Cont.
 Bridge Bank mechanism adopted for the following reasons:
 To sustain daily operations of the failed banks and ensure that all the
branches of the banks continue to function;
577
 To safeguard the banks’ total deposit liabilities of N809.4 billion;
 To safeguard 6,667 jobs in the affected banks;
 To enhance the confidence of both the depositors and creditors of the banks; and
 To prevent the systemic repercussions of the failure of the banks on the entire
financial system thereby ensuring financial and macro-economic stability.
 The three banks were acquired by the Asset Management Corporation of Nigeria
(AMCON) through share subscription the same day with an infusion of about N678
billion.
4.0. Failure Resolution Cont.
4.2. Monitoring of the CBN-Intervened Banks
 The Corporation continued to collaborate with the CBN
for close monitoring of the financial condition of the
remaining 5 intervened banks through the Special
Monthly Status Reports from the affected banks.
 Four of the banks, namely, Intercontinental bank Plc,
Equitorial Trust Bank Ltd, Oceanic Bank Plc, and
FinBank Plc were acquired by some core investors
while Union Bank of Nigeria (UBN) Plc was being
recapitalised by its shareholders and a consortium of
international investors.
 The merger partners/core investors of the banks are as shown in Table 1
below:
The CBN-Intervened Banks
Acquiring/Merger Partners
Oceanic Bank Plc
Intercontinental Bank Plc
Fin Bank Plc
Union Bank of Nigeria
Ecobank Nigeria Pl
Access Bank Plc
FCMB
To be recapitalised by the bank
shareholders and a consortium of
international investors.
Sterling Bank Plc
Equitorial Bank Ltd
•
r
Failure Resolution Cont.
4.2.
Update on the Operating Status of
Savannah Bank of
Nigeria (SBN) Plc and Societe Generale Bank of Nigeria (SGBN) Ltd.
4.2.1. Savannah Bank of Nigeria (SBN) Plc
 the Corporation successfully handed over the 104 branches of Savannah
Bank to its owners to facilitate resumption of operation.
 N450 million of Savannah Bank’s fund was released in 2009 and the
balance of N460 million was released in 2011.
 the sum of US$1.029 million belonging to the bank was equally released
in 2011.
4.2.2. Societe Generale Bank of Nigeria (SGBN) Limited
 Joint CBN/ NDIC Committee set up to work with the SGBN Team to
facilitate commencement of operations of the bank.
5.0. Bank Liquidation
5.1.
Liquidation of Microfinance Banks (MFBs)
 Following the revocation of operating licences of 103 MFBs by the
CBN in September 2010, the Corporation had paid an aggregate
sum of N2.024 billion to about 70,424 depositors of the closed
MFBs as at August 2011 as against the total sum of about N1 billion
paid as at December 31, 2010.
 The amount paid represented about 41% of total insured amount
of about N4.94 billion.
 Payment to the rest of the depositors continued through branches
of Agent Banks close to the location of their closed MFBs.
Bank Liquidation Cont.
 Agent Banks used for this purpose were Unity Bank
Plc, Intercontinental Bank Plc, First Bank of Nigeria Plc,
Wema Bank Plc, and United Bank for Africa Plc,
Mainstreet Bank Ltd., and Union Bank of Nigeria Plc.
 As part of efforts to sanitize the microfinance subsector, the Corporation had concluded arrangements to
prosecute about 55 directors, staff and related parties
of 19 closed MFBs who were found to be responsible
for the collapse of their banks. This is expected to
serve as a deterrent to would-be fraudsters in the
MFBs.
Bank Liquidation Cont.
5.2.
Sale of Hallmark Homes (Savings & Loans)
Limited (HHL)
to Centage Savings & Loans Limited.
 Hallmark Homes (Savings & Loans) Limited (HHL) is a wholly owned
subsidiary of Hallmark Bank Plc (in liquidation).
 The Hallmark Bank’s licence was revoked in 2006 and NDIC was
subsequently appointed by the Federal High Court as Liquidator to
wind-up its affairs.
 The revocation of the banking licence of Hallmark Bank Plc had an
adverse effect on the PMI because it had no banking relationship
with any other bank except the defunct Hallmark Bank.
Bank Liquidation Cont.
 Although HHL was not in liquidation but
technically, it was out of operation following the
revocation of the operating licence of Hallmark
Bank.
 In line with power bestowed on the Corporation
as Liquidator of the parent company, HHL was
advertised for sale and due process was followed
in selecting the successful bidder.
Bank Liquidation Cont.
 In line with its practice of ensuring transparency, the valuation of the HHL
was done by Akintola Williams Deloitte and on December 7, 2011, the
Corporation, in its capacity as liquidator of Hallmark Bank Plc successfully
sold HHL to Centage Savings & Loans Limited as a going-concern at a total
value of N1.15 billion.
 The proceeds of the sale in the sum of N1.15 billion would assist in paying
public deposits which had been locked up in Hallmark Bank since 2006.
 About 1,630 depositors having about N752 million in the former HHL
would also have access to their funds and benefit from other banking
services of Centage Savings & Loans Limited (the new acquirer of HHL).
 All these testify to the commitment of the Corporation to protecting
depositors.
Bank Liquidation Cont.
5.3.
Commencement of Payment to Depositors
of
Triumph & Fortune Banks
 In August 2011, the Corporation commenced payment
of insured deposits to the depositors of the two banks
(Triumph and Fortune Banks) closed in 2006.
 As at November 2011, the Corporation had paid about
N20 million out of N804.35 million to depositors of
Fortune while about N1 million out of N45.36 million
had been paid to depositors of Triumph.
Bank Liquidation Cont.
5.4.
Debt Recovery
 The cumulative recovery for the banks in liquidation since 1994 rose
from about N21.756 billion in 2010 to about N22.158 billion in
2011, representing an increase of about 2%.
 The sum of N8.33 million had been recovered to date in respect of
the closed MFBs.
 In order to enhance the pace of debt recovery and hence, payment
of uninsured deposits, the Corporation, among other steps, had
packaged all outstanding but secured non-performing loans of
banks in-liquidation, to the tune of N9 billion, for disposal by
AMCON.
6.0. Premium Reduction
 As part of its contribution to making the Financial
Stability Fund, (established in 2010 and to which
banks were expected to contribute 0.3% of its
Assets over the next 10 years and CBN to
contribute N500 billion over a 10-year period) a
reality, the NDIC reviewed downward the
premium payable by the banks by reducing the
assessment base rate for premium computation
from 50 to 40 basis points. The application of the
reduced premium took effect in 2011.
7.0. Deposit Insurance Fund
The deposit insurance fund (DIF) for DMBs
grew by about 17% from about N295.7 billion
in 2010 to about N347.19 billion in 2011.
The SIIF grew by about 39% from about N2.3
billion in 2011 to about 3.2 billion in 2011.
8.0. Extension of Deposit Insurance
System to Non-interest Bearing Banks
The Corporation during the year continued to
fine-tune the developed Framework that
would enable it extend DIS to non-interest
bearing financial institutions that would be
licensed in due course by the CBN.
9.0. Public Awareness Initiatives
 Airing of Radio and TV jingles tagged “NDIC Calling” in the
three main Nigerian languages, namely, Igbo, Hausa, and
Yoruba;
 The development of a new robust and interactive
Website- www.ndic.org.ng;
 Hosting of students of Nigerian Universities and
Polytechnics on excursion to Corporation;
 Translation of NDIC pamphlets into 3 major Nigerian
languages;
 Circulation of NDIC various publications to the public free;
and
 Survey on the Effectiveness of Public Awareness Activities
of the Corporation to determine awareness gap.
Help-Desk
The 24-hour Help Desk facility continued its
service in 2011.
More than 2000 calls were received and
attended to.
Most enquiries and complaints received
centered on depositor reimbursement and
abnormal charges by banks.
11.0. Enhancement of Capacity,
Processes and Systems
 In 2011, a total of 1140 staff of the Corporation benefitted from
relevant local courses while another 152 staff attended courses
overseas on Risk-based Supervision, International Financial
Reporting Standards, Risk-based Audit and Enterprise risk
management, among others.
 The Corporation commenced the development of the Information
Technology Security Systems and Architecture Systems (ITSSA),
which was aimed at addressing identified IT security vulnerabilities
in the Corporation.
 The Corporation had developed an Information Technology
Disaster Recovery (ITDR) blueprint in 2011 in order to continue
business in the event of a disaster.
Enhancement of Capacity, Processes
and Systems Cont.
 The Corporation commenced the development of a new web
enabled Financial Institutions Liquidation Management System
has been awarded so as to facilitate prompt depositor
reimbursement.
 The Corporation commenced the development of a web enabled
Performance Management System (PMS) in order to improve upon
the productivity of staff and by extension that of the Corporation as
well as adequately appraise staff on an objective basis.
 In order to aid communication and collaboration amongst staff in
the various office locations of the Corporation, a Video
Conferencing solution was installed in 2011 in the Head Office,
Abuja, Lagos Offices at Mamman Kontagora and Necom House. The
installation was completed and tested.
Enhancement of Capacity, Processes
and Systems Cont.
 The Corporation developed Standard Operating Procedures
(SOPs) manuals for its key operations, to serve as an
important tool for ensuring that assigned tasks are carried
out in consistent and correct manners.
 The Corporation continued to pursue the proposed
amendment to its 2006 Act so as to enhance the
effectiveness of the Corporation in the discharge of its
mandate by:
 Granting the Corporation powers to review books of
subsidiaries of banks.
Enhancement of Capacity, Processes
and Systems Cont.
 Independent enforcement powers to deal with erring
banks and their directors/ officials.
 Protection of the Corporation’s assets against creditors
who obtain judgment against closed institutions.
 Granting the Corporation powers to pay insured
amount to depositors in the event of imminent or
actual suspension of payment by an insured institution
even before the revocation of its licence.
12.0. International Networking
 Participated actively in the Africa Regional Committee
of International Association of Deposit Insurers (IADI)
and its world body’s programmes.
 Hosted 2 Regional programmes in May and December
2011.
 Participated in the 2011 Research Conference of IADI,
which took place in the Bank for International
Settlements, Basel, Switzerland on June 6 – 9, 2011.
The theme was “FINANCIAL CRISIS: THE ROLE OF
DEPOSIT INSURANCE”.
12.0. International Networking Cont.
 Participated at the 2011 IADI Annual Conference and General
meeting in Warsaw, Poland, 17 – 21, October 2011 with the theme
“Beyond the Crisis: The Need for Strengthened Financial Stability
Framework”.
 Entered into a Technical Assistance Agreement with the Office of
Technical Assistance (OTA) of the United State’s Treasury
Department.
 Consequent upon above, in May 2011, OTA deployed a Resident
Technical Advisor in the Person of Mr. Phillip Morris to the NDIC to
facilitate capacity building according to the agreed Terms of
Reference (TOR).
12.0. International Networking Cont.
 Specifically, the assistance has been in the following areas:
 Increased technical capacity of NDIC staff in the implementation of
Risk Based Supervision (RBS) as it relates to deposit insurance;
 Design and implementation of training programmes /methods to
improve the capacity of NDIC staff in the prompt payment of
claims to depositors and creditors;
 Design and development of staff training modules and operations
manual to enhance capacity in key areas of: Risk Assets valuation,
Purchase & Assumption (P&A) transactions, Asset &Real estate
management, Problem loan work out, other intervention
techniques etc.
12.0. International Networking Cont.
 Assist the corporation in transiting to the new International Financial
Reporting Standards (IFRS) by providing appropriate training to Staff;
 Provide general assistance in the development of core competencies in
Enterprise wide Risk Management framework; and
 Provide general assistance to NDIC as requested and approved by the US
Treasury Department during the period
 Under the OTA, the Corporation benefitted from the visit of 2 technical
advisors in the areas of International Financial Reporting Standard (IRFS)
and Risk-Based Supervision.
 The Corporation continued to participate effectively in the FSRCC
activities.
13.0. Corporate Social Responsibility
 Disbursed over N150 million for execution of different
educational projects under the third (3rd) phase of its
project-based support scheme.
 Executed projects ranged from Computer Complexes,
Lecture Rooms/Office Complexes, Multi-Purpose Halls,
Provision of tables & chairs, Upgrading of ICT Facilities,
to Laboratory Complexes.
 Supported sports development in six states of the
Federation and the Federal Capital Territory to the tune
of N42 million.
14.0. CORPORATE PLAN FOR 2012
14.1. Enhancement of Processes and Systems
• Some of the activities in this area include:
 Development and deployment of a robust Early Warning System with a
view to ensuring safety and soundness of banks;
 Development of a framework for resolving systemically important
financial institutions so as to achieve the objectives of reducing the
probability of their failure, reducing the impact of their failure in the event
it occurs; and improving on resolution regime so as to minimize utilization
of tax-payers money.
 Development of framework for integrated deposit insurance system so as
to pave way for orderly growth of the financial system;
14.0. CORPORATE PLAN FOR 2012
Cont.
 Repositioning the Human Resources Department
(HRD) in line with best practices to meet the challenges
of a contemporary organisation.
 Completion of the upgrading of the Financial
Institutions Liquidation Management System (FILMS)
to facilitate prompt depositor reimbursement.
 Fine-tuning of the differential premium assessment
system (DPAS) so as to serve as an effective tool for
promoting sound risk management in banks.
14.0. CORPORATE PLAN FOR 2012
Cont.
 Completion of the development and deployment of an appropriate
resolution framework for MFBs so as to continue to engender
confidence in the sub-sector thereby assisting to facilitate financial
inclusion and poverty eradication.
 Completion of a robust Performance Management System based
on the framework of balance score card with a view to up-scaling
the productivity and efficiency of the Corporation.
 Completion of the automation of the Enterprise Risk Management
System which should facilitate management of risks facing the
Corporation in the most efficient manner.
14.0. CORPORATE PLAN FOR 2012
Cont.
 Development of Business Continuity and Disaster
Recovery Plan as a strategy for mitigating risks arising from
natural and other disasters that could disrupt continuous
operations of the Corporation in the event of their
occurrence.
 Development and completion of a framework for financial
and technical assistance to ensure the effectiveness of the
Corporation in the performance of this function.
 Development of a model for establishing target fund ratio
so as to ascertain the adequacy of the deposit insurance
fund from time to time.
14.0. CORPORATE PLAN FOR 2012
Cont.
14.2. Capacity Building
 The Corporation plans to intensify its efforts in
capacity building, especially in the following
areas:
Risk-based supervision;
Consolidated supervision;
International Financial Reporting Standards;
Communication and Report Writing especially for
the Corporation’s examiners.
14.0. CORPORATE PLAN FOR 2012
Cont.
14.3. Physical Projects
Commence work on:
Head Office Annex in Abuja
Lagos Office Building
Port-Harcourt Zonal Office Building
Yola Zonal Office Building
15.0. Conclusion
 Notable achievements in the protection of depositors recorded in
2011;
 Facilitated the promotion of safe, sound and stable banking system
in Nigeria.
 With careful formulation and adoption of appropriate strategies,
the Management and staff of the Corporation are committed to
ensuring that the Corporation fulfills its statutory mandate.
 The planned activities for the Corporation in 2012 indicate that it is
committed to remain an active component of the Nigerian financial
safety-net player, particularly in the area of engendering confidence
and contributing to financial system stability.

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