PRESS RELEASE 

In order to address some of the developments that emerged during the 2008 global economic meltdown and the corporate governance issues that came to the fore, the Corporation organized a retreat for members of House of Representatives Committee on Banking and Currency on 19^th July, 2010 and members of the Senate Committee on Banking, Insurance & Other Financial Institutions on 26^th and 27^th July, 2010 respectively at Amber Tinapa Hotel Calabar.

In his welcome address, the Acting Managing Director/Chief Executive, Alhaji Umaru Ibrahim stated that the Nigeria Deposit Insurance Corporation was set up by NDIC Decree No. 22 of 1988, with the primary mandate of insuring the deposit liabilities of licensed deposit taking financial institutions.  He said as a risk minimiser, the Corporation was expected to play a proactive role in promoting safety and soundness of the financial system through bank supervision and engaging in effective distress resolution.  “Indeed, the Deposit Insurance Scheme in Nigeria has been given added responsibility to handle the orderly winding-up of closed financial institutions which entails realization of closed bank assets and using the proceeds to settle depositors’ liabilities and other creditors”.  However, over the years, it became evident that the 1988 Act was inadequate for effective deposit insurance.  Fortunately, through the effort of the Senate Committee on Banking, Insurance and Other Financial Institutions, and your counterparts in the House of Representatives, the National Assembly amended the NDIC Act in 2006, he added.

He noted that, although, the amendment in 2006 had addressed some of the identified weaknesses in the 1988 Act, that amendment did not foresee the developments that emerged during the 2008 global economic meltdown and the corporate governance issues that came to the fore.  He added that, the members of the National Assembly were quite familiar with the NDIC Act 2006 and the several proposals for its amendment in order to address emerging challenges.

Alhaji Ibrahim further stated that, even developed economies suddenly realized that their regulations were not robust enough and thus most of them had embarked on the review of their Legislations and Regulations to address emerging challenges.  It was in that context that a further review of the NDIC Act 2006 became more pertinent.  The Corporation had come up with proposals and the retreats were intended to give the members of the National Assembly the opportunity to critically examine the proposals while at the same, giving the Corporation the opportunity to provide them with insights, clarifications and explanations to the reasons that informed the proposals.  Some of the key issues covered in the proposed amendments included:

·         Enabling the Corporation to gain access to information on subsidiaries of insured institutions to facilitate consolidated supervision;

·         Dealing with Directors, Officers and other parties at fault in bank failures;

·         Prompt payment of depositors’ funds inspite of pending legal/court action;

·         Strengthening the enforcement powers of the Corporation to enhance effective supervision of insured institutions;

·         Enhancement of the DIF;

·         Protection of the assets of the closed banks/NDIC against attachment.

·         Enhancement of Deposit Insurance Coverage

·         Corporate Governance Issues

-          Tenure

-          Conflict of interest

The proposed amendment have therefore, attempted to address the various challenges faced by the Corporation, in particular, those that prevented immediate payment of insured deposit to depositors of failed banks as a result of legal/court actions usually instituted by erstwhile owners of those banks.

Alhaji Ibrahim hoped that the Retreat would afford members of the National Assembly the opportunity to appreciate the challenges faced by the Corporation and that they will bring their enormous wealth of experience to bear in considering the proposed amendments to enable the Corporation meet those challenges.  He said it was not surprising that the NDIC on behalf of the depositors of the Banking Industry was elated by the attendance of the members of the National Assembly at the Retreats.  He noted that, their presence was ample demonstration of their commitment to ensuring a safe and sound banking system and promoting financial system stability through an efficient Deposit Insurance System in Nigeria, being one of the three components of Financial Safety Net.

The Ag. MD/CEO stated that while as a Corporation, they were very confident that all the distinguished Senators and honourable members would be in the next Assembly, he passionately urged that after the Retreats, the members would do all that was in their power to ensure that the proposed amendments were passed by the National Assembly during its life span to forestall the process starting afresh when the next Assembly commences business.

He, on behalf of the Corporation heartily welcomed the members of the National Assembly to the two Retreats sessions and wished everyone fruitful deliberations.