The Governor, Central Bank of Nigeria, Mr. Lamido Sanusi, has reiterated that the failure of corporate governance in most financial institutions led to the recent crisis in the banking sector.

 Sanusi, who spoke in Lagos on Friday at an event on financial systems stability organised by Olaniwun Ajayi LP, said the inability of key personnel in some banks to live up to expectations negatively impacted on the institutions.

He outlined other factors that led to a weak financial system to include macroeconomic instability caused by large capital inflows; lack of investor and consumer sophistication; inadequate disclosure and transparency; and critical gaps in regulatory framework and regulations.

Others, he said were uneven supervision and enforcement of laws; unstructured governance and management processes at the CBN; and major weaknesses in the business environment.

The apex bank governor called on the managements of the financial institutions to avoid bad corporate governance structure, adding that they should take note of the factors which plunged not just the country into crisis, but impacted globally on the financial system.

He said the CBN reforms, after the global crisis, focused on enhancing the quality of banks by revising the universal banking model, introducing non-interest banking, resuscitating the financial services regulation coordination committee and revising the prudential guidelines for DMBs in Nigeria.

The apex bank, he said, implemented risk based supervision, strengthened cross border supervision of offshore Nigerian banks, set up the consumer and financial protection division, with 92.9 per cent of complaints processed, and implemented sound corporate governance practices.

Sanusi said some of the achievements achieved by the bank after establishing financial system stability included the setting  up of the Asset Management Corporation of Nigeria.

AMCON, he said, served as a resolution vehicle to free banks from the weight of non-performing assets.

He noted that the revocation of the licences of three failing banks and handing them over to the Nigeria Deposit Insurance Corporation and the establishment of a macro-prudential analysis and trend division within the CBN were some achievements recorded by the apex bank after the banking crisis.

He solicited support from the management of financial institutions and the public in driving the sector to loftier heights, noting that a sound corporate governance structure often guaranteed success in most organisations.

Sanusi said, “We seek the help of all players in the industry as well as the general populace in embracing these reform measures to minimise any challenges posed and ensure their continued success.”

Source: Punch/ Okechukwu Nnodim