The Central Bank of Nigeria has said it will take practical steps to prevent another crisis in the banking sector.

It has, therefore, announced plan to release a comprehensive framework for the resolution of banking crisis.

The Deputy Governor, Financial Systems Stability, CBN, Mr. Kingsley Moghalu, said at a forum in Lagos on Wednesday that the establishment of the framework would create a more endurable platform for financial stability.

He said, “We are at a stage where the Nigerian banks are stable. Our strategic priorities in the next three years are to develop and implement a strong macro-prudential framework which is in progress. We are also promoting the protection of consumer rights and financial literacy.”

The deputy governor noted that some aspects of the reforms and global development had implications for the future of the banking sector.

He said, “The implementation of Basel II/ III and International Financial Reporting Standards will foster better risk management and transparency, which have practical implications for the role and responsibilities of the board of directors. Competitive pressure will lead to innovation and improvement in efficiency and service delivery.”

Moghalu also said that sound corporate governance was a critical factor upon which confidence of customers, depositors and investors was built.

He added that with effective corporate governance anchored on core values of ethics, integrity, professionalism and trust, institutions would have competitive advantage in attracting business and generating positive reactions in the marketplace.

Moghalu said, “Many studies have shown that well-governed companies that place a high premium on transparency and accountability have a higher price premium than their competitors, reduced cost of capital, and a higher long-term return for shareholders.

“Institutions that have a reputation for ethical behaviour in today’s marketplace engender not only customer loyalty but employee loyalty. A great deal depends upon fairness, honesty, integrity and the manner in which institutions conduct their affairs.”

He noted that while the shareholders claimed the regulatory action by the CBN and the Nigerian Deposit Insurance Corporation amounted to the appropriation of their rights and interest, the regulators acted in the wider public interest and in line with their statutory responsibility to protect depositors and maintain financial stability.

“As a key stakeholder, the position of the CBN is that the wider goal of financial stability overrides the narrow interest of these shareholders whose investments in the intervened banks had effectively been wiped out,” he added.

Source: Punch ( written by Ademola Alawiye)