Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE)-The International Monetary Fund (IMF) Thursday advised the Nigerian Authorities to wind down the operations of the Asset Management Corporation of Nigeria (AMCON) in order to curb moral hazard and fiscal risks.
This is part of the IMF’s Executive Board Assessment and recommendation to the Country after it concluded its 2012 Article IV consultation with Nigeria.
The Directors commended the Nation’s Authorities success in restoring financial stability after the 2009 Banking crisis and subsequently recommended winding down the operations of the Asset Management Company to curb moral hazard and fiscal risks.
The IMF welcomed the Central Bank of Nigeria’s (CBNs) commitment to address supervisory and regulatory gaps identified in the Financial Stability Assessment Update, particularly the need to strengthen cross-border supervision and the regime against money laundering and terrorism financing.
As part of the Nigeria’s Central Bank’s effort at combating money laundering and financing of terrorism, it issued an exposure draft of Know-Your-Customer (KYC) requirements to cover low-value and low-risk accounts, thereby promoting and deepening Financial Inclusion while ensuring compliance with Anti-Money Laundering and Financing of Terrorism (AML/CFT).
To check the above, the CBN also developed AML/CFT RBS Template for Statutory Returns by Financial Institutions under its regulatory purview and the Nigerian Financial Intelligence Unit (NFIU) to ensure uniform rendition of Reports.
The CBN also developed in conjunction with Chief Compliance Officers of Banks (CCCOBIN), Standard Account opening forms for reporting Institutions to improve KYC compliance.
In year 2009, Nigeria’s Central Bank had conducted a Stress Test and declared that Banks such as the defunct Oceanic Bank Plc, Intercontinental Bank Plc, Finbank Nigeria Plc, Equitorial Trust Bank, Union Banks of Nigeria Plc, Bank PHB, Spring Bank Nigeria and Afribank Nigeria Plc as unhealthy.
This saw the CBN injecting about N620 billion to rescue the Banks; however as at today, three of the Banks, Oceanic, Intercontinental and Finbank has been acquired, while BankPHB, Spring Bank and Afribank has been nationalised by AMCON.
The Banks that metamorphosed from the defunct Banks are Main Street Bank Limited (Afribank Plc; Keystone Bank Limited (Bank PHB) and Enterprise Bank Limited (Spring Bank).
As earlier reported, AMCON has injected N679 billion into the new banks via Bonds. Enterprise Bank received N111 billion Main Street Bank got N285 billion and Keystone Bank secured N283 billion.
The Financial Stability Assessment Programme (FSAP) was established in 1999, and it’s a comprehensive and in-depth analysis of a country’s financial sector.
The focus of the FSAP is to gauge the stability of the financial sector and to assess its potential contribution to growth and development of any nation.
The FSAP teams do analysis on the soundness of a Country’s Banking and other Financial Sectors.
Also, they conduct stress tests; rate the quality of Bank, Insurance, and Financial Market Supervision compared to international standards.
The FSAP team further evaluates the ability of Supervisors, Countries Policymakers, and Financial Safety Environments on how they respond in the event of systemic stress.
Their job is the joint responsibility of the IMF and World Bank in developing and Emerging Market Nations.
