The Nigeria Deposit Insurance Corporation (NDIC) is considering an advance payment of insured deposits once the licence of any insured institution is withdrawn by Central Bank of Nigeria (CBN).

This initiative was disclosed by the NDIC Managing Director/Chief Executive, Alhaji Umaru Ibrahim last Monday when he received the Chairman and Members of the House Committee on Banking & Currency of the Federal House of Representatives during their oversight visit to Lagos Office of the Corporation.

 Alhaji Ibrahim told the Committee that this initiative is intended to ease the hardship being experienced by depositors in the event of bank closures. He however pointed out that the initiative would require a robust and effective information system in order to capture the balance on the ledger of every depositor prior to the closure of any insured bank.

The NDIC CEO regretted that despite mapping out various sensitization campaigns from 1994 to 2013, such as the use of Depositors’ Tracers, Agent Banks and zonal offices, the Corporation was still having an accumulated sum of N1.9 billion unclaimed by depositors in 48 deposit money banks (DMBs) in-liquidation. He however said that the Corporation would explore the use of social media and its zonal offices to enhance depositor sensitization campaigns.

Alhaji Ibrahim also informed the Committee that the CBN and NDIC were effectively collaborating to encourage banks not only to continue to imbibe sustainable banking principles but also to support power, agriculture and housing sectors.

The NDIC CEO however noted with concern the listing of the Corporation among public institutions that remit 25 percent of their internally generated revenues to the federal government instead of 80 per cent of its annual budget surplus to the federation account. This, according to him, not only posed serious threat to the NDIC deposit insurance fund (DIF) and ability to discharge its mandate but also ran contrary to global best practice which excluded deposit insurance organisations to pay such levies to government. He therefore appealed to the visiting committee to do whatever it could within its powers to reduce the burden on the Corporation by removing its name from agencies that should remit 25 percent of their internally generated revenues to the federal government.

In his remarks, the Chairman of the House Committee on Banking & Currency, Hon. Jones Onyereri said the object of their visit was in fulfilment of the oversight functions of the National Assembly. Hon. Onyereri disclosed that the Committee was determined to support the regulatory and supervisory authorities in preventing distress in the banking industry.

The Committee Chairman, who led the visiting team, noted with concern the prevalence of declaration of huge profits by banks as a result of their realisation of high returns from investment of public sector funds at their disposal.

According to him, his Committee supported the withdrawal of 50 percent of the public sector funds from the banks by the CBN. The banks, according to him, had however resorted to charging high interest rates which constrained the growth of the real sector of the nation’s economy.

He therefore advised the banks to make concerted efforts on deposit mobilisation from alternative sources; pointing out that if the ugly trend of high interest charges continued, the Committee would be left with no option than to push for full withdrawal of the public sector funds from the banks.

H. S. BIRCHI

HEAD, COMMUNICATION & PUBLIC AFFAIRS

DECEMBER 17, 2013

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By Peter OBIORA InvestAdvocate Wednesday December 04, 2013

Uyo (INVESTADVOCATE)-The Nigeria Deposit Insurance Corporation (NDIC) Wednesday said it will provide insurance cover for mobile banking customers from 2014.

Umaru Ibrahim, Managing Director/Chief Executive Officer (MD/CEO) of the Corporation made this disclosure at a question and answer session after his  keynote address at the annual workshop for Business Editors and Finance Correspondents Association of Nigeria (FICAN) with the theme “Deposit Insurance and Financial Inclusion”  in Uyo South South Nigeria.

Ibrahim said the NDIC and Central Bank of Nigeria (CBN) are working out modalities to ensure that mobile banking customers in Nigeria are protected.

According to him, the initiative is in line with the Corporation’s efforts to attract and retain poor and unbanked people into the formal financial systems.

Ibrahim said that access to formal financial services is a big problem in the world, “ there are about seven (7) billion people in the world and global financial inclusion database hosted by the World Bank says only 50% of adults have accounts at formal financial institutions-bank, credit union, cooperatives, post office or microfinance institution. This implies that 3.5 billion people are financially excluded,” he said.

He affirmed that working towards full financial inclusion is an ongoing and dynamic process, “the ability of the market to respond to this demand depends not only on providers developing sustainable and low-cost ways to providing such services, but also on having an enabling regulatory and supervisory environment backed by an effective deposit insurance system,” Ibrahim affirmed.

The NDIC Chief further affirmed that the Corporation supports through guaranteeing deposits, especially small savers.

He said deposit insurance is vital in financial inclusion because the poor need assurance that services of depository institutions are safe and available.

According to Ibrahim, plans are underway by a committee set up by both the NDIC and CBN to fashion out ways to identify customers of unclaimed insured deposits in the failed banks, for such deposits to be paid into their secured accounts.

He said due to the small value of some of the deposits, customers are unwilling to respond to the call by the Corporation to come for payment of their deposits.

The NDIC CEO said a number of banks have been listed and both the CBN and NDIC are currently collaborating with other stakeholders and have consulted   with some countries and jurisdictions on how to find out what level of funds can be insured. “Is there anything as mobile money? If so what do you consider as deposits?”he asked.

“So sometime in 2014, we will rollout cover for mobile banking,” Ibrahim said.

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Cypriot financial regulators have fined Bank of Cyprus BOC.CY and six of its former executives for failing to give shareholders information on the lender’s Greek government bond holdings, which almost bankrupted it.

Large depositors were forced to recapitalize the bank this year after it reported massive losses on its Greek bonds. The process, known as a “bail-in” was conditional to the east Mediterranean island reaching agreement with international lenders in March for 10 billion euros ($13.6 billion) in aid.

 

 

Cyprus’s Securities and Exchange Commission (SEC) said Bank of Cyprus’s former management failed to provide shareholders with timely information on their purchases of Greek government bonds dating back to 2010.

Investors, the regulator said, were left with the impression that the Cypriot bank had disposed of most of its Greek government bond holdings after public comments to that effect by its chief executive in December 2009.

But in the months that followed, Bank of Cyprus accumulated Greek bonds worth up to 2.4 billion euros, almost matching the lender’s equity capital of 2.5 billion euros, the SEC said.

The “least investors could have expected” was disclosure from the bank about its holdings, taking into account they were considered non-investment grade by ratings agency Standard and Poor’s, it said.

Bank of Cyprus lost 1.9 billion euros on its Greek bond holdings, largely through an EU-approved restructuring of Greek sovereign paper to make that country’s debt burden more manageable.

Combined with losses of its then-peer Laiki Bank, exposure to Greece was instrumental in triggering a financial crisis in Cyprus and forcing the island to seek international aid from the European Union and International Monetary Fund. Laiki was shut down in the bailout.

The SEC said it had fined Bank of Cyprus 160,000 euros; former CEO Andreas Eliades 140,000 euros; former deputy and compliance officer Yiannis Kypri 120,000 euros; and four members of its Asset Liability Committee 10,000 euros each.

Source: (Reporting By Michele Kambas)

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