The Nigeria Deposit Insurance Corporation has said another bank failure is imminent in the country on the back of weak corporate governance culture and weak internal control.
The Managing Director, NDIC, Alhaji Umaru Ibrahim, stated this on Thursday at the FITC Thought Leadership Discussion Series in Lagos where he was represented by the corporation’s Executive Director, Operations, Aghatise Erediauwa.
He said, “Banks usually have a cycle of between seven to 10 years. If we have not had bank failure in 15 years, then they are bound to happen soon. Presently, we are worried that the cycle is almost complete.
“This is all due to the issue of weak corporate governance culture in the banking system and weak internal control. If this is the situation, how would this drive financial system to achieve economic growth? This is our fear as regulators.”
Ibrahim said there was a lot to be done by the regulators to avert such occurrences.
The Chief Executive Officer, FSDH Merchant Bank, Mrs. Hamda Ambah, said regulators should come together and agree on similar policies to avoid conflicting regulations.
She said regulations should be applied to all institutions without exemption, adding that the crises in the industry were as a result of gaps in laws and regulations.
According to Ambah, the greatest problem banks and banking institutions have is corporate governance, and lack of good corporate governance always leads to bank failure.
She stated that the issues associated with corporate governance were issuing credit without following appropriate process, and the upturning of entrenched processes by managing directors, among others.
She said the looming bank failure could be averted if all stakeholders in the banking industry could play their roles effectively.
Also speaking at the event, the Chief Executive Officer, Sterling Bank Plc, Mr. Abubakar Suleiman, noted that there were other issues confronting the banking industry other than corporate governance.
He said the industry was plagued with lack of sovereign governance, adding that the banking industry would thrive better if rules were transparent.
He noted that corporate governance in banks were better than what they used to be.
According to him, it is the main responsibility of regulatory agencies to adopt tools and laws that will help strengthen the banking system and facilitate sustained economic growth.
The President, Bank Customers Association of Nigeria, Dr. Uju Ogubunka, identified the interest of customers as a missing gap that was not being addressed in the industry.
According to him, there are three key parties to banking activities, namely, regulators, operators and customers.
He said meetings were often organised between the operators and the regulators, but the customers were never taken into consideration.