Bridge bank initiative protected N1.759trn deposit liabilities – NDIC
Says Savannah Bank licence restored, owners yet to recapitalize it
THE NIGERIA DEPOSIT INSU RANCE CORPORA TION (NDIC) at the weekend disclosed that the bridge bank initiative protected deposit liabilities of over N1.759 trillion and safeguarded about 12,667 jobs in the nation’s financial system, amongst other benefits.
Umaru Ibrahim, managing director of the corporation who made the disclosure during a press conference as part of activities lined up to commemorate the corporation’s 30th anniversary, said but for the bridge bank mechanism implemented in collaboration with the CBN, the nation’s financial system would have suffered terrible systemic failure with the attendant negative implications for the economy.
Ibrahim, while recalling the various measures taken by the corporation over the past years in the banking system failure resolution drives, said that apart from the monetary and employment benefits of the initiative, it also engendered macro-economic stability, sustained daily operations of the failed banks, including their meeting maturing obligations and enhanced the confidence of depositors and other stakeholders in the financial system.
According to him, the bridge bank option, which is undertaken in the discharge of the corporation’s statutory role under Section 39 (i) of its enabling Act 16 of 2006 and in consultation with the CBN, helped in resolving the failure of three DMBs, namely Afribank, Spring Bank and Bank PHB in 2011 as well as to resolve the failure of Skye Bank Plc in 2018.
Expatiating further, the deposit insurance expert said that failure resolution mechanism remained one area in which the NDIC has continued to demonstrate great ingenuity and sagacity, adding that the experience the corporation gained since inception in 1989, when the banking system was already in distress with seven technically insolvent state-owned banks has helped it, in collaboration with the CBN, in adopting multiple resolution options to resolve failures in the system.
He listed some of the options as including Open Bank Assistance (OBA), Purchase and Assumption (P & A), Bridge Bank, and reimbursement (payout) of Insured Depositors.
Ibrahim listed some of the measures taken to protect depositors and investors in the banking system as the payment of a cumulative sum of over N11.93 billion as insured amount to depositors of closed licensed banks between 1994 to date. The payments comprised N8.25 billion paid as insured amount to 442,999 depositors of closed DMBs; N2.97 billion paid to 83,415 depositors of closed MFBs, and over N70.53 million paid to 869 depositors of closed PMBs.
While putting the recovered money from debtors of liquidated Deposit Money Banks (DMBs), MFBs and Primary Mortgage Banks by the corporation at about N29.541 billion, the NDIC boss disclosed that from 1994 to date, the corporation also realized N21.502 billion from the disposal of physical assets of closed DMBs even as N404.74 billion and N78.17 million were also realised from closed MFBs and PMBs’ disposed assets.
In addition, he hinted that the corporation had also paid N116.258 billion as liquidation dividends to depositors, creditors and shareholders of the closed DMBs, MFBs and PMBs.
Reacting to media inquiry as to the state of some banks that had closed business and depositors and investors are uncertain about their funds and investments in such banks, a top official of the corporation clarified that the issue of Societe Generale Bank had been resolved long time ago with Heritage Bank taking over its assets and liabilities.
He, therefore, advised any customer of the defunct bank having any issue on his deposits or other assets trapped in it to approach the management of Heritage Bank for the purposes of resolving it.
On the issue of Savannah Bank, another official of the bank confirmed that the bank’s operations licence had been re-issued to the owners in 2002 after the corporation conducted its assessment on the health of the lender but that it had not re-opened for business due to the inability of its owners to recapitalize the bank based on the prescribed capital requirement.