NDIC: How Litigations Frustrate Efforts to Wind up Failed Banks
The Managing Director, Nigeria Deposit Insurance Corporation (NDIC), Alhaji Umaru Ibrahim, has expressed worry over how legal contests frustrated the corporation’s efforts to completely wind up failed banks in accordance with the law. This, he said also affected settling of depositors and other creditors within a reasonable times.
Ibrahim, made the disclosure yesterday in Abuja at the 2015 NDIC annual sensitisation seminar for judicial officers for FCT and States High Court Judges with the theme: ‘Challenges of Deposit Insurance Law and Practice in Nigeria.
According to him, without an appropriate financial safety net, rumours of problems regarding solvency or liquidity of a financial institution have the potential of turning into full-blown crisis.
Ibrahim noted that depositors’ confidence tends to be greater and the likelihood of financial crisis reduced to barest minimum if an appropriate financial safety net is put in place.
He said: “The menace of liquidation-related litigations made it difficult for the corporation to completely wind up failed banks in accordance with the law and settle depositors and other creditors within a reasonable time. This is further compounded by the complex and often slow pace of litigations in our esteem courts.”
The NDIC boss stressed that lack of proper understanding of the legal status and the role of the NDIC by legal practitioners, the court and the public at large as liquidator being a distinct from its role as deposit Insurer. Ibrahim however expressed optimism that the presence of the participants at the seminar pledged that the corporation could count on them as committed partners in the pursuit of the NDIC vision of becoming one of the leading insurers in the world. Declaring the seminar open, the Chief Justice of Nigeria (CJN), Justice Mahmud Muhammed said a proper understanding of the concept and operations of bridge banks, as well as execution of assets of failed banks would enable a better and informed appreciation of the legal issues arising therefrom, or connecting thereto. Muhammed who was represented by Justice Mutatkar kumasi, stated that the seminar was intended to keep the participants informed of the critical role played by the NDIC in the discharge of its statutory mandate and the expected role of the judiciary in this regard.
“In the discharge of its mandate, especially as pertains to the resolution of banking distresses, in particular, liquidation of failed banks, some of the arcane legal issues bothering on the competing right of creditors, shareholders and depositors of such failed institutions come before your courts, “he said.
The CJN emphasised that the court decisions on these issues would set the precedent on bank Insolvency Laws and practice in Nigeria, while also commending NDIC leadership for recognising and appreciating the importance of this apparent reality and collaborating with the National Judicial Institute (NJI) to actualize this laudable objective.