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NDIC and depositors

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Payouts to depositors was long awaited, but it was, in most instances, too little and too late.

To the Managing Director of the Nigeria Deposit Insurance Corporation (NDIC), Alhaji Umaru Ibrahim, the corporation may well be on course to bringing the saga of failed banks to a closure. Speaking at the 24th Enugu International Trade Fair, he claimed that the corporation had paid N90.13 billion to depositors of 48 failed banks as at December 2012, out of which over N10 billion was paid in 2012 alone. Another N2.50 billion was said to have been paid to depositors of the 103 closed micro finance banks (MFBs). The shareholders of the defunct Alpha Merchant Bank, Nigeria Merchant Bank and Pan African Bank (in-liquidation), got a largesse in the cumulative liquidation dividend of N373.04 million, N620.0million and N293.0million, respectively, during the period.

For the hordes of frustrated depositors and shareholders it is, no doubt, a case of being better late than never. Unfortunately, the corporation failed to state the amount outstanding in favour of the depositors, which would have provided a basis to evaluate its performance.

However, the corporation still deserves some credit for pushing relentlessly to bring the unfortunate saga to a closure.

But the question, of course is – what kind of closure? The question is pertinent because the banks in this category were those that actually had their licences revoked by the Central Bank of Nigeria (CBN) between 1994 and 2006. We consider it unimaginable that a class of depositors would have to wait for nearly 18 years to get their deposits refunded to them. How will the NDIC compensate those that have died? And did the corporation make adjustments for the factor of inflation in the final payment?

The above, however, nowhere compares to the fact that a definite date is even far from set for closure to the saga.

No doubt, the larger portion of the blame would go to the intransigent shareholders who tied down the banks’ liquidation process through court actions. The managers who ran the banks aground would also share in equal measure. Litigation of course meant that the NDIC – even if it wished to – could not proceed with the winding down process until the cases were disposed of. Unfortunately, the NDIC itself seems to have been ill-served by its own tardy bureaucracy soon after some of the cases were decided.

The entire saga cannot but bring to mind the crass delinquencies that typified the era. This was no doubt compounded by the stark inability of the regulators to come to speed with the dynamics of the period, the result of which the process of banking consolidation became an avenue for some smart Alec operators to prey on the system. We saw instances in which capital issues were aborted after which the issuers vanished into the impunity-suffused atmosphere of the era. Till date, no steps were taken by the regulatory authorities to get the issuers to refund prospective investors their money, not to talk of the issuers and their cohorts being brought to book.

If only for the sake of the industry and the investing public at large, an early resolution of the failed banks saga has become imperative. Settling the depositors is however only one of two-parts to the closure; the other part is for the authorities to revisit and punish the iniquities of the era. Without both, there can be no talk of a closure.


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