NDIC MD ends tenure as analysts see successful navigation of financial crises

The current five year tenure of the Managing Director/CEO of the Nigeria Deposit Insurance Corporation (NDIC) Mallam Umaru Ibrahim which elapsed last week is seen by analysts as being largely successful despite significant challenges.

BusinessDay learnt that the former MD/CEO Ibrahim handed over to an NDIC Executive Director, Corporate Services Omo’lola Abiola-Edewor in a brief ceremony, last week.

Sources tell BusinessDay that President Muhammadu Buhari is weighing all options on the appointment of a successor.

The NDIC had to pull out all the stops and engage in innovative decisions and actions to help the Nigerian financial sector navigate the home grown financial crises of 2008/ 2009.

“A critical achievement of the corporation in the past five years has been in respect to the restoration of confidence in the banking system through effective collaboration with the CBN and the distressed banks which evolved from the last banking crisis,” said Olutola Oni, head of research at investment firm, WSTC financial services Ltd, in response to questions.

“Looking forward, the ability of the new helmsman of the corporation to continue to uphold the high standards of the outgoing managing director will remain a hurdle to be crossed.”

The NDIC is an independent agency of the Federal Government of Nigeria.

The objective of the deposit insurance system is to protect depositors and guarantee payment of insured funds in the event of failure of insured institutions.

The NDIC also engages in bank supervision by giving technical and financial assistance to insured institutions, failure resolution and bank liquidation as a last option.

The corporation in providing financial assistance to PMBs and MFBs developed an intervention framework being fine tuned in 2014 with a sum of N16 billion to address short term liquidity challenges to eligible PMBs and MFBs with a view to ring-fencing the banks and protecting depositors’ funds.

Four years ago NDIC saved 3.7 million depositors from their distressed banks through a failure resolution engineering that became a celebrated case study in the global community.

The NDIC also demonstrated its ingenuity in 2011 when it introduced the bridge bank model in failure resolution when it took over the assets of the critically distressed banks and assumed liabilities in the three bridge banks.

In the process 6,667 jobs in the affected banks were safeguarded. Significantly, too, depositors had unfettered access to a total deposits of N809.4 billion (U$5.58 billion) as against N130.57 billion (U$842.39 million) insured deposits guaranteed by NDIC.

“Another innovative measure of safeguarding the interests of depositor’s banks that took place in the last five years was the establishment of Asset Management Corporation of Nigeria (AMCON) in 2010, a collaborative measure between Central Bank of Nigeria (CBN) and NDIC.

The Deposit Insurance Fund (DIF) contributed by insured commercial banks to NDIC as at 31st December, 2014, stood at N614.16 billion as against N508.06 billion reported as at 31st December, 2013.

That was an increase of N106.10 billion or 20.88 percent over the 2013 figure.

PATRICK ATUANYA