Umaru Ibrahim and the challenges of a second chance at NDIC

The re-appointment of Umaru Ibrahim as the ManagingDirector of the Nigeria Deposit Insurance Corporation (NDIC) for a second consecutive five-year term could hardly havecome to many keen observers of the financial sector of Nigeria’s economy as a surprise.

Rather it is a welcome development and true to the antecedents of the current Buhari administration’s series of appointments based only on merit. The effective bank examination undertaken by the NDIC under his watch contributed immensely to the healthy state of the Deposit Money Banks (DMBs) in the country.

These were measures that engendered confidence in the industry, resulting in improvement on return on assets (ROA), return on equity (ROE) as well as yield on earnings and profitability. All these encouraged depositors’ confidence and promoted financial inclusion.

The vigilance that NDIC maintained over the last five years led to what we are witnessing today of the improvements in terms of the Capital Adequacy Ratio (CAR) of the Deposit Money Banks (DMBs) as well as their Asset Quality.

For example, their total loan in 2012 was N8.150 billion as against N7.273 billion in 2011. Similarly, Non-Performing loans dropped significantly in2012 from N360 billion in 2011 to N286 billion in 2012.

A more recent example as contained in the NDIC 2014 Annual Report is that total loans and advances granted by banks across the country climbed from N10.04trillion in 2013 to 12.63trillion in 2014. The report was however, quick to point that despite significant improvement in banking industry’sasset quality, the volume of non-performing loans rose from N1321.66billion in 2013 to 354.84bn in 2014. But it allays any fears that the ratio of the bad debts to total loans is within the regulatory threshold of five percent. Thanks to the constant vigilance of the Corporation in recent times “all the DMBs in theindustry had liquidity ratios in excess of the minimum prudential requirement of 30 per cent, as at 31st December2014, indicating that all DMBs were sufficiently liquid,” the report disclosed.

The NDIC immensely contributed to the resolution of the crises which affected the Nigerian Banking industry in 2008/2009. Having successfully steered the ship of the NDIC to safety during the recent global banking turbulence. In the process, Ibrahim displayed rare acumen and established himself as a thoroughbred professional.

The harmonious workingrelationship between the NDIC and other regulatory bodies such as the Central Bank of Nigeria (CBN) Federal Ministry of Finance, the SEC and NSE under his leadership put him in good stead ahead of any other candidates who might have eyed the coveted seat.

Add this to his effective management of the human resources at the corporation. His humble disposition towards his staff, which always surIbrahimprises them when he calls them by their first names at informal events, endears him to many. Today, the morale of the 1,000-plus strong staff at the NDIC is at its peak.

He has ensured constant training and retraining to enable them meetsurthe challenges of a modern deposit insurance organisation. Another factor that might have worked to Ibrahim’s advantage was the fact that he has been an insider, a longNDICstanding family member of the NDIC, having been with the institution from its humble beginnings in 1989 and grown through the ranks to the pinnacle of its management position.

The NDIC was established as a risk minimiser with the broadmandate of deposit guarantee, bank supervision, as well asprovision of mechanism for orderly resolution of failures, including bank liquidation.

In its 25 years of exbroadmaistence, the Corporation has been striving to achieve this mandate. Ibrahim proved he knows how to achieve this mandate through innovative approaches.

If one juxtaposes some of the measures taken to achieve the mandate of the NDIC in the yesteryears and those taken recently under the watch of Umaru, his incredible mastery of the game is unmistakable.

Some of the measures taken by the NDIC back in the 1990s to save many collapsing banks, for example, included moral suasion; continuous interaction with bank managers/owners;imposition of Holding Actions on distressed banks to restrict operations and encourage self-restructuring; and rendering of Financial Assistance to banks.

But the most recent measures taken from 2009 to the years Ibrahim held sway were quite novel in banking failure resolution. So far we have seen these innovative approaches in the form of bail outs, including the establishment of BRIDGEBANK, which were consequently acquired by AMCON.

AMCON injected the sum of N1.012 trillion (U$6.98 billion) into them as capital. AMCON also injected the sum of N1.379 trillion into five (5) of the intervened banks (Intercontinental,Oceanic, Finbank, ETB, Union) with a view to facilitating their merger and/or acquisition into five (5) of the intervened banks(Intercontinental, Oceanic, Finbank, ETB, Union) with a view tofacilitating their merger and/or acquisition. All these helped to protect the millions of bank depositors by ensuring that deposits were not lost.

The amount injected (invested) by AMCON had another positive impact. It shored up the affected banks shareholders’ funds that were negative, and made investment in the banks attractive to investors. Access Bank acquired Intercontinental,while Ecobank acquired Oceanic Bank and FCMB acquired Finbank , and Sterling Bank acquired Equitorial Trust Bank, respectively. The re-appointment of Umaru Ibrahim is a big challenge to his career, as well as the future of NDIC.

For one, Ibrahim needs to rise to the occasion and prove to the world that President Buhari has made the right decision in entrusting him with the leadership of the NDIC for the second time. Secondly, he needs to know all eyes are on him to take NDIC to even greater heights.
And achieving that is no easy feat. As ever, he will need the maximum corporation of his management team and staff generally. Equally important, he must stick to his persuasive and cooperative posture that has so firmly endeared him to the leadership of the other critical stakeholders in the industry.The NDIC needs to deepen the confidence that the financial institutions, financial media as well as the investing public have in the Corporation.

It needs to retain priority in protecting the depositors, which is the centre piece of its operations.

But at the same time, it needs to be more circumspect about the much needed changes that need to be introduced to ensure more efficiency in the operations of the Corporation, within the purview of the law. A delicate balancing act will come to bear here. Based on his deeper experience of the industry’s nuancesand politics, the re-appointed Umaru has the wherewithal to save the day.The NDIC has developed good rapport with the international community of Deposit Insurance Institutions in the past few years.

Leveraging on this will further strengthen regional and international co-operation , as well as promote sharing ofexperiences and compliance with best practices. The Corporation has always enjoyed stable leadership since inception, right from the days of J.U. Ebhodaghe to G.A.Ogunleye and now to Ibrahim.

Since Umaru Ibrahim has set enviable records in the past,surpassing those records shouldn’t be a difficult a task. This is the expectation of watchers of the nation’s financial system.

•Hassan is a financial analyst based in Abuja.