19 July 2015, Lagos – The Nigerian Deposit Insurance Corporation (NDIC) has faulted poor governance culture and risk control practices of some financial institutions capable of leading them into sudden challenges.
Speaking at the 15th National annual conference/AGM of the Risk Managers Association of Nigeria, RIMAN, the NDIC boss, Alhaji Umaru Ibrahim while delivering a lecture on the theme of the conference” Governance and Risk Management: The way forward” hinted that some banks had been playing around avoidable crisis which they may not recover from so soon.
Ibrahim who attributed the recent global financial crisis to a weak corporate governance and inability to effectively manage surfaced risk noted that some banks in the country were yet to learn from the experience going by their ways of operations.
“One of the greatest shocks from the financial crisis has been the widespread failure of risk management. In many cases, risk was not managed on an enterprise wide basis and was not aligned with the corporate strategy.
“Weak corporate governance had been identified as one of the major causes of financial system distress in the Nigerian Banking Sector. The large scale failure of banks in the late 90’s was occasioned by poor corporate governance characterised by: Board room squabbles, insider abuses, conflict of interest, overbearing influence of significant owners (that was the era of Chairman/CEO), inadequate diversity of the board, lack of professionalism and independence. Those malaises were also identified in all the five banks whose managements were changed by the regulatory authorities in 2009. Corporate abuse, unfortunately, has persisted in spite of efforts by the regulatory authorities to encourage good corporate conducts through enhanced code of corporate governance, administrative directives and guidance and indeed moral suasions”, he said.
Acknowledging central bank’s effort at saving the banking sector from future financial impediments, the President of the association, Gregory Jobome, lauded the shift from basel 1 to basel 11 accord, the implementation which still retain a minimum capital retention of eight percent of risk weighted asset.
He maintained that this has not just succeeded in standardizing capital adequacy requirement among nations, that it has also been able to enhance corporate governance and risk management system in the country.
While also commenting on CBN directives to Commercial banks to publish names of debtors, Jobome urged the concerned not to see the move as an attempt aimed at humiliating them, but that they should see it as an effort that is geared at sanitizing the financial environment.
Meanwhile, as parts of effort to take the profession of Risk Management profession to a more appreciable height, the association has entered into partnership with the Chartered Institute Of Bankers’ of Nigeria(CIBN).This is described to be a giant stride by the association which will further enhance professionalism in practice.
*Omolabake Fasogbon – Thisday