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2 1. INTRODUCTION  NDIC Established as Risk Minimiser With Broad Mandate.  Mandate includes Deposit Guarantee, Banking Supervision, Failure Resolution and Bank Liquidation.  1n 2011, commenced the implementation of its second strategic plan, spanning 2011 to 2015.  Plan was articulated within four strategic thrusts, namely: Operational Readiness; Culture of Continuous Performance Management; Strategic Partnering and Collaboration, and Promoting Public Confidence on Deposit Insurance System (DIS).  Below are highlights of achievements as well as plan for 2012

3 2.0. DEPOSIT GUARANTEE  Provided deposit insurance cover to twenty-four (24) Deposit Money Banks (DMBs), 882 Micro-Finance Banks (MFBs) and 100 Primary Mortgage Institutions (PMIs).  Insured amount had remained at levels set in 2010 at N500, 000 and N200, 000 for DMBs and MFBs/PMIs respectively.  All insured depositors of the closed MFBs were reimbursed using the new coverage level of N200, 000.00.

4 3.0. Banking Supervision 3.1Risk Based and Target Examination of Deposit Money Banks  Joint (CBN/NDIC)routine Risk-Based examination of the 16 non-intervened banks. NDIC led in 6 banks.  Joint (CBN/NDIC) Risk Assessment (Target) Examination of the 24 DMBs: the Corporation led in 9 banks.

5 3.0. Banking Supervision Cont. 3.2.Special Assignment for the Federal Ministry of Finance on the 24 Deposit Money Banks (DMBs)  The Corporation carried out special assignment for the Federal Ministry of Finance by reviewing the business relationships of the 24 Deposit Money Banks (DMBs) with Global Infrastructure Services Nigeria Limited; Global Steel Holding Limited; Ajaokuta Steel Co. Ltd; Delta Steel Co. Ltd and other related entities/subsidiaries in order to ascertain the extent of exposure of the banks to the companies.  Findings of the exercise had been submitted to the Ministry.

6 Banking Supervision Cont. 3.3.Special Investigation of 9 DMBs on Petitions/Complaints  The Corporation carried out special investigations of complaints/petitions received from bank customers and other stakeholders in respect of 9 out of the 24 DMBs.  As a result of the findings of the special investigations, some of the affected banks were directed to make some refunds to their customers.

7 Banking Supervision Cont. 3.4Routine Examination of Microfinance Banks (MFBs)  The Corporation completed examination of 159 MFBs.  As at the end of November 2011, the examination reports of 148 MFBs had been completed and issued out.  Findings of the exercise revealed that most of the MFBs violated the basic principles of corporate governance in several respects.  Reports also disclosed gross disregard for recommendations made in previous examination reports.

8 Banking Supervision Cont. 3.5Routine Examination of Primary Mortgage Institutions (PMIs)  The Corporation conducted routine examination of sixty-two (62) PMIs in 2011.  The examination revealed that 22 were technically insolvent while another 16 had closed shop.  The Corporation, in collaboration with the CBN, commenced work to resolve the problems of the identified institutions.

9 4.0. Failure Resolution 4.1. Adoption of Bridge Bank Option  Three bridge banks established to takeover the assets and liabilities of Afribank Plc, Bank PHB Plc and Spring Bank Plc, which could not recapitalised on or before September 30, 2011 deadline given by the CBN.  The takeover was occasioned by the deteriorating financial condition of the banks and inadequate efforts on the part of the former owners to recapitalize accordingly.  Takeover was sequel to due consultation with the CBN and the Federal Ministry of Finance.

10 4.0. Failure Resolution Cont.  The 3 bridge banks were: Mainstreet Bank Lit. Afribank (Nigeria) Plc Keystone Bank Ltd. Bank PHB Plc Enterprise Bank Ltd. Spring Bank Plc.  Transfer of assets and liabilities of the 3 banks effected on August 5, 2011.

11 4.0. Failure Resolution Cont.  Bridge Bank mechanism adopted for the following reasons:  To sustain daily operations of the failed banks and ensure that all the 577 branches of the banks continue to function;  To safeguard the banks’ total deposit liabilities of N809.4 billion;  To safeguard 6,667 jobs in the affected banks;  To enhance the confidence of both the depositors and creditors of the banks; and  To prevent the systemic repercussions of the failure of the banks on the entire financial system thereby ensuring financial and macro-economic stability.  The three banks were acquired by the Asset Management Corporation of Nigeria (AMCON) through share subscription the same day with an infusion of about N678 billion.

12 4.0. Failure Resolution Cont. 4.2.Monitoring of the CBN-Intervened Banks  The Corporation continued to collaborate with the CBN for close monitoring of the financial condition of the remaining 5 intervened banks through the Special Monthly Status Reports from the affected banks.  Four of the banks, namely, Intercontinental bank Plc, Equitorial Trust Bank Ltd, Oceanic Bank Plc, and FinBank Plc were acquired by some core investors while Union Bank of Nigeria (UBN) Plc was being recapitalised by its shareholders and a consortium of international investors.

13  The merger partners/core investors of the banks are as shown in Table 1 below: The CBN-Intervened Banks Acquiring/Merger Partners Oceanic Bank PlcEcobank Nigeria Pl Intercontinental Bank PlcAccess Bank Plc Fin Bank PlcFCMB Union Bank of NigeriaTo be recapitalised by the bank shareholders and a consortium of international investors. Equitorial Bank LtdSterling Bank Plc r

14 Failure Resolution Cont. 4.2.Update on the Operating Status of Savannah Bank of Nigeria (SBN) Plc and Societe Generale Bank of Nigeria (SGBN) Ltd. 4.2.1. Savannah Bank of Nigeria (SBN) Plc  the Corporation successfully handed over the 104 branches of Savannah Bank to its owners to facilitate resumption of operation.  N450 million of Savannah Bank’s fund was released in 2009 and the balance of N460 million was released in 2011.  the sum of US$1.029 million belonging to the bank was equally released in 2011. 4.2.2. Societe Generale Bank of Nigeria (SGBN) Limited  Joint CBN/ NDIC Committee set up to work with the SGBN Team to facilitate commencement of operations of the bank.

15 5.0. Bank Liquidation 5.1. Liquidation of Microfinance Banks (MFBs)  Following the revocation of operating licences of 103 MFBs by the CBN in September 2010, the Corporation had paid an aggregate sum of N2.024 billion to about 70,424 depositors of the closed MFBs as at August 2011 as against the total sum of about N1 billion paid as at December 31, 2010.  The amount paid represented about 41% of total insured amount of about N4.94 billion.  Payment to the rest of the depositors continued through branches of Agent Banks close to the location of their closed MFBs.

16 Bank Liquidation Cont.  Agent Banks used for this purpose were Unity Bank Plc, Intercontinental Bank Plc, First Bank of Nigeria Plc, Wema Bank Plc, and United Bank for Africa Plc, Mainstreet Bank Ltd., and Union Bank of Nigeria Plc.  As part of efforts to sanitize the microfinance sub- sector, the Corporation had concluded arrangements to prosecute about 55 directors, staff and related parties of 19 closed MFBs who were found to be responsible for the collapse of their banks. This is expected to serve as a deterrent to would-be fraudsters in the MFBs.

17 Bank Liquidation Cont. 5.2.Sale of Hallmark Homes (Savings & Loans) Limited (HHL) to Centage Savings & Loans Limited.  Hallmark Homes (Savings & Loans) Limited (HHL) is a wholly owned subsidiary of Hallmark Bank Plc (in liquidation).  The Hallmark Bank’s licence was revoked in 2006 and NDIC was subsequently appointed by the Federal High Court as Liquidator to wind-up its affairs.  The revocation of the banking licence of Hallmark Bank Plc had an adverse effect on the PMI because it had no banking relationship with any other bank except the defunct Hallmark Bank.

18 Bank Liquidation Cont.  Although HHL was not in liquidation but technically, it was out of operation following the revocation of the operating licence of Hallmark Bank.  In line with power bestowed on the Corporation as Liquidator of the parent company, HHL was advertised for sale and due process was followed in selecting the successful bidder.

19 Bank Liquidation Cont.  In line with its practice of ensuring transparency, the valuation of the HHL was done by Akintola Williams Deloitte and on December 7, 2011, the Corporation, in its capacity as liquidator of Hallmark Bank Plc successfully sold HHL to Centage Savings & Loans Limited as a going-concern at a total value of N1.15 billion.  The proceeds of the sale in the sum of N1.15 billion would assist in paying public deposits which had been locked up in Hallmark Bank since 2006.  About 1,630 depositors having about N752 million in the former HHL would also have access to their funds and benefit from other banking services of Centage Savings & Loans Limited (the new acquirer of HHL).  All these testify to the commitment of the Corporation to protecting depositors.

20 Bank Liquidation Cont. 5.3.Commencement of Payment to Depositors of Triumph & Fortune Banks  In August 2011, the Corporation commenced payment of insured deposits to the depositors of the two banks (Triumph and Fortune Banks) closed in 2006.  As at November 2011, the Corporation had paid about N20 million out of N804.35 million to depositors of Fortune while about N1 million out of N45.36 million had been paid to depositors of Triumph.

21 Bank Liquidation Cont. 5.4.Debt Recovery  The cumulative recovery for the banks in liquidation since 1994 rose from about N21.756 billion in 2010 to about N22.158 billion in 2011, representing an increase of about 2%.  The sum of N8.33 million had been recovered to date in respect of the closed MFBs.  In order to enhance the pace of debt recovery and hence, payment of uninsured deposits, the Corporation, among other steps, had packaged all outstanding but secured non-performing loans of banks in-liquidation, to the tune of N9 billion, for disposal by AMCON.

22 6.0. Premium Reduction  As part of its contribution to making the Financial Stability Fund, (established in 2010 and to which banks were expected to contribute 0.3% of its Assets over the next 10 years and CBN to contribute N500 billion over a 10-year period) a reality, the NDIC reviewed downward the premium payable by the banks by reducing the assessment base rate for premium computation from 50 to 40 basis points. The application of the reduced premium took effect in 2011.

23 7.0. Deposit Insurance Fund  The deposit insurance fund (DIF) for DMBs grew by about 17% from about N295.7 billion in 2010 to about N347.19 billion in 2011.  The SIIF grew by about 39% from about N2.3 billion in 2011 to about 3.2 billion in 2011.

24 8.0. Extension of Deposit Insurance System to Non-interest Bearing Banks  The Corporation during the year continued to fine-tune the developed Framework that would enable it extend DIS to non-interest bearing financial institutions that would be licensed in due course by the CBN.

25 9.0. Public Awareness Initiatives  Airing of Radio and TV jingles tagged “NDIC Calling” in the three main Nigerian languages, namely, Igbo, Hausa, and Yoruba;  The development of a new robust and interactive Website-;  Hosting of students of Nigerian Universities and Polytechnics on excursion to Corporation;  Translation of NDIC pamphlets into 3 major Nigerian languages;  Circulation of NDIC various publications to the public free; and  Survey on the Effectiveness of Public Awareness Activities of the Corporation to determine awareness gap.

26 10.0. Establishment of a 24-hour Help-Desk  The 24-hour Help Desk facility continued its service in 2011.  More than 2000 calls were received and attended to.  Most enquiries and complaints received centered on depositor reimbursement and abnormal charges by banks.

27 11.0. Enhancement of Capacity, Processes and Systems  In 2011, a total of 1140 staff of the Corporation benefitted from relevant local courses while another 152 staff attended courses overseas on Risk-based Supervision, International Financial Reporting Standards, Risk-based Audit and Enterprise risk management, among others.  The Corporation commenced the development of the Information Technology Security Systems and Architecture Systems (ITSSA), which was aimed at addressing identified IT security vulnerabilities in the Corporation.  The Corporation had developed an Information Technology Disaster Recovery (ITDR) blueprint in 2011 in order to continue business in the event of a disaster.

28 Enhancement of Capacity, Processes and Systems Cont.  The Corporation commenced the development of a new web enabled Financial Institutions Liquidation Management System has been awarded so as to facilitate prompt depositor reimbursement.  The Corporation commenced the development of a web enabled Performance Management System (PMS) in order to improve upon the productivity of staff and by extension that of the Corporation as well as adequately appraise staff on an objective basis.  In order to aid communication and collaboration amongst staff in the various office locations of the Corporation, a Video Conferencing solution was installed in 2011 in the Head Office, Abuja, Lagos Offices at Mamman Kontagora and Necom House. The installation was completed and tested.

29 Enhancement of Capacity, Processes and Systems Cont.  The Corporation developed Standard Operating Procedures (SOPs) manuals for its key operations, to serve as an important tool for ensuring that assigned tasks are carried out in consistent and correct manners.  The Corporation continued to pursue the proposed amendment to its 2006 Act so as to enhance the effectiveness of the Corporation in the discharge of its mandate by:  Granting the Corporation powers to review books of subsidiaries of banks.

30 Enhancement of Capacity, Processes and Systems Cont.  Independent enforcement powers to deal with erring banks and their directors/ officials.  Protection of the Corporation’s assets against creditors who obtain judgment against closed institutions.  Granting the Corporation powers to pay insured amount to depositors in the event of imminent or actual suspension of payment by an insured institution even before the revocation of its licence.

31 12.0. International Networking  Participated actively in the Africa Regional Committee of International Association of Deposit Insurers (IADI) and its world body’s programmes.  Hosted 2 Regional programmes in May and December 2011.  Participated in the 2011 Research Conference of IADI, which took place in the Bank for International Settlements, Basel, Switzerland on June 6 – 9, 2011. The theme was “FINANCIAL CRISIS: THE ROLE OF DEPOSIT INSURANCE”.

32 12.0. International Networking Cont.  Participated at the 2011 IADI Annual Conference and General meeting in Warsaw, Poland, 17 – 21, October 2011 with the theme “Beyond the Crisis: The Need for Strengthened Financial Stability Framework”.  Entered into a Technical Assistance Agreement with the Office of Technical Assistance (OTA) of the United State’s Treasury Department.  Consequent upon above, in May 2011, OTA deployed a Resident Technical Advisor in the Person of Mr. Phillip Morris to the NDIC to facilitate capacity building according to the agreed Terms of Reference (TOR).

33 12.0. International Networking Cont.  Specifically, the assistance has been in the following areas:  Increased technical capacity of NDIC staff in the implementation of Risk Based Supervision (RBS) as it relates to deposit insurance;  Design and implementation of training programmes /methods to improve the capacity of NDIC staff in the prompt payment of claims to depositors and creditors;  Design and development of staff training modules and operations manual to enhance capacity in key areas of: Risk Assets valuation, Purchase & Assumption (P&A) transactions, Asset &Real estate management, Problem loan work out, other intervention techniques etc.

34 12.0. International Networking Cont.  Assist the corporation in transiting to the new International Financial Reporting Standards (IFRS) by providing appropriate training to Staff;  Provide general assistance in the development of core competencies in Enterprise wide Risk Management framework; and  Provide general assistance to NDIC as requested and approved by the US Treasury Department during the period  Under the OTA, the Corporation benefitted from the visit of 2 technical advisors in the areas of International Financial Reporting Standard (IRFS) and Risk-Based Supervision.  The Corporation continued to participate effectively in the FSRCC activities.

35 13.0. Corporate Social Responsibility  Disbursed over N150 million for execution of different educational projects under the third (3 rd ) phase of its project-based support scheme.  Executed projects ranged from Computer Complexes, Lecture Rooms/Office Complexes, Multi-Purpose Halls, Provision of tables & chairs, Upgrading of ICT Facilities, to Laboratory Complexes.  Supported sports development in six states of the Federation and the Federal Capital Territory to the tune of N42 million.

36 14.0. CORPORATE PLAN FOR 2012 14.1. Enhancement of Processes and Systems Some of the activities in this area include:  Development and deployment of a robust Early Warning System with a view to ensuring safety and soundness of banks;  Development of a framework for resolving systemically important financial institutions so as to achieve the objectives of reducing the probability of their failure, reducing the impact of their failure in the event it occurs; and improving on resolution regime so as to minimize utilization of tax-payers money.  Development of framework for integrated deposit insurance system so as to pave way for orderly growth of the financial system;

37 14.0. CORPORATE PLAN FOR 2012 Cont.  Repositioning the Human Resources Department (HRD) in line with best practices to meet the challenges of a contemporary organisation.  Completion of the upgrading of the Financial Institutions Liquidation Management System (FILMS) to facilitate prompt depositor reimbursement.  Fine-tuning of the differential premium assessment system (DPAS) so as to serve as an effective tool for promoting sound risk management in banks.

38 14.0. CORPORATE PLAN FOR 2012 Cont.  Completion of the development and deployment of an appropriate resolution framework for MFBs so as to continue to engender confidence in the sub-sector thereby assisting to facilitate financial inclusion and poverty eradication.  Completion of a robust Performance Management System based on the framework of balance score card with a view to up-scaling the productivity and efficiency of the Corporation.  Completion of the automation of the Enterprise Risk Management System which should facilitate management of risks facing the Corporation in the most efficient manner.

39 14.0. CORPORATE PLAN FOR 2012 Cont.  Development of Business Continuity and Disaster Recovery Plan as a strategy for mitigating risks arising from natural and other disasters that could disrupt continuous operations of the Corporation in the event of their occurrence.  Development and completion of a framework for financial and technical assistance to ensure the effectiveness of the Corporation in the performance of this function.  Development of a model for establishing target fund ratio so as to ascertain the adequacy of the deposit insurance fund from time to time.

40 14.0. CORPORATE PLAN FOR 2012 Cont. 14.2. Capacity Building  The Corporation plans to intensify its efforts in capacity building, especially in the following areas:  Risk-based supervision;  Consolidated supervision;  International Financial Reporting Standards;  Communication and Report Writing especially for the Corporation’s examiners.

41 14.0. CORPORATE PLAN FOR 2012 Cont. 14.3. Physical Projects  Commence work on:  Head Office Annex in Abuja  Lagos Office Building  Port-Harcourt Zonal Office Building  Yola Zonal Office Building

42 15.0. Conclusion  Notable achievements in the protection of depositors recorded in 2011;  Facilitated the promotion of safe, sound and stable banking system in Nigeria.  With careful formulation and adoption of appropriate strategies, the Management and staff of the Corporation are committed to ensuring that the Corporation fulfills its statutory mandate.  The planned activities for the Corporation in 2012 indicate that it is committed to remain an active component of the Nigerian financial safety-net player, particularly in the area of engendering confidence and contributing to financial system stability.


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