If there is anything that the Nigerian economy so much deserves at
this crucial period, it is a banking sector that is healthy and stable. A
banking sector where investors, depositors, operators, regulators and
other stakeholders, including the employees can go to sleep after a
day’s work with all eyes closed and without any anxiety.
In other words, if there is anything that Nigeria cannot risk at
this period, it is battling bank failure. The two-word phrase sounds so
much like Armageddon to the nation’s economy and to think it is looming
is to think the end is near for the Nigeria, whose economy, is fledgling
again at the moment.
As at today, a number of Nigerian banks are facing the crippling
problem of insider abuse and the Apex bank cannot afford to ignore. Add
to this capital adequacy and non-performing loans. The three are bad
enough to cause the collapse of any bank. In so many of the banks, there
are insider loans running into hundreds of billions of naira.
Specifically, Skye Bank, whose management team has just been sent
packing is groaning under a N150 billion uncollateralized loan owed by
just its Chairman Tunde Ayeni and one other board member.
Skye Bank is not the only bank guilty of such infractions. Dreadful
as it sounds, economic watchers are beginning to sound notes of warning
that the symptoms are here with us. They are already percolating
through many banks, if they ever left them at all. While the bank rogues
have continued with their insider abuse, the regulators seem not care
about the effects, while the investors and depositors look askance.
This, watchers say, is a dangerous trend.
Any type of suspicious activity is a bad sign for banks. But it is
especially troubling when the threat comes from within. In fact, some of
the most significant risks to a bank are self-serving or criminal acts
carried out by business insiders; and those include employees,
contractors, consultants and even trusted individuals in an oversight
capacity (directors, officers, executives). Using their special access
privileges and knowledge of bank operations, insiders can commit fraud,
intellectual property theft and privacy breaches. When insiders use
their technical knowledge to alter or disable security controls, it can
be even more difficult to detect abuse. Any of the crimes that can be
committed by outsiders can be committed by insiders and often, with more
ease.
According to the immediate past president of the Central Bank of
Nigeria, Sanusi Lamido Sanusi, we often say some banks have failed.
This is a passive and complicit phrase that masked a gross
irresponsibility and crass insensitivity. “The bank has failed,” he
said, somewhat sounds like coming across the corpse of a man whose
throat was slit, or whose body is covered with knife wounds or riddled
with bullets and saying “the man died.”
The man did not die. He was killed. He was murdered. And he did not
kill himself. To use the term “death” instead of “murder”, excuses us
from the responsibility of finding the killers and bringing them to
book. And that is exactly what happens when we refer to “failed banks”
as if the bank itself, some impersonal structure made up of branches and
computers, somehow collapsed on its own. By using, or abusing, the term
“failed bank” we are able to mask what is almost always a monumental
fraud. But it is a deliberate act of prestidigitation
What are the landmines that Nigeria as a country should begin to
watch out for in the banking sector? The Nigerian Depositors Insurance
Corporation once listed the terminal ailments killing banks in Nigeria
as: Huge Non-performing Loans, Severe Liquidity Squeeze, Poor Corporate
Governance and Negative Capital. A dreadful list of life-threatening
diseases indeed, and each of these factors is serious on its own right.
But acting together, they will always bring the nation’s financial
system to the brink of collapse.
These are economically challenging times. Nigeria cannot do with
banking crisis at this point. Government should closely monitor the
activities of banks through their agencies/regulatory authorities
without necessarily politicizing their mandate. Banks should equally
strengthen their internal control measure. Moreover, if the regulatory
authority saddled with the responsibility of managing the industry keeps
an eagle eye on the industry’s activities, it will stem the tide to
bank and limit the management’s meddling with the fortunes of
depositors, shareholders and other interested parties. This will be good
for the overall benefit of the economy.
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