IS YOUR BANK ONE OF THE FIVE SOUND BANKS IN NIGERIA?

Governor, Central Bank of Nigeria - Sanusi Lamido

Yesterday, the 29th of November 2012, the Nigeria Deposit Insurance Corporation (NDIC) revealed that there are only five sound banks in the country, even as it stated there are no unsound banks. Whereas 13 of the banks are satisfactory, two of them are just marginal, says the deposit insurer. In its 2011 Annual Report and Statements of Accounts,  NDIC said the Deposit Money Banks (DMBs) were categorised under A to E, which means, A–Very Sound, B–Sound, C–Satisfactory, D–Marginal and E–Unsound,
adding that there are no banks in the country that satisfied the condition to be in the category of Very Sound Bank and that there are no unsound banks at the end of 2011 fiscal year.

However, the report added that two banks are in the marginal category and that the combined total assets of the two marginal banks stood at N560.02 billion or 3.07 per cent of the industry’s total assets. Also, in the 2010 fiscal year, the NDIC said that in collaboration with the Central Bank of Nigeria (CBN), it carried out a joint target examination of the insured DMBs, where the findings at the end showed extreme weakness in corporate governance, weak credit examination, improvement in industry assets quality, arising largely from the sale of non-performing loans to Assets Management Company of Nigeria (AMCON), insider credit in excess of 10 per cent paid-up capital, concentration of credits and inadequate capital in some banks and credit in excess of single obligor limit.

The report also noted that in the Risk Based Supervision audit carried out by the two regulators in the banking sector, the examination revealed poor corporate governance practices, poor risk management arising from inadequate manpower and training of risk management personnel and absence of defined overall risk appetite by the banks. However, the  report further noted that notwithstanding the level of soundness of the banks, the report showed that all the banks but nine of them recorded significant improvement in the financial condition and performance in their 2011 report.

The NDIC report only listed the banks examined which include; Access Bank Plc, Citibank Nigeria Limited, Diamond Bank Plc, Enterprise Bank, Ecobank Plc, Fidelity Bank, First Bank Plc, First City Monument Bank, Guaranty Trust Bank and Keystone Bank. Also, examined include,  Mainstreet Bank, Standard Chartered Bank Nigeria Limited, Skye Bank Plc, Stanbic IBTC Bank Plc, Sterling Bank Plc, United Bank for Africa Plc, Union Bank Plc, Unity Bank Plc, Wema Bank Plc and Zenith Bank Plc.