Distress Resolution

The Corporation, together with Central Bank of Nigeria (CBN), ensures that failing institutions are resolved in timely and efficient manner that will result in the least cost to the Deposit Insurance Fund and the banking system. It also provides financial and technical assistance to failing or distressed banks in the interest of depositors.

The Corporation was established when the banking system was already in distress. As a matter of fact, there were about seven technically insolvent banks in the system in 1988. The NDIC was nevertheless statutory required to insure all the banks. It, therefore, had to grapple with the resolution of distressed banks at an early stage of existence.

Depending on the severity and peculiarity of the situation, NDIC in collaboration with the Central Bank of Nigeria (CBN), had, over the years, successfully adopted the following measures, among others, to address bank distress:-

(i) A -N- 2.3 billion accommodation facility was granted to ten (10) banks which had serious liquidity crises in 1989 following the withdrawal of public-sector funds from commercial and merchant banks and the transfer of same to CBN during that year.

(ii) Take-over of management and control of twenty-five (25) distressed banks by CBN/NDIC to safe-guard their assets.

(iii) Acquisition, restructuring and sale of seven (7) distressed banks to new investors.

(iv) Closure of 36 terminally distressed banks that failed to respond to various regulatory/supervisory initiatives. While the liquidation of Savannah Bank of Nigeria and Peak Merchant Bank were suspended due to Court action, it is noteworthy that all the banks were closed with minimal disruption to the banking system. The combined effect of these measures was a significant reduction in the level of distress in the banking system.

IMPLEMENTATION OF FAILED BANKS ACT

The Failed Banks Act was promulgated in November, 1994.The Tribunals that were established under the Act commenced sitting in July, 1995.Between that time up to May, 1999, the tribunals determined 45 criminals caes and 672 civil cases and were able to recover the total sum of -N-4.453 Billion.

However with the return to democratic rule in 1999 the Tribunals were abolished by the Tribunal, ( Consequential Repeal, etc) Act No. 62 of 1999, which transferred jurisdiction to try civil and criminal cases pursuant to the Failed Banks Act to the federal High Court.

Since then, no single criminal case has been concluded on the merits.Currently, there are about 19 criminal cases pending against Directors and Officers of Banks.You can go to Litigations for a summary of the criminal cases and debt recovery and defense litigation of the banks in liquidation.