Bank directors with non-performing loans (NPLs) are to quit or be sacked, according to a new Code of Corporate Governance approved by the Central Bank of Nigeria (CBN).

Director, Bank Examination Department at the Nigeria Deposit Insurance Corporation (NDIC), Adedapo Adeleke, said the new code was instituted to address the rising cases of insider bad loans, which not only represent a conflict of interest, but are against the prudential guidelines for the industry.

He described corporate governance as an essential pillar in financial system stability.

Banks’ assets have depreciated in the last three years, with provisions for NPLs hitting N856.9 billion, due to the drop in crude oil prices. A large part of these bad loans is owed by bank directors and are in most cases unsecured.

Besides, the economic recession showed that the financial industry still harbours weaknesses in governance, as seen in insider non-performing loans, unreported losses, huge exit packages for directors, over-domineering executive management, contravention of regulatory/prudential guidelines and lending limits, poorly appraised credits and weakening of shareholders’ funds, among others.

Adeleke, who spoke at the weekend in Kano during a media workshop organised by NDIC for finance reporters, said the Corporate Governance Code for Bank Directors is signed by all bank directors at the point of their appointment, and has a section that empowers the banks’ boards to remove any director with insider non-performing loans. That section says: “If you are having non-performing loans, you will be removed. It is already being enforced except that the regulators are not being dramatic in publishing the names of affected directors,” Adeleke said.

Speaking on the theme: Curtailing the Growth of Non-Performing Loans in Banks: The Role of Regulators and Supervisors, he said that delay or non-payment of workers’ salaries by government and private companies is worsening the level of non-performing loans in the industry. He said the rate of non-performing loans is in excess of 20 per cent as against the five per cent regulatory threshold.

The NDIC director said when salaries are delayed, workers who have borrowed from banks, especially through consumer loans, always find it difficult to pay back. “If the economy is improving, and government can help to fulfill its responsibilities, including prompt payment of salaries, the level of non-performing loans in the industry will drop,” he said.

“If people working in companies that are troubled borrowed from banks, it is important that the loans be provided for when their employers can no longer pay salaries,” he said.

He however, expressed confidence that the current rise in crude oil prices will impact positively on the banking industry and businesses and help reduce the rising cases of bad loans in the industry.

Adeleke said the establishment of the Asset Management Corporation of Nigeria II (AMCON II) to buy up non-performing loans as being suggested can only be private sector led. “If there is going to be AMCON II at all, it is going to be private sector-led,” he said.

He said the CBN Prudential Guidelines allows banks to review their credit portfolio continuously (at least once in a quarter) with a view to recognising any deterioration in credit quality. Such reviews, he added, should systematically and realistically classify banks’ credit exposures based on the perceived risks of default.

https://www.financialwatchngr.com/2017/11/27/cbn-sack-bank-directors-bad-loans/

Mynd44, Lalasticlala, Seun

They are always messing with the economy with unsolicited policies.

The excesses of the Bank Directors must be checked.

Good one from the CBN.

Sack whoever gave Toke Makinwa boyfriend loan, its very funny and disappointing how Nigeria's richest men are bad debtors there won't let a poor man without collateral access 100k

A welcomed development

Lobatan

... and employ me to fill the vacumn created...




if you dey eye the position hit like

Next page..

Use other people’s money to enrich themselves yet flaunt the money on the streets

ChiefPiiko:
Sack whoever gave Toke Makinwa boyfriend loan, its very funny and disappointing how Nigeria's richest men are bad debtors there won't let a poor man without collateral access 100k

The acclaimed sugar daddy is (was) a director in Skye bank

sharp sacking. i dont like that word

Is dat all After ruining skye bank giving loans to his friends and companies owned by him(now bad due to oil crisis). This mofo Tunde Ayeni is chilling and laughing. Nigeria is one big joke

ChiefPiiko:
Sack whoever gave Toke Makinwa boyfriend loan, its very funny and disappointing how Nigeria's richest men are bad debtors there won't let a poor man without collateral access 100k

Savage you are my friend But it's very true.....imagine Festus Fadeyi (owner of Pan Ocean Oil Corporation) owing billions to skye bank and lavishing it on that dry cunt Toke Makinwa

Nice

It's not by just sacking these marauders but also jailing them...They award themselves huge loans without following due process representing a gross abuse of corporate governance. Also, most of the rich and influential guys are given loans without any effort to pay back causing shareholders of the banks to bear the inefficiency of the board and management in recovering the loan...For instance, ever since Skye directors were sacked nothing has happened in terms of recovery and prosecution of the affected directors and chairman...These bank debtors have become an institution that CBN has failed to make them pay off the loans that put Skye bank in comatose...CBN needs to up its game on banking supervision in a way it will strengthen investors' confidence in the financial system. Nigerians still await when the cowboys that wrecked Skye bank would be prosecuted and jailed to serve as deterrent to others.

na wa o

Ok

On behalf of Myself and I, today's my birthday.. Since I'm not accepting gifts I might as well accept likes

victorakpabome:


Savage you are my friend But it's very true.....imagine Festus Fadeyi (owner of Pan Ocean Oil Corporation) owing billions to skye bank and lavishing it on that dry cunt Toke Makinwa

U get bad mouth, Shey u know?

Nbote:
On behalf of Myself and I, today's my birthday.. Since I'm not accepting gifts I might as well accept likes

happy birthday fam

maximunimpact:
Bank directors with non-performing loans (NPLs) are to quit or be sacked, according to a new Code of Corporate Governance approved by the Central Bank of Nigeria (CBN).

Director, Bank Examination Department at the Nigeria Deposit Insurance Corporation (NDIC), Adedapo Adeleke, said the new code was instituted to address the rising cases of insider bad loans, which not only represent a conflict of interest, but are against the prudential guidelines for the industry.

He described corporate governance as an essential pillar in financial system stability.

Banks’ assets have depreciated in the last three years, with provisions for NPLs hitting N856.9 billion, due to the drop in crude oil prices. A large part of these bad loans is owed by bank directors and are in most cases unsecured.

Besides, the economic recession showed that the financial industry still harbours weaknesses in governance, as seen in insider non-performing loans, unreported losses, huge exit packages for directors, over-domineering executive management, contravention of regulatory/prudential guidelines and lending limits, poorly appraised credits and weakening of shareholders’ funds, among others.

Corporate governance is important

But have they considered the possible effect of a high turnover of board members?

Perhaps hefty FINES could be a better deterrent

ScotFree:
It's about time

Sack time ?

Believe this story at your own risk..,,

I hope most bank managers in Orlu gets sacked especially Diamond bank manager

The gov should extend this to politicians. Political candidates with big outstanding loans should be removed as it poses a massive conflict of interest.

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My thesis is currently on nonperforming loans in dmbs....its a very serious issue. The banks would have been able to withstand the global crises of 2008 if the loans-which is the core asset of dmbs are performing...that is,no issue of default on payment of interest acrrued and the principal.

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Who care! person who have gathered enough to feed himself and family for the next millions years to come.