It
was against this background that the CBN moved decisively to strengthen the industry,
protect depositors’ and creditors’ funds, safeguard the integrity of the industry
and restore public confidence. In that regard, the CBN replaced the chief
executives/executives directors of the banks identified as the source of
instability in the industry and injected the sum of N620.0 billion into the
banks in an effort to prevent a systemic crisis. Arrangements were also made to
recover non-performing loans from banks‘debtors, while guaranteeing all foreign
credits and correspondent banking commitments of the
affected banks.
Furthermore, the Bank proposed the establishment of the Asset Management
Corporation of Nigerian (AMCON).
The AMCON Bill has already been passed by the
National Assembly and signed into law by the President. The AMCON as a
resolution vehicle is expected to soak the toxic assets of troubled banks.
Members of the Board of Directors of AMCON have also been cleared by the Senate
and inaugurated. The CBN is also collaborating with the Securities and Exchange
Commission (SEC) and the Nigerian Stock Exchange (NSE) to reduce the cost of
transactions particularly bond issuance so as to diversity funding sources away
from banks, as well as attract more foreign portfolio investors into the sector.
Efforts are also being intensified towards strengthening regulatory and
supervisory framework and enhancing the monitoring of the operations of the
Deposit Money Banks (DMBs) to ensure that they remain safe, sound and healthy.
To
further engender public confidence in the banking system and enhance customer
protection, the CBN established the Consumer and Financial Protection Division
to provide a platform through which consumers can seek redress. In the first
three months of its operation, about 600 consumer complaints were received by
the Division which was a manifestation of the absence of an effective consumer
complaints resolution mechanism in banks. The CBN has also issued a directive
to banks to establish Customer Help Desks at their head offices and branches.
In addition, the CBN has commenced a comprehensive review of the Guide to Bank
Charges with a view to making the charges realistic and consumer-friendly.
Furthermore, the Consumer and Financial Protection Division is expected to
commence a programme of consumer education and enlightenment and is also
collaborating with the Consumer Protection Council on the review of the
Consumer Protection Council Act No. 66 of 1992, to regulate and enforce
discipline in the market. The CBN has taken steps to integrate the banking
system into the global best practices in financial reporting and disclosure
through the adoption of the international Financial reporting Standards (IFRS)
in the Nigerian Banking Sector by end-2010. This is expected to enhance market
discipline and reduce uncertainties, which limit the risk of unwarranted
contagion. The CBN is also closely collaborating with other stakeholders like
the Nigerian Accounting Standard Board (NASB), Federal Ministry of Finance
(FMF), NDIC, SEC, NAICOM, PENCOM, Federal Inland Revenue Service (FIRS), and
the Institute of Chartered Accountant of Nigerian (ICAN), among others, towards
ensuring a seamless adoption of IFRS in the Nigerian banking sector by 2012.
These efforts are being pursued under the aegis of the Roadmap Committee of
Stakeholders on the Adoption of IFRS in Nigeria inaugurated by the NASB and
facilitated by the World Bank.
The universal banking (UB) model adopted in
2001, allowed banks to diversify into non-bank financial businesses. Following the
consolidation programme, banks became awash with capital, which was deployed to
multiples of financial services. In effect, the laudable objectives of the UB
Model were abused by operators, with banks operating as financial supermarkets
to the detriment of core banking practices. To address the observed challenges,
the CBN is reviewing the UB Model with a view to refocusing banks to their core
mandate. Under the new model, banks would not be allowed to invest in non-bank subsidiaries,
while banks with such investments would be required to either divest or
spin-off the businesses to holding companies that will be licensed by the CBN as
other financial institutions. The three classes of deposit money banks being proposed
are: International banks, National banks and Regional banks.