By FELIX OLOYEDE
The Nigeria Deposit Insurance Corporation (NDIC) has debunked newspaper report that it hastily liquidated liquidation of Fortis Micro-Finance Bank (MFB).
Mohammed Ibrahim, Head, Communications and Public Affairs, NDIC stated in a release that the allegation by Mallam Garba Kurfi, Managing Director of APT Securities and Fund that the corporation and thee Central Bank of Nigeria (CBN) should have managed the affairs of Fortis MFB rather than embark on its outright liquidation, were false and misleading.
He explained that liquidation of ailing banks was always the last option adopted by the NDIC after other cost-effective resolution options have failed.
“It is, however, common knowledge that shareholders are part of the governance structure of the affected banks, through the control they exercise over the Board and Management of their banks during the Annual General Meetings and Extra Ordinary General Meetings, as well as through appointment of Directors and Auditors of their banks. Accordingly, they cannot be absolved from the misdeeds of their Boards,” he noted.
Ibrahim added that various examinations and supervisory interventions carried out by CBN and NDIC showed that the bank was being run in an unsafe and unsound manner leading to huge non-performing loans, high cost of funds (foreign and domestic borrowings, and fixed/term deposits), exorbitant administrative and personnel costs (especially high emoluments to successive CEOs), and poor corporate governance practices, all of which impacted negatively on its financial condition; consequently, the bank was illiquid, could not honour its obligations to its depositors, and became insolvent.
Ibrahim claimed, “The unhealthy condition of the bank degenerated to the extent that the CBN removed the Management of Fortis MFB Plc in February 2018 and appointed a four (4) person Interim Management Committee (IMC) to take over the control and management of the bank. The IMC which comprised of officers drawn from the CBN and NDIC, as well as an independent Chairman, were mandated to steer the bank back to sustainability. The IMC managed the affairs of Fortis MFB Plc for a period 10 months during which it did all it could to resuscitate the bank and began reimbursing depositors, using funds advanced by CBN for that purpose.”