Collapse of Fortis MFB collapse expected-NDIC
Nigeria Deposit Insurance Corporation, NDIC, said the liquidation of Fortis Micro-Finance Bank, MFB, was done after every attempt to save the bank from going under failed.
NDIC denied media reports that it the liquidation process was hurriedly done without prior attempt to salvage the ailing bank before its eventual collapse.
Reacting to statements credited to one Mallam Garba Kurfi, Managing Director of APT Securities and Fund, the corporation stated that the liquidation of ailing banks is always the last option adopted by the NDIC after other cost-effective resolution options have failed.
Kurfi was reported to have said the CBN and NDIC should have managed the affairs of Fortis MFB rather than embark on its outright liquidation. He added that managing affairs of the bank, its resale or the appointment of a new management would have been better for its depositors and other banks that had business relationship with Fortis as well as the economy at large.
A statement by the NDIC however dismissed the claims as false and misleading.
“Ordinarily, the NDIC would have ignored both erroneous claims, but for the need to correct the wrong impression which may be created in the minds of the public, thereby undermining public confidence in the banking system,” it stated.
With particular reference to the liquidation of the Fortis MFB, it noted that the various examinations and supervisory interventions of CBN and NDIC revealed 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. As a consequence, the bank was illiquid, could not honour its obligations to its depositors, and became insolvent.
“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 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.”
NDIC therefore blamed the eventual liquidation of the bank on mismanagement by its erstwhile Board and Management.
The statement however assured the general public of the NDIC’s commitment to its responsibilities in protecting Nigerian Depositors at all times.