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Wednesday, June 5, 2013

CBN to release banking crisis resolution plan

The Punch - Nigeria's Most Widely Read Newspaper
Breaking News, information and opinion in Nigeria
CBN to release banking crisis resolution plan
Jun 5th 2013, 23:32

In a bid to avert another banking system failure, the Central Bank of Nigeria has concluded plans to release the comprehensive banking sector crisis resolution framework.

Our correspondent gathered on Tuesday that the framework was now at the implementation stage and would be released soon.

A reliable source in the CBN, who craved anonymity because he was not authorised to speak on the subject, told our correspondent, "We are at the final and implementation stage of the crisis resolution framework of the banking sector. In a short while, the CBN should release the framework."

The source, however, declined to state the implementation date.

The Director, Banking Supervision, CBN, Mrs. Tokunbo Martins, had earlier told our correspondent on the sidelines of an event in Lagos that the bank was "carrying out finishing touches" on the framework.

The banking sector crisis resolution framework, according to the CBN, is being set up to prevent another crisis in the sector.

The Deputy Governor, Financial Systems Stability, CBN, Mr. Kingsley Moghalu, had said at a forum in Lagos that the establishment of the framework would create a more endurable platform for financial stability.

"We are at a stage where Nigerian banks are stable. Our strategic priorities in the next three years are to develop and implement a strong macro-prudential framework, which is in progress. We are also promoting the protection of consumer rights and financial literacy," he said.

The deputy governor added that some aspects of the reforms and global development had implications for the future of the banking sector.

However, a former Director-General, Securities and Exchange Commission, Mr. Wole Adetunji, advocated an urgent review of the Nigerian financial system to enable it compete with its peers across the world.

Adetunji, who spoke at the PEARL Award in Lagos recently, noted that the review had become imperative for healthy development of the financial system considering that the last of such exercise was done in 1978 under the military administration of Gen. Olusegun Obasanjo.

"I believe the Nigerian banking industry is over-regulated and that is not how it is done elsewhere. We need an independent body to regulate the banks, while the CBN will concentrate on monetary policy, inflation targeting and exchange rate stability,'' he said.

According to him, government can do this by setting up a high-powered committee of experts to take a critical look at the financial system in order to come up with a code that will enhance the efficiency of the system as they have in Britain where there is a financial services regulatory authority.

"The Nigerian financial system needs an overhaul. It needs to be looked into because the CBN does not have the capacity and resources to handle effectively the responsibility it has assigned itself under the current dispensation," Adetunji added.

The CBN, in June 2009, took a three-pronged approach to assess the financial conditions of the 24 banks, given their precarious and fragile state.

One of the approaches was the special audit jointly carried out by the central bank and the Nigerian Deposit Insurance Corporation.

The exercise highlighted inadequacies in capital asset ratios and liquidity ratios as well as weaknesses in corporate governance and risk management issues in nine banks.

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