In a move aimed at restoring confidence in the financial system, depositors, shareholders and creditors of distressed banks and microfinance institutions in the country have been getting their money back from the Nigeria Deposit Insurance Corporation, OKECHUKWU NNODIMwrites.Shareholders, depositors and creditors of distressed Deposit Money Banks and microfinance institutions were paid N143.72bn by the Nigeria Deposit Insurance Corporation last year, according to findings by our correspondent.The NDIC said as at December 31, 2010, it had paid insured deposits totalling N559.2m to 18,520 depositors in 76 out of the 103 microfinance banks, whose licences were revoked by the Central Bank of Nigeria in September.It is noteworthy that the payment was effected with minimum delay from the date of closure. The NDIC has since intensified efforts at obtaining the required information from the rest of the 27 MFBs so that payment to the affected depositors can commence in January, it explained.The Managing Director and Chief Executive Officer, NDIC, Mr. Umaru Ibrahim, while referring to the corporations failure resolution activity report, said insured depositors of banks-in-liquidation were paid a total of N7.597bn as at December 31, 2010.He added that apart from the payment of the insured sums, the corporation had the additional responsibility of settling claims of uninsured depositors, creditors and shareholders of closed banks by paying liquidation dividends from the proceeds of realised assets of the closed banks.He said, The sum of N69.90bn had been paid as liquidation dividend to 249,822 depositors as at the end of 2010. The payments included the uninsured portion of private sector depositors of 11 out of 13 banks closed in 2006.Similarly, as at the end of 2010, the sum of N1.5bn was declared for some creditors of the banks-in-liquidation, out of which the NDIC had paid the sum of N848.127m to creditors, who had filed their claims. The cumulative liquidation dividends declared for shareholders of three banks-in-liquidation as at December 31, 2010 stood at N1.513bn, out of which N1.285bn had been paid.The corporation further stressed that the cumulative dividend paid to uninsured depositors of banks under the purchase and assumption arrangement as at December 2010 was N63.52bn as against N59.443bn paid in December 2009, representing an increase of N4.08bn or 6.8 per cent.A computation of the total sums paid to the depositors, creditors and shareholders of the financial institutions showed that the corporation disbursed N143.71bn to them last year.Our correspondent gathered that the NDIC, in collaboration with the CBN, had during the year conducted a target examination of 24 DMBs in the financial system.The NDIC led the target examination of eight banks, while the CBN conducted that of the remaining 16 banks.The examinations were sequel to the outcome of the special examination of banks conducted in June 2009, which resulted in regulatory intervention in 10 DMBs and the change of executive managements of eight of the affected banks by the CBN.According to Ibrahim, the supervisory activities were done in order to promote safe and sound banking practices, as well as engender depositor confidence in the system.He said, The target examination revealed that the financial condition of the intervened banks remained critical, which made the establishment of the Asset Management Corporation of Nigeria and the Financial Stability Fund imperative.In addition, to promote financial system stability and restore confidence in the system, the corporation, during the year, collaborated with the CBN to closely monitor the financial condition of the 10 intervened banks.The NDIC boss noted that consequent upon the numerous petitions, which the corporation and the CBN received from depositors complaining about their inability to access their funds in some MFBs and other reports indicating that some of the institutions had closed their doors, the regulatory agencies, in early 2010, embarked on target examination of all MFBs in the system.The report noted that NDIC examined 302 MFBs, while the CBN examined the remaining 584, adding that findings by the corporations examiners revealed that 72 out of those it examined were incapable of honouring their obligations to customers as and when due, while 11 out of the 72 had actually closed shop.Following the revelation from the CBN/NDIC target examination of all the licensed MFBs that 224 of the institutions were terminally distressed or technically insolvent, the CBN, in September 2010, revoked that licences of 103 MFBs, Ibrahim said.However, the NDIC in its report noted that it recovered N22.79bn debts in 2010 as against N20.77bn in the preceding year, an increase of over N2bn or 9.7 per cent.The NDIC boss stated that the corporation collaborated with other government agencies during the process of recovering the debts, adding that it had commenced discussions with the Asset Management Corporation of Nigeria.Ibrahim said, In an attempt to re-invigorate the recovery process, the NDIC, during the year under review, had embarked on a number of aggressive debt recovery initiatives to facilitate recovery and enhance liquidation dividend being paid to depositors and other eligible claimants to boost public confidence in the banking system.Some of those measures included the appointment of debt recovery agents, use of relevant law enforcement agencies, as well as taking advantage of AMCON. In particular, the NDIC has commenced discussion with AMCON to use its platform to dispose some of the risk assets of banks-in-liquidation.
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