The Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele, on Tuesday said the regulator was currently looking at some cases of insider abuse by members of the board of directors of commercial banks and other financial institutions in the country.
As a result, Emefiele said the CBN would go tough on errant board members of banks and other financial institutions.
According to the governor, the recent economic recession has revealed corporate governance weaknesses in the financial services sector.
READ ALSO : Hausas Can Win Election Without Igbos - Rochas Okorocha Explodes
He listed some of the governance weaknesses as: unreported losses, huge exit packages for directors, insider non-performing loans, over-domineering executive management, and contravention of regulatory/prudential guidelines.
He spoke at the 2017 edition of the CBN-FITC Continuous Education Programme held in Lagos.
Emefiele said, “We are going to get tough because it is a dynamic environment, and we still see cases of some insiders’ abuses. The central bank is currently looking at a few, and we will continue to take drastic action against those insiders
“The recent economic recession has shown that the financial industry still harbors weaknesses in governance, exemplified by instances of unclear rendition of returns, corporate governance abuses such as unreported losses, huge exit packages for directors, insider non-performing loans, over-domineering executive management, contravention of regulatory/prudential guidelines and lending limits, poorly appraised credits and weakening of shareholders’ funds, among others. Overall, the huge challenge of ‘key-man’ risk abound in our industry.”
READ ALSO : BREAKING News: Court Grants Diezani's Prayer, Strikes Out Fraud Charge Having Her Name
Emefiele said depositors were important stakeholders in the banks than shareholders and there was the need to ensure that cases of insider abuse by executive management and board members were stopped.
According to him, the CBN will not fold its arms to allow owners of some banks to impose incompetent management or board to oversee the affairs of the banks.
He said, “Insiders or core shareholders of banks are people who have been used by God to set up those institutions. They truly do not own those institutions. Yes, even though they are important, the more important stakeholders in a bank are the depositors.
“And there is the need for us to ensure that we all protect them. And that is why I’ve had cause to say at this programme that independent directors must remain independent and perform their roles and responsibilities, no matter how tough. They must be able to look at insiders who are shareholders of those institutions and tell them what is true and what is not right.”
He added, “Everything about running an efficient system profitably and sound has to do with strong governance because weak governance will result in either weak capital or eroded capital. Weak governance will result in weak and eroded assets. Weak governance is the result of shareholders or owners putting in place weak, inexperienced and unenlightened management to run their banks.
“Those are the issues we will be looking at going forward because those depositors are very important and we see them truly as the owners of those banks and not the core shareholders.”
READ ALSO : How 7 Banks Help Fraudulent Govt. Officials Hide N249.6b Against
Beyond strengthening the CBN Corporate Governance Code, Emefiele said the regulator had issued a ‘Competency Framework’ for the banking industry and a revised circular on ‘Approved Persons Regime’ to ensure that only fit and proper persons were appointed on the boards of financial institutions.
He added, “Other improvements introduced include review of the Board of Directors Charters and fixed tenure for chief executive officers/managing directors of banks and other executive directors.
Recently, the CBN exposed to external stakeholders, the draft Codes of Corporate Governance for six other financial institutions, which will soon be issued to the industry.”
The Deputy Governor, Financial System Stability, Dr. Joseph Nnanna, who was also at the event, said that good corporate governance bred trust and confidence which are critical success factors for banking and other financial institutions.
According to him, sufficient empirical evidence suggests a strong correlation between weak corporate governance and rising level of non-performing loans.
He said the CBN’s efforts to enhance the effectiveness of board members commenced with the issuance of the 2014 CBN Code.
READ ALSO : Rivers Governor, Nyesom Wike Assigns Portfolios to 20 New Commissioners...See Full List
Are you an artiste? Do you want your music to go viral and reach a large number of audience? Promote your music and Submit your story on Ujuayalogusblog.com by clicking here. For Advert Inquiries Tel/+44(0)7590363984 Subscribe to Ujuayalogusblog.com News!
ALL RIGHTS RESERVED. 2015-2017 @ Uju Ayalogu's Blog NIGERIAN NEWS
For More: Visit Us at Uju Ayalogu's Blog
No comments:
Post a Comment