BY Emma Ujah
ABUJA— Managing Director of Nigeria Deposit Insurance Corporation, NDIC, Alhaji Umaru Ibrahim, has said that its axe dangles over bank directors who are involved in any form of infractions and insider abuse that jeopardise any bank and that such persons will be flushed out forthwith.
Exchanging views with a delegation of the Bank Directors Association of Nigeria, BDAN, in Abuja, yesterday, he said the unsavoury experience in the banking industry in the recent past was due, largely, to gross insider abuse which would no longer be tolerated.
Ibrahim told the directors that a continuous performance assessment would be carried out on each bank director with a view to removing anyone found wanting in terms of character.
His words: "As directors, I believe you have responsibilities entrusted on you by the law. Therefore, given what has happened in the last couple of years, the bad experience we have had with the banks, probably could have been avoided if directors were truly independent and cared to carry out their responsibilities.
"But you know in that environment, how directors ere picked. In some cases, is was a network, depending on whom you knew and whom you were comfortable with to be on the same board.
"But as regulators, we have a responsibility to make sure that the right people come on board and this leads me to the issue of the need for a continuous assessment of the performances of directors, especially in terms of not just adding value to your institutions but also on the issue of character. It is very critical.
"That is why we have to continually devised the means of continuously assessing performance and performance can be assessed in very many ways.
"As you are all aware, one of the things that ruined the banking system is the phenomenon of gross inside abuse. This could only be done by people of doubtful character who abuse the trust that has been given to them.
"That is why we believe that together, we should do everything possible to fish out and flush out people who are not fit and proper to be entrusted with board membership because banking is sensitive, it is critical and should not be left to all-comers, it doesn't matter how much money you have."
Review of compensation
On the request by the association for a review of their compensation, the NDIC boss said as regulators, the authorities of the organisation would not delve into such issues as Nigeria had become a free market economy.
His words: "As far as we are concerned as regulators, it is a free market and we do not want to delve unnecessarily into issues like this. We leave it to individual organisations to pay executive and non-executive directors and even employees whatever the market dictates and whatever they can afford.
"I believe that the compensation of board members the world over, especially in the financial institutions and in the banking sector in particular, is a very critical matter which has to be looked at continuously on a very objective basis.
"Of course, you have to consider the issue of affordability of the various institutions. But I think gone are the days when bank directors were expected to be paid peanuts because of the enormous responsibilities that they are expected to shoulder.
"So, one would support an appropriate compensation of bank directors. But then, it should be in line with the compensation policy of their various banks and like I said, the issue of sustainable compensation package, the issue of affordability are important."
He insisted that whatever remunerations that banks' directors approved for themselves should not be such that could jeopardise depositors' funds in the banks, adding: "It should not be self serving."
The MD urged members of the association to forward their requests to their various banks to review their remunerations either upwards or even downwards, as the case may be.
Kuku reacts
Earlier, the President of the association, Olorogun Sonny Kuku, who led the delegation, told the NDIC that the executive was working towards increasing the capacity of the directors to better situate themselves for higher value addition in the industry.
He commended the NDIC and the Central Bank of Nigeria, CBN, for not sacking the entire boards of the banks that had the recent problems but only removed the affected directors.
He said: "Not all bank directors were involved. We will do everything possible so that such a thing does not happen again. As a group, we will advocate good corporate governance in all the banks."
Vanguard Nigeria