NDIC Forecasts Payout of N61.63 Billion to Depositors from 20 Collapsed Banks

Depositors, creditors, and shareholders of 20 liquidated banks are on the verge of receiving a substantial windfall, with a projected total of approximately N61.63 billion earmarked as paid liquidation dividends. As of July 2023, the Nigeria Deposit Insurance Corporation (NDIC), according to a statement obtained by Infostride News, has disbursed about N45.45 billion, leaving an additional N16.18 billion slated for distribution among the stakeholders.

Bashir Nuhu, the Director of Communication and Public Affairs at NDIC, underscored these developments in the released statement. It was highlighted that the closure of these banks was instigated by the Central Bank of Nigeria (CBN) through the revocation of their operating licenses, a measure carried out between 1994 and 2018.

The NDIC clarified its commitment to fulfilling obligations by settling guaranteed sums owed to depositors. In addition to surpassing the guaranteed sums by disbursing N45.45 billion to depositors of the 20 banks as of July 2023, the Corporation is poised to distribute an extra N16.18 billion in liquidation dividends. This marks a crucial step toward providing financial relief to the affected depositors, creditors, and shareholders.

In the unfortunate event of a financial institution’s failure and the subsequent revocation of its license by the CBN, the NDIC steps in to reimburse eligible depositors. The reimbursement extends up to the maximum insured amount of N500,000 for Deposit Money Banks (DMBs) and Primary Mortgage Banks (PMBs), with a cap of N200,000 for Microfinance Banks (MfBs). The NDIC follows a systematic approach, selling the assets of failed banks and collecting outstanding debts to facilitate payments to depositors whose claims exceed the insured amounts. In the case of MFBs and PMBs, depositors with claims greater than the maximum insured sums of N200,000 and N500,000, respectively, receive liquidation dividends on a pro-rata basis.

Liquidation dividends represent the amount disbursed to depositors by the NDIC after the closure and liquidation of a bank, specifically when the depositor’s claim surpasses the insured amounts. Once all depositors have been repaid from the assets of closed financial institutions, payments to creditors and shareholders are made from the remaining proceeds.

The NDIC’s announcement specified the list of closed banks involved in this liquidation dividend distribution process. Noteworthy among them are Liberty Bank, City Express Bank, Assurance Bank, Century Bank, Allied Bank, Financial Merchant Bank, Icon Merchant Bank, Progress Bank, Merchant Bank of Africa (MBA), Premier Commercial Bank, North-South Bank, and Prime Merchant Bank. Additionally, Commercial Trust Bank, Cooperative and Commerce Bank, Rims Merchant Bank, Pan African Bank, Fortune Bank, All States Trust Bank, Nigeria Merchant Bank, and Amicable Bank find themselves in the purview of liquidation.

As the NDIC diligently navigates the complexities of bank liquidation and ensures the fulfillment of its commitments, depositors, creditors, and shareholders can anticipate a more comprehensive recovery from these financial institutions’ closure. The upcoming disbursement of an additional N16.18 billion underscores the NDIC’s dedication to financial stability and the protection of stakeholders in the banking sector. The proactive measures taken by the NDIC in handling the aftermath of these closures exemplify its commitment to maintaining public confidence in the financial system while fostering a resilient and secure banking environment.