NIGERIA DEPOSIT INSURANCE CORPORATION
WELCOME ADDRESS BY THE Ag. MANAGING DIRECTOR/CHIEF EXECUTIVE OFFICER OF NIGERIA DEPOSIT INSURANCE CORPORATION ALHAJI UMARU IBRAHIM mni, AT THE NDIC RETREAT ON THE PROPOSED AMENDMENT OF THE NDIC ACT 2006 FOR THE MEMBERS OF SENATE COMMITTEE ON BANKING, INSURANCE AND OTHER FINANCIAL INSTITUTIONS HELD AT AMBER TINAPA HOTEL CALABAR, FROM 26TH -27TH JULY 2010.

The Chairman Senate Committee on Banking, Insurance and Other Financial Institutions,
The Deputy Chairman,
Distinguished Senators,
My Colleagues from NDIC,
Ladies and Gentlemen.

It is a great honour and privilege for me to welcome all of you to this Retreat on proposals to amend the NDIC Act 2006 at the famous Tinapa Business Resort.  As you may be aware, the Corporation was here early last week at a similar Retreat organized for Honourable members of the House of Representatives Committee on Banking and Currency.

Amber Tinapa Hotel is a beautiful and serene environment, as you may soon find out and quite suitable for such tedious assignment.  We sincerely appreciate the fact that the distinguished Senators could spare sometime to come here to examine a matter that is of great importance to the NDIC, i.e., the review of its enabling law.

As you are all aware, the Nigeria Deposit Insurance Corporation was set up by NDIC Decree No. 22 of 1988, with the primary mandate of insuring the deposit liabilities of licensed deposit taking financial institutions.  Deposit Insurance is part of the safety net arrangement needed to maintain financial stability and public confidence in the financial system.

The NDIC was designed as a risk minimiser as against merely a pay box.  As a risk minimiser, the Corporation is expected to play a proactive role in promoting safety and soundness of the financial system through bank supervision and engaging in effective distress resolution.  Indeed, the Deposit Insurance Scheme in Nigeria has been given added responsibility to handle the orderly winding-up of closed financial institutions which entails realization of closed bank assets and using the proceeds to settle depositors’ liabilities and other creditors.  However, over the years, it became evident that the 1988 Act was inadequate for effective deposit insurance.  Fortunately, through the effort of the Senate Committee on Banking, Insurance and Other Financial Institutions, and your counterparts in the House of Representatives, the National Assembly amended the NDIC Act in 2006.
Although, the amendment in 2006 had addressed some of the identified weaknesses in the 1988 Act, that amendment did not foresee the developments that emerged during the 2008 global economic meltdown and the corporate governance issues that came to the fore.  The Distinguished Senators are quite familiar with the NDIC Act 2006 and the several proposals for its amendment in order to address emerging challenges.

You would also recall that even developed economies suddenly realized that their regulations were not robust enough.  Most countries had embarked on the review of their Legislation and Regulations.  It is in the above context that a further review of the NDIC Act 2006 became more pertinent.  The Corporation had come up with proposals and this retreat is intended to give the Distinguished Senators the opportunity to critically examine the proposals while at the same, giving the Corporation the opportunity to provide you with insights, clarifications and explanations to the reasons that informed the proposals.  Some of the key issues covered in the proposed amendments include:

• Enabling the Corporation to gain access to information on subsidiaries of insured institutions to facilitate consolidated supervision;
• Dealing with Directors, Officers and other parties at fault in bank failures;
• Prompt payment of depositors’ funds inspite of pending legal/court action;
• Strengthening the enforcement powers of the Corporation to enhance effective supervision of insured institutions;
• Enhancement of the DIF;
• Protection of the assets of the closed banks/NDIC against attachment.

The proposed amendment have therefore, attempted to address the various challenges faced by the Corporation, in particular, those that prevent immediate payment of insured deposit to depositors of failed banks as a result of legal/court actions usually instituted by erstwhile owners of those banks.
We hope most fervently that this Retreat will afford distinguished Senators the opportunity to appreciate the challenges faced by the Corporation and that they will bring their enormous wealth of experience to bear in considering the proposed amendments to enable the Corporation meet those challenges.  It is not surprising that the NDIC on behalf of the depositors of the Banking Industry is elated by the attendance of the distinguished Senators at this Retreat.  Your presence is ample demonstration of your commitment to ensuring a safe and sound banking system and promoting financial system stability through an efficient Deposit Insurance System in Nigeria, being one of the three components of Financial Safety Net.

While we are very confident that all the distinguished Senators would be in the next Senate, we passionately urge that after this Retreat, the distinguished Senators would do all that is in their power to ensure that the proposed amendments are passed by this Senate during its life span to forestall the process starting afresh when the next Senate commences business.

Following the above expectations, the NDIC heartily welcomes you all to this Retreat and wishes everyone fruitful deliberations.

Thank you for your attention.