Failed Banks’ Employees Cases Hindering NDIC Mandate

The acting managing director and chief executive of the Nigeria Deposit Insurance Corporation (NDIC), Emily Osuji, has raised concerns over the increasing number of legal cases filed by former employees of failed banks, saying the development is hindering the Corporation’s ability to effectively liquidate distressed financial institutions.

Speaking at a sensitisation seminar organised for Judges of the National Industrial Court (NIC) and members of the Investment and Securities Tribunal, Osuji said the litigation trend is undermining the Corporation’s core mandate of ensuring financial system stability and protecting depositors.

Pointing out the achievements recorded in the liquidation of banks, she said the Corporation is still faced with some legal challenges, some of which include cases filed against it by employees of the banks in liquidation.

“Cases involving severance packages, outstanding salary arrears, and exit packages for former employees of banks undergoing liquidation warrant careful consideration. It is important for judges of the National Industrial Court (NIC) to re-examine the priority of claims as stipulated under the NDIC Act, 2023 when adjudicating such matters.

“This approach is crucial to ensure the protection of the law on priority of claims in bank liquidation. Employment cases initiated by former staff of failed banks against the Nigeria Deposit Insurance Corporation (NDIC), particularly those litigated before the National Industrial Court (NIC), present a significant challenge to the NDIC’s mandate of liquidation. “This challenge is particularly pronounced when judgments obtained by former bank employees and officers are executed against the assets of the Corporation,” she said.

In his remarks at the seminar themed “Strengthening Adjudication and Depositor Confidence in the Banking System”, the Administrator, National Judicial Institute, Hon. Justice Salish Garba Abdullahi, stressed that depositor confidence remains the bedrock upon which the banking sector thrives, adding that judicial decisions play a crucial role in reinforcing that confidence.

“When courts adjudicate cases relating to deposit insurance and financial disputes, they set legal precedents that shape regulatory frameworks, enhance investor protection, and stabilise financial institutions.

“The Nigerian banking sector continues to evolve in response to technological disruptions and financial innovations. Digital banking, cryptocurrency, and decentralised finance have introduced new dimensions to financial transactions, prompting regulators to adapt swiftly. These developments necessitate a Judiciary that is forward-thinking and adaptable to emerging financial realities.