NDIC, Judiciary Express Readiness For Recapitalisation

Ahead of issues that may arise during the mergers and acquisitions by banks in the country to meet the 2026 deadline for a new capital base, the Nigeria Deposit Insurance Corporation (NDIC) as well as the judiciary have said they are well prepared for the events that would unfold.

This is as the managing director of the NDIC, Bello Hassan said he is optimistic that no bank in the country will need to close shop considering all the options which the Central Bank of Nigeria (CBN).

Speaking at the Sensitisation Seminar for Judges of the Federal High Court, organised by the National Judicial Institute in collaboration with the NDIC with the theme “Building Strong Depositors Confidence in Banks and Other Financial Institutions through Adjudication”, Justice Faji, representing the Chief Judge of the Federal High Court, expressed the readiness of the judiciary ahead of the recapitalisation phase.

He noted that the functions of the courts particularly when it comes to matters of economy, and financial stability cannot be overemphasised. “We are going into yet another period of banking consolidation, so it is very imperative that judges are on top of their game and the role of the judges cannot be underestimated.

“There would be quite a lot of activities in the courts, there  would be issues of banking, capitalisation, there would be issues of restructuring,  acquisitions, mergers, and all that and of course, some banks may also want to stop business because they may not be able to meet all the requirements.

“I am sure that the courts are going to be very busy and I want to assure you that the judges are adequately equipped for this. We have had quite a lot of experience in this area and I’m sure that at the end of the day, we’ll be able to add value to the process.”

On his part, the managing director of the NDIC, Bello Hassan said he believes that there would be no need for winding down any bank after the recapitalization process as he expects that with the ample time given, banks in the country will explore the various options as laid out before them and would be able to meet the new capital base.

Noting that the collaboration between financial industry regulators and the judiciary cannot be overemphasised, he said “understanding of the concept and practice of deposit insurance, would enable my Lords to appreciate the legal issues involved where there are disputes, and to deal with the cases expeditiously. We therefore sincerely believe that your pronouncements on these issues will invariably set judicial precedents thereby contributing to the development of bank insolvency law and practice in Nigeria, which is an evolving area of legal jurisprudence.

“The challenge of liquidation-related litigations experienced in the past which makes it difficult for the Corporation to wind-up banks whose licences had been revoked by the Central Bank of Nigeria, and to settle depositors and other claimants promptly has drastically reduced.

“As at date, the Corporation had obtained Winding up Orders for 96 out of 183 Micro Finance and Primary Mortgage Banks whose licences were revoked by the CBN in May 2023, in less than one year of revocation.

“There is better understanding of the roles of the Corporation as a corporate body and Deposit Insurer, as distinct from NDIC acting as Liquidator of failed banks whose licences had been revoked. Consequently, the incidence of litigants that obtained judgement against banks in liquidation and attempted to levy execution against the assets of the Corporation as a corporate body has been substantially diminished.