The bridge bank option avoids a systemic crisis in banking operations – NDIC –

The adoption of the Bridge Banks option by the Nigeria Deposit Insurance Corporation helped avert a systemic crisis and secured N1.021 trillion, which gave depositors access to their funds and financial services.

Bello Hassan, the chief executive of the company, revealed it at the 2021 Editors Forum on Saturday.

The Forum, whose theme was: “Enduring Extreme Disruption: Resilience and Reinvention for Banking System Stability and Deposit Insurance”, was held in Lagos.

Hassan said that several failure resolution initiatives such as open bank assistance, purchase and takeover and mergers and acquisitions were adopted to resolve the difficulties of various banks from 1989, culminating in the new Bridge Bank option.

A bridge bank is an institution created by a national regulator or central bank to manage a failing bank until a buyer can be found.

Bridge banking is usually established by a government deposit insurer or financial regulator and can be set up to avoid systemic risk and ensure an orderly transition while avoiding negative effects.

Some of the tasks of a bridge bank are to assume the deposit and honor the liabilities of the failing bank, so that service to retail clients is not interrupted, and to manage existing secured loans to avoid their failure. interruption or premature termination.

These tasks are performed on a temporary basis (usually for no more than two or three years) to give time to find a buyer for the bank as a going concern.

Hassan explained that the option has so far guaranteed deposits of 1.021 trillion naira, which has guaranteed depositors continued access to their funds and financial services.

He said: “The implementation of the Bridge Bank option has also saved more than 12,667 jobs while more than 877 networks of branches and departments of the banks concerned have been maintained.

“The company’s accomplishment in paying guaranteed sums and liquidation dividends speaks volumes about its commitment to fulfilling its unique mandate.

“NDIC had paid a cumulative sum of 8.268 billion naira to 443,946 insured depositors and 100.8080 billion naira to uninsured depositors of liquidating deposit banks as of September 30, 2021.

“It has also paid out 3.413 billion naira to 90,945 insured depositors of microfinance banks and 1.218 million naira to uninsured depositors.

“In a similar vein, the cumulative insured amount paid to 1,553 depositors of primary mortgage banks closed as of September 30, 2021 amounted to N 110.15 million while N 7.965 million was paid as uninsured deposits.

More importantly, the payment of 1.274 billion naira to 991 creditors and 4.886 billion naira to 965 shareholders of liquidating banks as of September 30, 2021 underscored the company’s success in bank liquidation.

“What this implies is that the Company had realized enough assets to pay all the insured and uninsured depositors of the banks who come forward for payment. Currently, 19 of the 49 DMB in liquidation fall into this category. “

Hassan called on publishers to continue partnering with NDIC to spread its mandate to Nigerians to improve service delivery.

He said: “Through a better understanding of our programs and policies, we believe that you will not only provide an informed review and analysis of our activities, but also help our other stakeholders to get a good idea of ​​the role of NDIC as a member of the financial safety net and the DIS contributions to the stability of the country’s financial system.

Two papers were presented: “Resilience and Reinvention Strategies for the Deposit Insurance System in the Face of Extreme Banking System Disruptions”, by Olatayo Babatolu, Director of Banking Review, NDIC; and: “The Role of the Deposit Insurance System in Resolving Deficiencies”, by Galadima Gana, Director, Insurance and Monitoring, NDIC.

The documents dwelled on various measures taken by NDIC to clean up the financial sector to cope with current challenges, measures put in place to mitigate failures and ensure depositors are properly looked after while doing business with institutions. financial resources of the country.

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