The Nigerian Deposit Insurance Corporation, NDIC, yesterday responded to earlier claims by the Progressive Shareholders Association of Nigeria, PSAN, which alleged that financial regulators in Nigeria made very little to zero effort to mitigate the liquidation of Fortis Microfinance Bank Plc.
A statement released yesterday by the NDIC, stressed that the claim is untrue.
According to the statement, the NDIC alongside the Central Bank of Nigeria, CBN, adopted a series of intervention plans. But none of these plans was able to forestall the eventual collapse of the microfinance bank.
The statement went further to clarify that that the decision to liquidate Fortis Microfinance Bank Plc, was a last minute one after all other available options failed.
“The IMC managed the affairs of Fortis MFB Plc for a period 10 months during which it did all it could to resuscitate the bank and began reimbursing depositors, using funds advanced by CBN for that purpose.
“The above is contrary to the claim by Mallam Garba Kurfi, that the CBN/NDIC made no prior attempt to salvage the ailing bank before its eventual liquidation. Unfortunately, due to the mismanagement of the bank by its erstwhile Board and Management, it could not be salvaged, hence its eventual liquidation.
“The general public is therefore urged to disregard the misleading claims in the publication and to remain assured that the NDIC will always be faithful and alive to its responsibilities in protecting Nigerian Depositors at all times.”
An ailing microfinance bank
Just recently, national leaders of the Progressive Shareholders Association of Nigeria (PSAN), — Mallam Garba Kurfi and Mr Boniface Okezie, accused both the CBN and the NDIC of having not tried enough to save the ailing microfinance bank.
However, giving insight into the nature of the defunct company’s problems and all the efforts made to save it, the NDIC statement said that bank was mismanaged.
Investigations by the regulators revealed that the mismanagement led to the build up of non-performing loans.
Moreover, a poor corporate governance culture in the liquidated entity also contributed as problem.
The statement said there was huge administrative cost, especially the expensive emoluments for top officers which contributed to the company’s financial troubles.
In February last year, the CBN had to remove the entire management of the bank, replacing them with an interim management team.
The interim management tried all it could to save the ailing bank, until the decision was made to liquidate the bank earlier this month.
A brief overview of the defunct bank
Fortis Microfinance Bank was incorporated in 2007 after obtaining the necessary license from the Central Bank of Nigeria. In 2012, it was listed on the Nigerian Stock Exchange.
Prior to the eventual liquidation, the company’s shares were suspended from trading on the floor of the NSE for failing to adhere to standard corporate governance and extant post-listing requirements.