Nigerian Deposit Insurance Corporation (NDIC) has said that weak corporate governance is the major cause of the financial system distress in the Nigerian Banking Sector.
Speaking at the 15th National annual conference/AGM of the Risk Managers Association of Nigeria, RIMAN, the NDIC boss, Alhaji Umaru Ibrahim said this while delivering a lecture on the theme of the conference” Governance and Risk Management: The way forward.”
Ibrahim said “One of the greatest shocks from the financial crisis has been the widespread failure of risk management. In many cases, risk was not managed on an enterprise wide basis and was not aligned with the corporate strategy.
“Weak corporate governance had been identified as one of the major causes of financial system distress in the Nigerian Banking Sector. The large scale failure of banks in the late 90’s was occasioned by poor corporate governance characterised by: Board room squabbles, insider abuses, conflict of interest, overbearing influence of significant owners (that was the era of Chairman/CEO), inadequate diversity of the board, lack of professionalism and independence. Those malaises were also identified in all the five banks whose managements were changed by the regulatory authorities in 2009.
“Corporate abuse, unfortunately, has persisted in spite of efforts by the regulatory authorities to encourage good corporate conducts through enhanced code of corporate governance, administrative directives and guidance and indeed moral suasions.”