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NDIC Clarifies Position on Liquidation of Insurance Firms

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The Nigeria Deposit Insurance Corporation (NDIC) has denied some newspaper reports that the Corporation was seeking powers to liquidate insurance companies and (or) terminate the insurance firms’ licences.

The above misrepresentations were published in some national dailies on Wednesday, 9th July 2014 with the captions: ‘’ CBN rejects moves to empower NDIC to liquidate Insurance Companies’’, ‘’ CBN faults proposed NDIC powers to liquidate insurance companies’’ and ‘’CBN challenges NDIC over insurance companies liquidation’’ among others.

The erroneous publications were sequel to the public hearing held on Tuesday, 8th July 2014 by the House of Representatives Committee on Banking and Currency.

In a statement released on its website, the Corporation states that: “As a deposit insurer and liquidator of insured deposit taking financial institutions, the liquidation of insurance companies does not fall under the purview of the Corporation.”
“The Corporation wishes to make it categorically clear that its proposed amendments bill which is before the National Assembly does not seek for powers to liquidate insurance companies or terminate the insurance firm’s licenses as erroneously published in the national dailies.”

The Nigeria Deposit Insurance Corporation was established in 1989 vide the NDIC Act of 1988 with powers among others to supervise insured institutions, resolve banks distress conditions and to act as liquidator of closed insured financial institutions whose licences have been revoked.

These powers were not only retained by the NDIC Act 2006 which replaced the NDIC Act of 1988 but were strengthened for greater effectiveness.

The NDIC Act of 2006 had enabled the Corporation to collaborate effectively with the CBN in resolving banking crises in Nigeria, particularly the crises of 2009.

However, emerging challenges after the crises as well as the experience garnered in the operation of deposit insurance in Nigeria in the past twenty-five (25) years have necessitated the need for a further review of the 2006 Act in order to empower the Corporation to address the emerging challenges.  The proposed amendments are therefore to enable the Corporation discharge its mandates effectively and efficiently.

Accordingly, some of the amendments and or new provisions being proposed are:
– Prompt payment of insured deposits following failure of an insured institution by reducing time of reimbursement (payment to depositors) from 90 days to 60 days;
– Powers to deal with parties at fault i.e. Directors and officers who caused the failure of an insured institution;
– Power to reimburse insured depositors notwithstanding pending court suits;
–  Prevention of execution of judgement against the assets of the Corporation (as body corporate) for a liability of a failed insured institution;
–   Limitation of court orders aimed at preventing the Corporation from carrying out its statutory functions of deposit protection;
–  Enhancing corporate governance practices in the Corporation
–  Increase funding for the Corporation to be able to carry out its core mandate of depositor protection; and
–  To enhance debt recovery efforts by the Corporation.


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E-Financial

Fidelity Bank Eyes Oversubscription to N127.1bn Combined Offers

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Against the background of groundswell of supports and enthusiasm for the bank’s ongoing offers, Fidelity Bank Plc has started preparations to allow the bank absorb oversubscriptions.

With investors rallying behind the bank’s N127.1 billion combined rights and public offer, market pundits had indicated that the bank would raise more than initial size of the combined offer.

Reports have shown high subscription levels for the offers early weeks of the offer period, riding on the back of acceptances by existing shareholders and demand by the general investing public.

Fidelity Bank is offering a rights issue of 3.2 billion ordinary shares of 50 kobo each at N9.25 per share. The bank is also simultaneously offering 10 billion ordinary shares of 50 kobo each to the general investing public at N9.75 per share.

The acceptance and application lists for the rights issue and public offer, which opened on Thursday, June 20, 2024, are scheduled to close on Monday, July 29, 2024. The rights issue has been pre-allotted on the basis of one new ordinary share for every 10 existing ordinary shares held as at the close of business on Friday, January 05, 2024.

With promising feedbacks from receiving agents and as shareholders, investors, experts and other stakeholders continue to rate the combined offers high, the board of Fidelity Bank has called an extraordinary general meeting (EGM) to enable the bank to absorb expected surplus funds.

Shareholders are scheduled to meet later this month to authorise the company “to accept surplus monies arising from potential oversubscription of the combined offer in such proportion as may be determined by the board of directors, subject to the company’s issued share capital and obtaining relevant regulatory approvals”.

Shareholders are also expected to increase the issued share capital of the company from N22.6 billion divided into 45.2 billion ordinary shares of 50 Kobo each to N26.70 billion through the creation of up to 8.2 billion in order to “accommodate potential oversubscription of the combined offer in the proportion of 5.0 billion additional ordinary shares under the public offer and 3.2 billion additional ordinary shares under the rights issue”.

The meeting will also mandate the board to take all necessary actions in line with the absorption of the oversubscription funds.

The board of the bank reiterated its commitment to retain the bank’s international banking license by meeting the new capital requirement within the regulatory timeframe.

According to the board, the resolutions proposed for shareholders’ approval at the upcoming EGM of July 26, 2024, are to enable acceptance of potential oversubscription from the combined offer, subject to relevant regulatory approvals.

The board pointed out that with the resolutions to accept oversubscription, the bank will be in stronger position to take advantage of emerging business opportunities and secure long-term profitability and competitive advantage, while ensuring increased shareholder value.

The net proceeds of the offer would be applied to investments in information technology infrastructure, business and regional expansion, and product distribution channels.

“The company is on a strong growth trajectory and requires additional capital for improved profitability, expansion- domestic and international, and enhancement of its digital capabilities.

“Continuing advances in technology, the rapid evolution of the business of banking, and changes in the operating landscape also make it imperative that the bank remains agile, adaptable and properly positioned to respond appropriately to developments, whilst remaining a competitive and forward-looking institution,” the board stated.

Directors of the bank assured that notwithstanding the continued rapid evolution of the banking industry, Fidelity Bank has been placed on foundation for strong and sustainable growth.

Fidelity Bank Plc’s combined N127.1 billion rights and public offer had struck early success as enthusiastic shareholders mobilise to pick their pre-allotted shares and buy more stakes in Nigeria’s most-widely owned commercial bank.

Shareholders have said they would pick their rights and buy more shares from the public offer in a massive show of support and positioning in the bank. Fidelity Bank had delivered an average annual capital gain of more than 100 per cent over the past five years and ranked among the elite stocks with the highest corporate governance rating at the Nigerian stock market.

In separate interviews, shareholders across Nigeria’s leading shareholders’ associations, said the pricing of the highly discounted rights issue and public offer, the operational growth of the bank over the years, dividend records and capital gains were attractions to buy more stakes in the bank. Fidelity Bank is one of the few companies that pay dividends twice a year at the stock market.

They envisioned that a post-recapitalisation Fidelity Bank would deliver higher returns and continue to be a leading preserver of values for shareholders’ wealth.

The shareholders, who spoke through their leaders, said recapitalisation has offered good opportunity to the investing public to buy into good banking stocks at reduced prices, noting that banks are the most influential stocks at the Nigerian market. Subscribers to primary market issues are exempted from paying transaction costs, unlike direct purchase through the secondary market.

Shareholders, under the auspices of Independent Shareholders Association of Nigeria (ISAN), Ibadan Zone Shareholders Association (IBZA), Association for the Advancement of Rights of Nigerian Shareholders (AARNS), Pragmatic Shareholders Association of Nigeria and Progressive Shareholders Association of Nigeria among others, said they were picking up their rights and mobilising supports for the bank.

The general shareholders’ endorsements represent a major boost for Fidelity Bank, which has the most diversified retail shareholders’ base among Nigerian banks.

With nearly 400,000 shareholders, no single shareholder held up to 5.0 per cent of the issued share capital of the bank. Five per cent and above are considered the material shareholding under extant laws and market regulations.

Rights issue is traditionally pre-allotted on the basis of existing shareholdings and its success, most often, depend largely on the satisfaction and enthusiasm of existing shareholders.

Fidelity Bank appears to be riding high on its highly diversified shareholding base with its popularity showing across all cadres of investors in the market. The shareholders’ comments came on the heels of similar positive comments by investment experts and capital market stakeholders.

The combined rights and public offers had opened to a rousing support from the investing public as key capital market stakeholders recalled the symbolic importance of Fidelity Bank’s impressive growths and investor-friendly disposition over the years.

From the Nigerian Exchange (NGX) to stockbrokers, investors and customers; the N127.1 billion combined rights and public offer received unreserved recommendations, with industry thought leaders citing the performance of Fidelity Bank in its core banking operations and as a quoted company at the stock market.

They said Fidelity Bank’s N127.1 billion combined rights and public offer was the right way for the nation’s banking recapitalisation exercise to start as the bank, which has the highest corporate governance rating and an average annual capital gain of more than 100 per cent at the stock market, has strong appeal to the investing public.

The Doyen of Stockbrokers, the oldest practicing stockbroker, Alhaji Rasheed Yussuff, said Fidelity Bank has good records going for it with its history of impressive growth and profitability and dividend payments.


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FCMB Unit CEO Calls for Innovation and Resilience Amid Economic Challenges

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At the BusinessDay CEO Forum, Chukwuma Nwanze, MD/CEO of Credit Direct Finance Company Limited (Credit Direct), FCMB Group’s consumer finance arm, emphasized the critical role of innovation and resilience for Nigerian businesses navigating the current economic challenges. Highlighting the transformative potential of technology and digital transformation, he stressed its importance in adapting to evolving consumer needs and ensuring sustained growth.

Chux Nwanze -CEO Credit Direct – A member of FCMB Group

During a panel discussion on “Leadership and Partnership: Driving Value in a Challenging Economy,” Nwanze emphasized the need for proactive strategies to address market volatility. He offered insights into how businesses can foster innovation and achieve sustainable reinvention.

Nwanze pointed to Credit Direct’s success as Nigeria’s leading FinTech and consumer finance company, attributing its growth to using AI-driven credit decisioning in its loan origination process and digital channels for nationwide expansion. “At Credit Direct, we are able to optimize and scale significantly by using automated credit decisioning in underwriting loans and leveraging digital channels to reach all parts of the country,” he stated. “We consistently innovate to build products that solve our customers’ problems.”

He urged business leaders to embrace emerging technologies and understand evolving consumer behaviours to meet demands and remain competitive. “Leaders must extend their vision beyond traditional boundaries and continuously adapt to changes in the environment,” Nwanze emphasized.

The panel session that featured the Credit Direct boss also had other distinguished business leaders, including Yomi Ademola, Chairman of West Africa Rendeavour and Managing Director, Alaro City; Khilian Khanoba, Senior Partner, Kreston Pedabo; and Dr. Ayotunde Coker, CEO, Open Access Data Centres Limited, who collectively shared profound insights on the subject of driving value in a challenging economy.

Dr Coker particularly stressed the need for broadband development to drive economic growth while also dwelling on the importance of data in making economic decisions. The panelists, including Nwanze, aligned on how these elements are requisite for economic development.

The conference also featured Central Bank of Nigeria Governor Olayemi Cardoso, who participated in a fireside chat titled “Leadership in Tough Economic Times.” Cardoso said: “It is essential for businesses to build genuine credibility. Part of the current focus of the Central Bank of Nigeria is to develop a stronger and more resilient banking system.”

The BusinessDay CEO Forum drew CEOs from Nigeria’s leading companies, including the Deputy Lagos State Governor, Femi Hamzat, and former Governor of the Bank of Kenya, Patrick Ngugi Njoroge. The annual gathering, organized in collaboration with PricewaterhouseCoopers (PwC), is a platform for top executives and government officials to discuss critical economic issues and shape the nation’s economic landscape.


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NDIC Harps on Collaboration to Check Insider Abuses, Financial Malpractices

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The Nigeria Deposit Insurance Corporation, NDIC, urged for more collaboration with enforcement agencies to tackle the menace of insider abuses and malpractices in financial institutions.

Bello Hassan, Managing Director/Chief Executive Officer, NDIC, made this call while speaking at the capacity building workshop for law enforcement agencies in Lagos.

Speaking on the theme of the workshop, “Effective Collaboration as a strategy in the fight against insider abuses and financial malpractices in Banks and Other Financial Institutions in Nigeria,”

Hassan said that the menace of insider abuses and financial malpractices is   a major cause of bank failure, which if not tackled is   capable of eroding public confidence in our banking system.

Stating that the aim of the workshop is to build on current collaborative efforts in the fight against insider abuse and financial malpractices, the NDIC boss said: “In line with similar initiatives by the Corporation, this workshop aims to complement the efforts of the Inter-Agency Task Force on the Implementation of Failed Banks Act, and I want to believe that all the Agencies involved as members of the Task Force are being represented at this workshop.

The Corporation, whilst bearing in mind the positive impact of such collaboration will continue to strive at enhancing the synergy between all of us in the area of law enforcement relating to investigation and prosecution of financial malpractices.

“Please permit me to use this forum to appeal to the members of the Task Force not to relent on your oars but to execute the given mandate diligently thereby achieving the objectives of establishing the Task Force.

“Through our collaborative efforts, I am aware that fourteen (14) prosecution cases are on-going at various courts, eighteen (18) on-going investigation with FMIU, eight (8) with EFCC and nine (9) concluded investigations with Federal Ministry of Justice for advice and prosecution. This is an indication that we are on the right course.”

Consequently, Hassan urged the gathering of law enforcement agencies not relent on their efforts adding that the NDIC is aware of the challenges of investigating and prosecuting financial malpractices and bank fraud cases and will give its unflinching support at all times.


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