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Don seeks two-way regulatory authorities to tame collapse of banks’, others

A Senior Lecturer in Strategy, Corporate Governance and Risk Management, Lagos Business School, Pan Atlantic University, Lekki, Professor Franklin Ngwu, has called for immediate collapse of all financial regulatory agencies to two so as to give tailored supervision to the banking activities in Nigeria.
Currently, Nigeria banking sector can be said to be under the supervision of a number of agencies starting from the Central Bank of Nigeria (CBN), National Insurance Commission (NAICOM), Securities and Exchange Commission (SEC), Nigeria Depository Insurance Corporation (NDIC), to the National Pension Commission (PENCOM).
But speaking in an interview, Prof Ngwu averred that when the entire number of supervising agencies are pruned down or streamlined under Prudential Regulatory Authority (PRA) and Financial Conduct Authority (FCA), it will afford the CBN to clinically focus more on monetary policy issues.
He argued that such a system will deepen industry synergy and further enhance proper regulation of the industry while reducing the prevalence of failed bank incidence in Nigeria.
According to him, “The synergy is what is called twin pick regulations whereby all the multiple regulators would come together and form two major regulators known as prudential regulatory authority and financial conduct authority.
“The main challenge we have in the industry, like what happened with Polaris bank is pure conduct issue, the harmonization will allow the conduct authority to properly access the conduct of the different directors and managers of the financial industry.
“Similarly, the prudential regulatory authority will now focus on ensuring that any financial institution will have the required capital adequacy and other prudential requirement before they are allowed to operate in Nigeria.
Prof Ngwu stressed that “By time the prudential regulation and conduct regulation come together, there is going to be a kind of buying, feedback mechanism, for proper regulation of the industry.
“What it does is that they allow CBN to focus more on monetary policies and liaise with these two regulators to achieve optimum outcome for the banking sector. The present situation whereby you have multiple regulators is repetition of functions.”
While giving classical examples with economies like UK, USA, South Africa, Australia, New Zeland as emerging and developed markets where similar approach has been adopted, Ngwu noted that their various economies have recorded consistent improvement when compared to their peers and Nigeria in particular.
However, another Don, Professor of Capital Market and Head, Banking and Finance Department, Nasarawa State University Keffi, Prof Uche Uwaleke argued that “Rather than merge them, what is required is an effective coordinating structure. To this end, the Financial System Regulatory Coordinating Committee which is already in place should be strengthened and be made more visible”.
Business Hilights recalls that the nation’s banking industry has been recording recurring cases of bank failures and even the death of other related financial services providers including Micro Finance Banks, Finance Houses and Mortgage banks roughly every five to seven years.
Before the ‘Hurricane Sanusi’ between 2006 and 2008, several banks collapsed while some were rescued with public funds valued at over N620bn which is yet to be recovered both by the CBN and NDIC that gave them out.
Last month, both CBN and NDIC rescued another bank and renamed it Polaris Bank with a whooping N786bn injection.
It would be recalled that CBN had in 2016 sacked the management board of Skye Bank (now Polaris Bank) and appointed new board with injection of N100bn. Currently, commonwealth of Nigerians valued at N886bn is stocked in Polaris Bank without a clear timeline for recovery.
On the N620bn dashed out by former CBN Governor, Sanusi Lamido Sanusi, current management at the same CBN has no plan whatsoever to begin any recovery move for the tax payers’ money.