Business
Bank Reform: CBN To Overhaul Corporate Governance Soon
A complete overhaul of corporate governance and risk-base consolidated supervision of banks will form the fulcrum of the second phase of banking sector reforms coming up in the first quarter of 2010, the Central Bank of Nigeria (CBN) has said.
But a major player in the industry thinks otherwise, saying one-size-fits-all approach to corporate governance will continue to lead us to sub-optimal outcomes.
Kingsley Moghalu, deputy governor, Financial Sector Surveillance, Central Bank of Nigeria (CBN), revealed that by the first quarter of 2010, the new harmonised and comprehensive corporate governance code will be issued by the apex bank, adding that it will also ensure compliance by enforcing it.
Also, CBN said the reform in the banking sector will focus on disclosure and international financial reporting standards as well as consumer protection.
The proposed harmonised corporate governance code which the Financial Sector Regulatory Consultive Committee (FSRCC) is working on not just the individual codes issued by Nigerian Deposit Insurance Corporation (NDIC), pension commission (PENCOM) and the CBN.
Moghalu, who spoke in Lagos at a public lecture with the theme, ‘The Financial Crisis, Banking Regulation and Payment System in Sub-Saharan Africa,’ organised by London School of Economics Alumni Association of Nigeria, noted that the banking sector watchdog is putting in place, a risk based supervision framework which will focus on proactive examination of banks, proactive management of risks, examining banks from the perspective of risks analysis and risks management.
Also at the lecture, Atedo Peterside, chairman, Stanbic IBTC Bank, faulted the proposed harmonised corporate governance, noting that ‘our regulator imposed corporate governance codes and arrangement but do not take cognisance of vastly deferring ownership/management dynamics, nor are they adjusted or fine-tuned for the unique set of risks facing each institution”.
In another development, Moghalu revealed that CBN will soon commence a comprehensive training programme for every examiner of the CBN, whereby after completion, every supervisory staff member of the CBN becomes a risk management expert, with the skills to be able to apply the risks based supervisory framework to examining banks operating in Nigeria.
According to CBN, the second phase of the reforms will also include the creation of the Assets Management Company (SMC) which Moghalu described as very important for the resolution of the banking crisis because “the AMC will buy toxic assets off the rooms of these banks and we believe that, that will generate confidence.”
“Payment of tuition fees for undergraduate/postgraduate studies shall be subject to a maximum limit of $25,000.00 per semester,” the Manual states.
The expansion of international card limits also reflects growing confidence among lenders that foreign exchange liquidity has improved enough to support retail dollar transactions.
Speaking recently at the BusinessDay 14th Annual CEO Forum in Lagos, CBN Olayemi Cardoso, governor of the CBN said buying and selling activities now increasingly determine outcomes in the foreign exchange market, unlike in the past when market participants relied heavily on routine Central Bank interventions.
According to Cardoso, Nigeria’s net foreign exchange reserves have risen from just over $3 billion at the start of the reform programme to more than $40 billion, while gross reserves have climbed to about $52 billion, providing stronger confidence for investors and enabling the Central Bank to reserve interventions for periods of market stress rather than day-to-day liquidity management.
The restoration and expansion of international naira card spending limits are increasingly being seen as one of the clearest signs that the benefits of the CBN’s foreign exchange reforms are beginning to reach households, students and businesses making legitimate cross-border payments.
The Secretary-General and Chief Executive Officer, WEC, Dr Angela Wilkinson, disclosed this in a statement, last Thursday.
“Nigeria’s participation comes at a pivotal time as the country seeks to expand energy access, strengthen energy security, accelerate gas development and mobilise the capital required for industrialisation and sustainable economic growth.
“WEC Nigeria will convene leaders from across the energy ecosystem, apply the WEC’s globally recognised Energy Trilemma framework to Nigeria’s unique context, and promote evidence-based dialogue, practical collaboration and informed policymaking.
“It will also ensure that Nigerian and broader African perspectives contribute meaningfully to global energy conversations,” she said.
Wilkinson expressed confidence that Nigeria would play a significant leadership role at the World Energy Congress scheduled for Riyadh in April 2027 and beyond.
The statement also quoted the Chairman of WEC Nigeria, Isa, as describing the country’s participation as an opportunity to deepen national and African leadership within the global energy community through practical solutions tailored to regional development priorities.
He said the platform would promote collaboration across sectors and attract sustainable investments into Nigeria’s energy sector.
The Chief Executive Officer of WEC Nigeria, Wunti, was quoted in the statement as saying that the council would connect leadership, evidence and investment to build a secure, affordable and sustainable energy system.
“This system will be capable of driving economic growth and shared prosperity.”
According to him, the platform will also connect Nigerian institutions and businesses with international knowledge, technology, partnerships and investment opportunities through the World Energy Council’s global network.
Recall that WEC, founded in 1923, is the world’s oldest independent and impartial community of energy leaders and practitioners, advancing informed, collaborative and practical action across the global energy system.