The Nigerian Central Bank is seen in Abuja, Nigeria. The central bank has ordered lenders to boost capital by Sept. 30 or it will withdraw interbank guarantees. Photographer: Suzanne Plunkett/Bloomberg
The banking sector reported N21 billion fraud cases last year, the Nigeria Deposit Insurance Corporation (NDIC) said in a report.
But of the amount, only N11.68 billion cannot be recovered or covered by the insurance bond, the NDIC report of the year ended December 2010, added.
The NDIC said the amount represented a drop from that of 2009, which stood at N41.3 billion.
The drop, it said, represented a rapid improvement in terms of accountability and transparency in the conduct of banking transactions in the country.
The corporation stated that there were 1,532 reported cases compared with 1,764 reported cases of frauds and forgeries in 2009.
An analysis of the type of frauds and forgeries perpetrated during the review period showed that the commonest were: Automated Teller Machine (ATM) fraud, fraudulent transfers/withdrawals, lodgment of stolen warrants; presentation of forged cheques, suppression of customer deposit, granting of unauthorised credits and loss of money to armed robberies and outright theft.
Besides, a total of 357 bank employees were reported to be involved in frauds and forgeries in 2010, a decrease of about 45.58 per cent when compared with the 2009 figure of 656. Of the total, core operation staff such as supervisors, officers, accountants, managers, executive assistants, clerks and cashiers made up 286 persons, thus accounting for about 80.11 per cent.
Meanwhile, the NDIC has commenced discussion with Assets Management Company of Nigeria (AMCON) to use its platform to dispose some of the risk assets of banks-in-liquidation. To facilitate this, NDIC has completed the segregation of all accounts with outstanding balances of N100 million and above, which would be offloaded to AMCON as soon as it takes off. The NDIC has appointed some debt collection agents to enhance the pace of debt recovery.
Also, total cumulative recoveries made by the NDIC in 2010 was N22.79 billion, as against N20.77 billion in 2009, representing an increase of over N2 billion, or about 9.7 per cent.
The banking industry capital adequacy ratio deteriorated by 5,92 percentage points from the 10.24 per cent recorded in December 2009 to 4.32 per cent as at December 2010, which is far below the prudential minimum of 10 per cent. “The significant decline could be attributed to the inability of some banks to make adequate provision for their toxic loans as recommended by the CBN/NDIC examiners during the year,” the NDIC said.
Consequently, Tier II capital attached declined by 8.47 per cent while Total Qualifying capital recorded a significant decrease of 65.48 per cent over the same period. Also, Primary Capital (Tier1), which is the adjusted shareholders funds, depreciated by over 30 per cent from N448.99 billion reported in 2009 to N312.36 billion as at December 2010.
via The Nation