NDIC Pays N593.8m to Shareholders of Banks In-liquidation

By Dipo Olowookere

The Nigeria Deposit Insurance Corporation (NDIC) on Tuesday revealed that it paid the sum of N593.78 million to shareholders of some banks in-liquidation in 2018.

In a report released today and obtained by Business Post, the deposit insurer in the country said this amount was paid to 48 shareholders of the affected lenders.

“The NDIC paid the sum of N593.78 million to 48 shareholders of Alpha Merchant Bank, Rims Merchant Bank and Continental Merchant Bank in 2018,” the report titled NDIC 2018 Annual Report.

It stated that the cumulative liquidation dividend paid amounted to N3.30 billion to 679 shareholders of six Deposit Money Banks (DMBs) in-liquidation as at December 31, 2018 against N2.71 billion paid to 631 shareholders of DMBs in-liquidation as at December 31, 2017.

“However, the total liquidation dividend declared for shareholders of DMBs-in-liquidation stood at N4.04 billion as at December 31, 2018,” the report added.

The NDIC further said in the report that during the year, it paid the sum of N1.52 billion to uninsured depositors of 20 DMBs in-liquidation.

In total, the agency said it has paid the sum of N100.39 billion as liquidation dividend to uninsured depositors of closed DMBs as at December 31, 2018.

The report stated that through sustained and diligent liquidation activities, the NDIC has realized assets to fully pay the deposits of the customers of 17 out of the 49 DMBs in-liquidation.

“In effect, all the depositors of the 17 defunct banks who came forward to file their claims have been paid all their monies (both insured and uninsured) that were erstwhile trapped in such banks,” it said.

On the asset management activities in the year under review, the NDIC said it ensured the efficient conversion of assets of closed financial institutions to cash for the payment of liquidation dividend to uninsured depositors, creditors and shareholders.

“Overall, the NDIC realised the sum of N777.03 million from the disposal of risk assets, physical assets and investments for the DMBs, MFBs and PMBs in-liquidation during the year ended December 31, 2018,” it added.

Commenting on the major challenges faced in asset management activities in 2018, the agency said they were majorly inadequate documentation of borrowers’ information by failed banks; unwilling attitude of high net-worth debtors of failed banks to liquidate their debts; preponderance of uncollateralised loans; problems associated with identifying assets of judgment debtors; protracted legal processes due to frequent adjournment of cases; large outstanding insider-related debts usually characterised by poor documentation and insider abuse; and difficulties to repay loans induced by economic realities, policy inconsistencies as well as issues relating to moral hazards.