The Nigeria Deposit Insurance Corporation, NDIC, said that decision to liquidate the defunct Fortis Microfinance Bank was taken after efforts to resuscitate the bank proved abortive.
The corporation stated this in response to comments by some financial sector operators which alleged that the liquidation of Fortis MfB was hastily done without regards for interest of stakeholders.
In a statement signed by Mohammed Kudu, Head, Communications and Public Affairs, NDIC, the corporation averred that the allegations are false and misleading, stressing, “Liquidation of ailing banks is always the last option adopted by the NDIC after other cost-effective resolution options have failed. In all instances, the safety of depositor’s funds is the primary concern of the corporation.”
The corporation said: “With particular reference to the liquidation of the Fortis MFB, it would be recalled that Fortis MFB was licensed by the Central Bank of Nigeria, CBN, in 2007 and listed on the Nigerian Stock Exchange, NSE. However, in 2016, the shares of the bank was suspended due to failure to submit its 2016 audited accounts.
“It should be noted that the various examinations and supervisory interventions of CBN and NDIC revealed that the bank was being run in an unsafe and unsound manner leading to huge non-performing loans, high cost of funds (foreign and domestic borrowings, and fixed/term deposits), exorbitant administrative and personnel costs (especially high emoluments to successive CEOs), and poor corporate governance practices, all of which impacted negatively on its financial condition. As a consequence, the bank was illiquid, could not honour its obligations to its depositors, and became insolvent.
“The unhealthy condition of the bank degenerated to the extent that the CBN removed the Management of Fortis MFB Plc in February 2018 and appointed a four person Interim Management Committee, IMC, to take over the control and management of the bank. The IMC which comprised of officers drawn from the CBN and NDIC, as well as an independent Chairman, were mandated to steer the bank back to sustainability. The IMC managed the affairs of Fortis MFB Plc for a period 10 months during which it did all it could to resuscitate the bank and began reimbursing depositors, using funds advanced by CBN for that purpose.
“The above is contrary to the claim by Mallam Garba Kurfi, Managing Director of APT Securities and Fund, that the CBN/NDIC made no prior attempt to salvage the ailing bank before its eventual liquidation. Unfortunately, due to the mismanagement of the bank by its erstwhile Board and Management, it could not be salvaged, hence its eventual liquidation.
“The general public is therefore urged to disregard the misleading claims in the publication and to remain assured that the NDIC will always be faithful and alive to its responsibilities in protecting Nigerian Depositors at all times.”