Lessons from the banking reform in Nigeria

CBN reform: Ex-banker highlights important lessons
By CHIMA NWOKOJI
As the ongoing reforms in the banking system has reached advanced stage with presidential assent obtained for the establishment of the Asset Management Company of Nigeria, a former Head of Strategy at the First City Monument Bank (FCMB), Dr Biodun Adedipe has drawn the attention of stakeholders to three important lessons that should be drawn there from.
The Financial Consultant reeled out these lessons while speaking at the 15th edition of the annual workshop for Business Editors and Finance Correspondents in Benin. He said the first lesson is the inevitability of the business cycle which is characterised by boom that will necessarily be followed by recession and possibly slump before recovery. To this end, he advised that lending by banks should be done cautiously during a boom era,’’ observing all the rules of risk management so that they can minimize losses when things go really bad.’’
The second lesson is for those that engage in wrong behaviour , who he advised to know that a day will come when someone will call those actions to question. ‘’the price to be paid might just be too high, but unfortunately could affect adversely so many stakeholders ,a number of whom might not recover from the losses inflicted by the irresponsible acts of a few privileged individuals who largely own and/or run the banks.’’
Adedipe further noted that the third lesson was that stakeholders should never assume that the industry is insulated whenever there is ‘’a problem of global dimensions,’’ in an environment where the banks are daily becoming more active internationally.
According to him, if the actions taken since August 2009 had commenced earlier (say in March 2008) , the banks probably would not have deteriorated to the level discovered and announced on August 2009.
Adedipe further admonished that as the Asset Management Company (AMCON) comes on stream, the exit of the Central Bank of Nigeria from the troubled banks should be orderly and transparent.
The 3-day seminar with the theme, “the blueprint for banking reforms in Nigeria: issues, challenges and prospects”, is designed to facilitate better education and enlightenment of the public through capacity building of finance correspondents and business editors.