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INTRODUCTION
On the 29th of April, 2021, the Central Bank of Nigeria (â CBNâ), the apex regulatory body for banks and other financial institutions in Nigeria created under the CBN Act 2007 (âCBN Actâ),1 announced the removal of all the directors of First Bank of Nigeria Limited (âFBNâ) and its holding company, FBN Holdings Plc (âFBN Holdingsâ). The CBN also re-appointed 14 out of the 21 directors affected by the removal to form a new board of directors for the two institutions and reinstated the removed Managing Director/Chief Executive Officer of FBN (âMD/CEOâ), Dr. Adesola Adeduntan.2
This action raises important legal issues, which will be addressed in this article, especially with regards to the regulatory powers of CBN to make decisions concerning the constitution of the board of directors of financial institutions in Nigeria.
A recent review of the status of Nigeria’s banking industry at the backdrop of the adverse impact of COVID-19 on the overall economy has indicated sound fundamentals. But the policy powerhouse of the apex financial regulatory authority also hinted of some downside risks and weak links.
Vanguard’s analysis of the financial performance of the leading banks in Nigeria indicated a significant drop in revenue and profitability on industry-wide scale.
However, the personal positions of members of the Monetary Policy Committee, MPC, of the CBN has given a near-clean bill of health to the industry, while pointing to some red flags in the first quarter of 2021.
The increase in non-performing loans - one of the risks of the banking system this year
Recorded by Emilia Olescu (TRANSLATED BY COSMIN GHIDOVEANU)
• (Interview with Gabriela Folcuţ, Executive Director of the Romanian Banking Association)
An increase in the volume of non-performing loans is one of this year s risks for the banking system, Gabriela Folcuţ, Executive Director of the Romanian Banking Association (ARB) told us. The Balance of Non-Governmental credit evolved by 5.5% in 2020, as the economy contracted by 5.2%, according to estimates. Thus, paradoxically, we could also witness an increase in the degree of financial intermediation, up from 25%. .
In 2021, lending is expected to record a growth rate at least equal to that of 2020, but this sector is also affected by uncertainties related to the evolution of pandemic. One of the identified risks is that of an increase in of non-performing loan ratio.
Vanguard News
Banking industry report shows mixed development
On
• Capital adequacy declines, bad loans increases
• CBN chiefs say all is well with slight warnings
By Emeka Anaeto, Business Editor
The Central Bank of Nigeria, CBN, staff report has indicated that the banking industry ended 2020 in a mixed performance. But members of the apex bank’s Monetary Policy Committee, MPC, its highest policy body, have indicated that the industry remained resilient and sound despite some negative impacts of the COVID-19 pandemic during the year.
The report indicated that the banking industry liquidity ratio improved markedly between October and December 2020 from 35.6 per cent to 44.5 per cent.