By Jide Komolafe
Minister of Finance, Dr Mansur Muhtar has assured that the federal government will make urgent exit from the eight troubled banks taken over by the Central Bank of Nigeria (CBN).
The eight banks are Union Bank, Intercontinental bank, Spring bank, BankPHB, Oceanic bank, Afribank, Finbank and Equitorial Trust bank.
â€It is very important to note that the government remains committed to ensuring the stability of the financial system. We expect an urgent exit from the financial institutions rescued with public funds, while protecting investment value during the intervention. While we continue to manage this necessary intervention, the focus must be on eventual resolution.
â€œThe government is working hard on ensuring long_run soundness and stability of the financial system. Focus will continue to remain on enhancing the supervisory framework, including the implementation of risk_based and consolidated supervision and strengthening integrated financial sector regulation to enhance the resilience of the sector for a more effective contribution to economic growth.â€, Murtar said in Lagos last week
He stated this in a goodwill address delivered on his behalf by the former Minister of Justice and Attorney-General of the federation, Chief Bayo Ojo at the London School of Economics Alumni Association of Nigeria in Lagos Public Lecture onÂ Â financial risks, financial crises and public policy with special reference to Africa.
He said, â€œThis Public Lecture could not have come at a better time, as African economies were not spared the waves of the global financial meltdown that rolled over from the previous year. This Public Lecture is taking place against the backdrop of global financial sector upheavals and the associated dramatic slowdown in trade and output that commenced in 2008 and lingered through the better part of 2009. World growth is projected to contract by about 1 percent in 2009 and to expand by about 3 percent in 2010, which is well below the rates achieved before the crisis.
â€œI would like to highlight, in my assessment, the key policy lessons of the on-going global financial crisis: Enhancing the capacity of the regulatory agencies to monitor effectively the complex operations of the financial sector is very important;Â Â It is critical for corporate governance to embed a firm_wide focus on risk.
The financialÂ market turbulence has provided clear evidence that effective cultivation of a consistent â€œrisk cultureâ€ throughout firms is the main enabling tool in risk management;Â Within a solid risk management framework, a key part of an effective risk culture is the articulation of the firmâ€™s risk appetite, and ensuring its adoption throughout the firm;
Ensuring that compensation incentives do not induce risk-taking in excess of the firmâ€™s risk appetite; andÂ Making the approach, principles, and objectives of each firmâ€™s compensation policies transparent to stakeholders.
â€œSeveral measures were undertaken to mitigate the impact of the global financial crisis on the Nigerian financial system. These measures were predicated on the fact that a strong and robust banking sector is essential to accelerating economic recovery.
With a view to improving the balance sheets of banks as well as enhance the flow of credit to the real sector, the Federal Ministry of Finance is collaborating with the Central Bank of Nigeria to accelerate the establishment of an Asset Management Company (AMC). A Bill to this effect has been submitted to the National Assembly. The AMC is conceptualised to assist banks to improve their capital and liquidity positions by taking over toxic assets (qualifying loans) from the banks.
â€œThe Federal Ministry of Finance actively participates in the activities of the Financial Services Regulation Coordination Committee (FSRCC). This is a body charged with promoting cooperation among regulatory bodies and the Federal Ministry of Finance.
Thus, any information gap encountered by any regulatory agency in its relationship with any group of financial institutions are easily addressed; the overall objective being the articulation of strategies for the promotion of safe, sound and efficient practices by financial intermediaries.â€