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How to safeguard your money in banks (5)

Do not deposit your money with a bank that has not published its audited Annual Report and Statement of Accounts in accordance with statutory provisions. As you know, the CBN must approve a bank’s account before it can be published. If something is wrong, the CBN may not approve the publication. This could be a danger signal.

Do not have anything to do with a bank that is involved in gambling. Gambling is not for a bank that has the safety of its customers’ funds at heart. If you are able to identify a bank that is gambling, do not touch it even, with the longest spoon. Its days are numbered. And gambling in banking can come in many shades, particularly when a bank embarks on non-banking businesses that it lacks the experience to see through.

Do not deal with a bank whose loans and advances are concentrated on few large borrowers. Few large borrowers in a bank surely can determine the fate of the bank. Indeed, if anything should happen to them resulting in their inability to repay the facilities, the lending bank suffers, many a time with depositors.

Do not transact your deposit business with a bank whose shareholders/directors are the main beneficiaries of its credit facilities. This could be a case of lack of good corporate governance as well as non-compliance with statutory provisions against such practice. It is dangerous. For one thing, they may decide that it is their own share of the “national cake” and thus, refuse/neglect to repay the borrowing. The rest will be history.

Do not entrust your money to a bank whose loans and advances are largely not being repaid by its borrowers. The liquidity and profitability of the bank is under threat. Poor asset quality in a bank is usually evidence of poor management.

Do not deposit your money with a bank where malpractices and frauds are prevalent otherwise, your deposit may be the target. Besides, malpractices and frauds are known to have accounted for the distress of some banks.
Do not bank with any bank that cannot keep confidential, its customers’ banking transactions, except as permitted by law.

Do not deal with a bank the integrity, credibility and experience of its Board and top management are in doubt. What makes a bank survive and succeed revolve around integrity, credibility and experience.

There are many other don’ts but those discussed above are central to ensuring the safety of your money in banks. Now, let us address the dos.

Do Know Your Bank (KYB). This must be on be consistent basis. If you fail to know your bank, it will be very difficult if not impossible for you to know when things are not going the right way. Therefore, you must be close to your bank. This YOU can achieve through distinct sources, for instance, news items, auditors’ reports and indeed, general market perception of the bank.


Disclaimer

Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.