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Registrar/Chief Executive, Chartered Institute of Bankers of Nigeria (CIBN), Dr. Uju Ogubunka  says  it is possible for bank customers to safeguard their money in a bank against distress and he explains how this can be achieved.

Do distribute your deposits rather than concentrate them in one bank. Large deposits in a single bank, though sometimes profitable and even necessary, may be unwise and unsafe. Like the saying goes, never put all your eggs in one basket

Do conduct your deposit and indeed other businesses with your bank honestly and report any anomalies timely. You should bear in mind that the journey to losing your money begins with the distress of your bank. The cause of distress can arise from customers’ dishonesty and other malpractices.

Do keep your deposit with your bank on short-term rather than long-term maturity especially in an unstable economic and financial environment. This will enable you to withdraw it if problem suddenly begins

Do develop inquiring mind about what concerns your bank. It is no crime to ask questions and receive answers. After-all, it has been said that where a person’s treasure is there is the heart.

Do take particular interest in the Annual Reports of Banks and happenings at the Annual General Meetings. Take special interest on the performance of the bank and the External Auditor’s report. There may be something to learn to enable you protect your money.

Do study your periodic Statements of Account given to you by your bank regularly and watch out for any manipulations. Many a time, unethical and unprofessional and hence, potential distressed banks,
manipulate some customers’ accounts to cover their weaknesses.

Do take action at the slightest credible news/ information that your bank is threatened or having financial problem. Take your money away, even if your action is pre-emptive. You can return the money when you are reasonably certain that the source of threat has been removed.

As in the case of don’ts, there are many other dos besides the above. Whatever that can ensure the safety of your money, you must do, if indeed, you are sincere that you seek to safeguard it.

There are a few things however, that you must, by all means, be careful of in your plans to walk ahead of bank distress. Some of them are as follows:

Be careful with banks that offer more than market interest rates to attract deposits. As has been widely proven, the higher the interest rate, the riskier the safety of the money. Banks with liquidity problems (particularly those that are over-trading) are usually prepared to and indeed, do buy deposits at very high interest rates. Being careful with banks offering more than market interest rates is one wisdom in staying ahead of bank distress.

Be careful with banks that are overtly extravagant. As the saying goes, extravagance “if not a crime, very naturally, leads to crime”. The safety of a bank, if its officials spend extravagantly, is suspect especially in the medium to long term.


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