By Babajide Komolafe

It used to be the norm in the banking industry until 2007, when the Central Bank of Nigeria and Nigeria Deposit Insurance Corporation (NDIC) used the Purchase and Assumption model for the resolution of problem in banks that lost their operating licence due to inability to meet the N25 billion new minimum capital base. Before then, whenever the CBN revoked the licence of a bank, depositors suffer.

This is because from the moment the licence of the bank is revoked, they are denied access to their money until the NDIC is ready to start liquidation process. Even then, depositors would only be paid the insured deposit, which used to be N100, 000, but now N200, 000. The process can take years. The suffering is sometimes aggravated if the owners of the bank go to court to challenge the revocation of their banking licence. Ask the depositors of Fortune Bank, Savannah Bank, more than five years after the CBN revoked the licensces of these banks, depositors can’t access their money because of legal action.

But the situation has changed. The CBN and NDIC are now wiser.. By embracing the Purchase and Assumption (P&A) and Nationalisation options, depositors are not denied access to their money simply because the bank has been closed.

But the Securities and Exchange (SEC) and the Nigeria Stock Exchange (NSE) are still operating the old model.  They allow investors to suffer for the sin of operators. This is reflected in the complaint received from the Retirees of Delta Steel Company, Warri, Delta State. Their stockbroker, Securities Solution Limited, was suspended by the NSE, and its account frozen.

Meanwhile, the company had sold shares on behalf of the Retirees, and had not remitted the money to them before its suspension. Hence, since 2012 January, these Retirees cannot access their money. Many investors in the capital market are suffering similar fate. Their sin was that they patronised stockbroking firms that were suspended by the regulators.

More worrisome is the fact that the regulators are not considerate of their plight, that many of these investors might lose their lives because they cannot access their money. The reality is that most times, it is the investors and not the suspended operators that suffer. The sanctioned operator
most likely would still be walking free, enjoying their wealth. Thus the investor suffers for the sin of the operator.

If the CBN and NDIC can find a way to sanction erring banks’ managements, close banks, without denying depositors access to their money, surely, SEC and NSE can,  and should find a way to sanction erring operators, without denying investors access to the money. All it requires is a will to do it. This is because where there is a will, they is a way.