CBN Governor, Sanusi Lamido Sanusi
By Obinna Chima
As the banking sector reform gradually comes to an end, the Central Bank of Nigeria (CBN) has advised risk managers of banks not to rest on their oars.
CBN Governor, Malam Sanusi Lamido Sanusi, made this call at the 11th annual conference of the Risk Management Association of Nigeria (RIMAN), held in Lagos, Thursday.
Sanusi, whose speech was presented by the Deputy Director, Risk Management Department, CBN, Mr. Olawoyin Adebola, reiterated that the approach taken by the apex bank in the ongoing reform was different from traditional approaches in the past, where banks would have been allowed to fail.
He maintained that the objective of the banking sector watchdog was to build a stable financial system.
Sanusi noted that the ongoing global financial crisis continues to hurt both Nigeria and other countries across the globe, adding that the global financial crisis affected the gains that were achieved during the 2005 banking sector consolidation.
According to him, a sound financial system can only be achieved when substantial and fundamental economic reforms are implemented.
He however listed some of the cardinal pillars of the ongoing reforms to include; enhancing the quality of banks, establishing financial stability and ensuring that the financial sector contributes to the real economy.
“Consumer confidence is also been tackled in the reform programme. It is hoped that the new macro-prudential rules would limit capital market lending to certain proportion of banks’ balance sheet, prohibiting banks from using depositors’ funds for propriety trading or venture capital investment,
“The important thing is to learn from the past and avert the dangers of the past. We should all try to be vigilant risk managers ahead of any situation, so as to guide our institutions, our financial sector and economy as a whole,” Sanusi added.
Earlier, in his address titled: Recent Market Turmoil: Rethinking the Role of Risk Managers in a Changing Wold,” the President, RIMAN, Mr. Emmanuel Abolo, pointed out that failures of financial institutions were often caused by failure to adhere to basic risk management principles, especially when new products and markets emerge.
“In many cases, this is due to the pressure that firms face to increase market shares, combined with unrealistic expectations about growth and performance prospects. But no matter how much, risk exposures get sliced, diced and distributed among financial market participants, financial innovation cannot mask poor underwriting.
“Banks are not only participants in the financial markets; participants cuts across several sectors and industries and in a world of interconnectedness, we cannot remain blind to systemic dynamics. We at RIMAN are conscious of this fact which explains why we have continued to reach out beyond the financial service industry,” Abolo added.