Rise in Legal Actions by Failed Bank Staff Worry NDIC

Nume Ekeghe

The Nigeria Deposit Insurance Corporation (NDIC) has raised concern over the rising tide of legal actions filed by former employees of failed banks, warning that such cases are increasingly obstructing its ability to liquidate distressed institutions efficiently and protect depositors.
Speaking at a sensitisation seminar for judges of the National Industrial Court (NIC) and members of the Investment and Securities Tribunal in Lagos recently, the Acting Managing Director/Chief Executive of NDIC, Mrs. Emily Osuji, said employment-related litigation especially those involving claims for severance, unpaid salaries, and other benefits pose a significant challenge to the Corporation’s liquidation mandate.
“Cases involving severance packages, outstanding salary arrears, and exit packages for former employees of banks undergoing liquidation warrant careful consideration. It is important for judges of the National Industrial Court to re-examine the priority of claims as stipulated under the NDIC Act, 2023 when adjudicating such matters. This approach is crucial to ensure the protection of the law on priority of claims in bank liquidation.”
She emphasised that while the Corporation respects the rights of all stakeholders, including former employees, judgments obtained without reference to the priority framework outlined in the NDIC Act could have unintended consequences on depositors and the wider financial system.
“Employment cases initiated by former staff of failed banks against the NDIC, particularly those litigated before the National Industrial Court, present a significant challenge to the NDIC’s mandate of liquidation.
“This challenge is particularly pronounced when judgements obtained by former bank employees and officers are executed against the assets of the Corporation.”
Osuji noted that while the Corporation had recorded significant milestones such as the swift and orderly closure of Heritage Bank legal actions that sidestep statutory liquidation priorities risk undermining progress and delaying depositor reimbursements.
She said NDIC continues to engage with the judiciary to deepen understanding of the legal and operational context in which the Corporation functions and to support efficient resolution of banking crises.

Also speaking at the event, the Administrator of the National Judicial Institute (NJI), Hon. Justice Salisu Garba Abdullahi, urged judges to apply a broader lens when adjudicating financial disputes, especially those that intersect with national economic stability.

“It is imperative for judicial officers to comprehend not only the technicalities of financial laws but also their far-reaching implications on economic stability,” he said.

According to him, as the banking sector evolves with digital innovation, cryptocurrency and decentralised finance, the courts must be prepared to adapt and support a responsive legal ecosystem.

“This seminar offers a platform for discourse on global best practices, legal precedents, and policy directions, which will enhance adjudicatory efficiency and contribute to the overall confidence and security of Nigeria’s financial system,” he added.