AMCON Boss Seeks Reintroduction of Failed Bank Act

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Ahmed Kuru

Nume Ekeghe

Disturbed by the rising level of toxic loans in the banking sector, the Managing Director/Chief Executive Officer, Asset Management Corporation of Nigeria (AMCON), Mr. Ahmed Kuru, Wednesday stressed the need to revisit the Failed Bank Act, so that operatives in the banking sector would be made to account for their actions.

Kuru, also urged banks to immediately strengthen their risk management framework to stem the negative growth.

The AMCON boss, was quoted in a statement, to have made the remark in Lagos, when he played host to officials of Risk Management Association of Nigeria (RIMAN).

According to him, the reintroduction of the Failed Bank Act into the country’s financial system would not only curtail the current trend of financial rascality on the part of some bankers, but would bring discipline to the banking industry in general.

As a former bank CEO, Kuru, explained that given the huge resources available to financial institutions and the pivotal role they play to the development of the economy makes it mandatory for financial institutions to take the issues of risk management seriously to prevent what happened during the global financial crisis.

He suggested that in line with the fight against corruption, there was also the need to fight against impaired and arranged credits so that operators are held responsible for booking credits contrary to their credit policy, that go bad under their supervision.

Reiterating that one of the reason for the failure of the banking system during the global financial crisis of 2008/2009, which eventually led to the creation of AMCON was because of the prevalence of weak risk management framework by financial institutions, Kuru said the trend became a baggage, which contained all sorts of bad omen for the economy including poor corporate governance structure, lack of robust risk management strategy and lack of adherence to laid down principles that govern credit approvals by financial institutions.

He added: “I have been on both sides, therefore, I can authoritatively comment on issues relating to risk management. Immediately after the intervention of the Central Bank of Nigeria (CBN) in 2009, they insisted that risk management must be given prominence right from the Board level to the account officer.

“What we have noticed now is the lack of consequent framework to manage the risk structure. We have noticed prevalence of key men risk. Credits are booked with impunity without any intentions of being paid. The grievous impunity is taking place along the credit process. There is the urgent need to revisit the failed bank act so that operatives become responsible for their actions. We believe it will bring discipline to the banking industry.”

RIMAN was led by its President, Mr. Magnus Nnoka, during the business visit.