NDIC QUARTERLY JOURNAL SEP/DEC 2024 VOLUME 39, NUMBER 3 & 4

Activities of the NDIC in the Third Quarter, 2024

4.0 Introduction

This report discusses the activities and achievements of the NDIC in the third quarter of 2024.

4.1 Update on Corporate Strategic Performance

The NDIC continued to implement its various strategic initiatives in the period under review. At end-September 2024, the Corporation: i. Commenced the preparation for the ISO Surveillance Audit to ensure compliance with ISO 22301 (BCMS), ISO 20000 (SMS), and ISO 27001 (ISMS) standards to address Non-Conformities, Observations, and Opportunities for Improvement (OFIs) identified during the Stage 2 Certification Audit, as well as other identified gaps. ii. Sensitised staff on fostering innovation aimed at promoting creativity for a dynamic future, and supporting value-driven innovations aligned with the Corporation's mandate. iii. Finalised and submitted the 2024 mid-year Efficiency Report on utilities expenditure for Departments, Units, and Zonal offices (DUZs)/Cost Centres to the Executive Committee of the Board (EXCO) for review. iv. Attended three Resource Centre Engagements sessions in the SERVICOM Office of the Presidency. These sessions enabled the Corporation to provide updates on its SERVICOM activities, challenges, and redress mechanisms. v. Approved the commencement of the general review of the NDIC 2021-2025 Strategic Plan to assess performance, and align the Plan with current realities as well as address emerging issues affecting the Corporation. vi. Conducted the NDIC's Composite Rating (CR) for the fourth quarter of 2023 and the first and second quarters of 2024, with a rating of 70.00 per cent, 89.00 per cent, and 68.00 per cent, respectively. The cumulative Composite Rating of the Corporation for the three quarters resulted in an Average Composite Rating (ACR) of 75.66 per cent, surpassing the established performance threshold of 60 per cent. This achievement was bolstered by the implementation of SLAMS, which serves as a key metric in the proposed Departmental assessment scorecard.

4.2 Corporate Operational Performance

4.2.1 Payments to Insured and Uninsured Depositors of Closed Insured Banks

i. In the third quarter of 2024, the NDIC paid N37.73 billion to 546,186 insured depositors of Heritage Bank in-liquidation, and N2.60 million to uninsured depositors of banks in-liquidation. Cumulatively, the Corporation paid N56.22 billion to 1,126,715 insured depositors, and N105.77 billion to uninsured depositors of 50 DMBs in-liquidation at end-September 2024. ii. The NDIC also paid N7.88 million to 152 insured depositors, while N249,492.45 was paid to uninsured depositors of Microfinance Bank (MFBs) in-liquidation during the review period. Cumulatively, the NDIC had paid N5.15 billion to 135,652 insured depositors and N247.26 million to uninsured depositors of 546 MFBs in-liquidation at end-September 2024. iii. During the third quarter of 2024, four insured depositors were paid N1.37 million, while no payment was made to uninsured depositors of 55 Primary Mortgage Banks (PMBs) in-liquidation. The cumulative insured amount paid by the NDIC to 2,691 depositors of closed

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PMBs stood at N364.04 million, and N261.99 million to the uninsured depositors as at September 30, 2024.

4.2.2 Payments to Creditors of Banks in-Liquidation

During the period under review, the NDIC made no payment to creditors of banks in-liquidation. The cumulative payment to 1,034 out of 1,320 creditors, therefore, remained at N1.28 billion at end-September 2024, as in the second quarter of 2024.

4.2.3 Payments to Shareholders of Banks in-Liquidation

During the period under review, the NDIC made no payment to creditors of banks in-liquidation. The cumulative payment to 1,034 out of 1,320 creditors, therefore, remained at N1.28 billion at end-September 2024, as in the second quarter of 2024.

4.3 Asset Management Activities

4.3.1 Risk Assets Recovery

The sum of N814.94 million was recovered from debtors of 14 DMBs in-liquidation during the third quarter of 2024. Similarly, the sum of N58.12 million, and N7.44 million were recovered from debtors of five PMBs and 10 MFBs in-liquidation, respectively. The total recovery from the risk assets of banks in-liquidation for the period was N880.51 million, as detailed in Table 4.1.

Table 4.1: Loan Recoveries (N' Million) for the Second Quarter and Third Quarter of 2024

Insured Institutions	Q2, 2024				Q4, 2024
	Apr N'mn	May N'mn	Jun N'mn	TOTAL N'mn	Jul N'mn	Aug N'mn	Sept N'mn
DMBs	27	35.06	63.15	125.22	167.95	382.53	264.46
PMBs	6.29	4.45	-	10.73	3.48	2.85	51.79
MFBs	4.02	1.42	3.63	9.07	1.24	2.71	3.49
GRAND TOTAL	37.3	40.93	66.79	145	172.67	388.10	319.74
Source: NDIC

The total risk assets recovery of N880.51 million represented an increase of N735.49 million or 507.16 per cent from N145.02 million recovered in the second quarter of 2024. The total recovery in the third quarter represents 67.73 per cent of the Corporation's full-year Risk Assets Recovery target of N1,300 million.

At end-September 2024, the cumulative recovery of Risk Assets of all banks in-liquidation stood at N33.68 billion, comprising N32.28 billion, N0.99 billion, and N0.42 billion from debtors of DMBs, PMBs, and MFBs in-liquidation, respectively.

4.3.2 Disposal of Physical Assets of Banks in-Liquidation

The total amount realised from the sales of physical assets of banks in-liquidation in the third quarter ended September 30, 2024, was N58.66 million, compared with the sum of N7.01 million realised in the second quarter of 2024. The recovery of N58.66 million comprised the sum of

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N10.00 million, N3.30 million, and N45.36 million realised for DMBs, PMBs, and MFBs, respectively.

As at September 30, 2024, the cumulative realisation from Physical Assets, and Rent collected on property of banks in-liquidation stood at N23.93 billion. This figure comprised N22.53 billion, N0.24 billion, and N1.17 billion for DMBs, PMBs, and MFBs in-liquidation, respectively.

4.3.3 Realisation of Investments of Banks in-Liquidation

The amount realised from investments of 59 banks in-liquidation during the third quarter of 2024 was N824.76 million, compared with N10.23 million realised during the second quarter of 2024. The sum comprised N787.53 million, N0.16 million, and N37.07 million for five DMBs, two PMBs, and seven MFBs, in-liquidation, respectively. Table 4.2 presents the summary of year-to-date actual recoveries against the target for the year.

Table 4.2: Actual and Target Recoveries/Realisations by Asset Category (N' million) at the end of the Third Quarter 2024

S/N	ASSET TYPE	RECOVERY (N'bn)	RECOVERY (N'bn)	COMPARISON TO TARGET (%)
1	Risk Assets	1,320,165,487.30	1,300,000,000.00	101.55
2	Physical Assets	102,433,440.50	1,000,000,000.00	10.24
3	Investments	839,773,077.58	-	-
	TOTAL	2.26	2.30	98.26
Source: NDIC

The cumulative sum realised from investments of banks in-liquidation stood at N6.83 billion at end-September 2024. This figure comprised realisations of N6.59 billion, N0.08 billion, and N0.16 billion from the sale of investments of DMBs, PMBs, and MFBs, respectively.

4.4 Bank Supervision

4.4.1 Risk-Based Supervision - On-Site Examination of Payment Service Banks

In the third quarter of 2024, the CBN/NDIC conducted risk-based supervision (RBS) of 22 banks with composite risk ratings of “Low” and “Moderate”. Furthermore, as at September 30, 2024, the NDIC monitored 40 examined banks comprising 35 Deposit Money Banks (DMBs), and 5 Payment Service Banks (PSBs). The monitoring exercise aims to assess the expected direction of risks, and the extent of the banks' implementation of previous examiners' recommendations.

4.4.2 Cyber Security Risk Examination

During the quarter under review, the joint CBN/NDIC Cyber Security Risk Examination (CSRE) of 17 “High and Above Average” risk-rated banks was conducted. The examination aimed to assess the effectiveness of banks' information security control systems in mitigating threats to their operations.

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4.4.3 On-Site Examination of MFBs and PMBS

The CBN allocated 160 banks (150 MFBs and 10 PMBs) to the NDIC for the 2024 on-site RBS Examination cycle, representing 50.94 per cent increase, compared with 106 banks (100 MFBs and 6 PMBs) allocated in 2023.

During the period under review, the Corporation conducted RBS examination of 10 PMBs, and the report writing exercise for these banks is on-going. In addition to the examination reports of 69 MFBs issued in second quarter 2024, the reports of 75 MFBs were issued to the banks and CBN. It is worthy of note that, the Corporation was unable to examine six MFBs due to security challenges in the locations of five MFBs, while one MFB was already examined by the CBN.

In the third quarter 2024, the NDIC monitored 74 out of the 144 MFBs examined. The monitoring exercise aims to assess the extent of the banks' implementation of previous examiners' recommendations.

4.4.4 Investigations/Consumer Protection

At the end of the third quarter of 2024, 270 customer complaints from various banks were received by the NDIC, in addition to 84 brought forward from the fourth quarter of 2023, bringing the total to 354. Of the 354 complaints, 299, representing 84.46 per cent, were fully resolved, and 39 (11.02 per cent) were still being investigated. In contrast, 16 (4.52 per cent) were stepped down because account details and disputed amounts were not provided. Furthermore, out of the 299 investigations concluded, the NDIC successfully ensured the affected banks refunded the sum of N44.18 million, and recommended a further refund of N1.33 million to the complainants. However, the amount borne by the complainants due to their negligence was N28.70 million during the quarter under review, representing a 58.56 per cent increase compared with N18.10 million recorded in the quarter ended June 2024.

In the PMB-MFB sub-sector, the NDIC received 20 customer complaints from various banks during the third quarter ended September 30, 2024, in addition to 32 complaints received in the first two quarters of 2024. This bring the total number of complaints received in the first nine months ended 30th September, 2024, to 52, out of which, 47 were resolved, while investigations on the remaining five are ongoing.

4.4.5 Premium Assessment, Collection and Deposit Verification on Insured Banks

As at September 30, 2024, the NDIC collected premium of N3.09 billion from 409 MFBs and N323.43 million from 16 PMBs, bringing the total premium collected in the first nine months of 2024 to N3.41 billion. The premium collected in the first nine months of 2024 represented 262.31 per cent of the N1.3 billion target collection of 2024 for the PMB-MFB sub-sector.

4.4.6 Fit and Proper Persons Enquiries

In the third quarter of 2024, the NDIC received and treated 325 requests (involving 808 individuals) from the other financial sector regulators (CBN, National Insurance Commission, National Pension Commission, and Securities and Exchange Commission) to conduct due diligence on prospective appointees in the financial sector.

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4.5 Legal Activities

The major legal activities of the Corporation for the quarter ended September 30, 2024 were as follows: i. The NDIC monitored 94 debt recoveries of "N100 million and above", 80 debt recoveries of "below N100 million", 44 corporate cases, 46 High Profile Defensive Litigations, six defensive cases involving MFBs & PMBs, 48 winding-up petition cases of MFBs & PMBs closed in 2023, 14 Criminal cases, and 16 cases handled by in-house counsel. ii. The Corporation obtained an additional 22 winding-up orders from the Federal High Court regarding MFBs and PMBs whose licenses were revoked by the Central Bank of Nigeria (CBN) in 2023. This brings the total number of winding-up orders obtained for these banks to 142. iii. The NDIC further monitored 20 criminal cases pending at the various national courts involving fraud, granting unauthorised and unsecured credit facilities, conspiracy, non-disclosure of interest and stealing funds belonging to DMBs in-liquidation. iv. The Corporation received three judgements, from which, it recovered the sum of N174,106,750.60 from debtors of banks in-liquidation comprising N27,000,000.00, N4,000,000.00, and N143,106,750.60 from suit involving City Express Bank (in-liquidation) Vs. Ila Enterprise Limited & Anor, Trade Bank Plc (in-liquidation) Vs. Conair Cargo Services, and Rims Merchant Bank (In-liquidation) Vs. Lighthouse Asset Management Company Ltd, respectively. v. The Corporation continued to monitor 30 investigation cases being conducted by the Director Public Prosecution of the Federation (DPPF) for prosecution.

4.6 Enterprise Risk Assessment

During the third quarter of 2024, the NDIC continued to carry out its Enterprise Risk Management activities. At end-September 2024, the Corporation: i. Approved the Enterprise Risk Management Framework (ERMF), Risk Appetite Framework (RAF), and Document Retention Policy (DRP) by the Interim Management Committee (IMC). ii. Reviewed the Incident Log, and the improvement register, as well as monitored the implementation of Crisis Communication Plan (CCP), and Notification Call Tree (NCT) of the Corporation. iii. Monitored the Business Continuity Management System (BCMS), and implementation of the ERMF. iv. Commenced the development of the stress testing policy of the Corporation. v. Collaborated with the Ministry of Finance Incorporated Nigeria (MOFI) on Risk Management Gap Analysis. vi. Conducted an IT application test to assess the effectiveness of the applications. The significant risks identified during these exercises were profiled, and appropriate controls were reinforced. vii. Hosted the Ghana Deposit Protection Commission (GDPC) for a study tour of its risk management system.

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viii. Completed the Enterprise Risk Management software, and conducted the User Acceptance Test.

4.7 Achievements/Challenges

4.7.1 Achievements

The following are some of the notable achievements of the NDIC during the quarter ended September 30, 2024: i. The NDIC remitted the sum of N57.81 billion, being payment of 80% of the Corporation's 2024 half-year unaudited Net Operating Surplus into the FGN Consolidated Revenue Fund (CRF). ii. The Corporation also received the “Most Attended Government Organisation” merit award at the 19th Abuja International Trade Fair. iii. The NDIC, paid N37.73 billion to 546,186 insured depositors of Heritage Bank in-liquidation whose operating licence was revoked by the CBN) on Monday 3 June 2024. The NDIC also paid N7.88 million to 152 insured depositors, while N249,492.45 was paid to uninsured depositors of Microfinance Bank (MFBs) in-liquidation. In addition, the Corporation paid N1.37 million to insured depositors, while no payment was made to uninsured depositors of 55 PMBs in-liquidation during the review period. iv. The Corporation obtained a total of three judgments in various courts of the federation, from which, it recovered the sum of N174,106,750.60 from debtors of banks in-liquidation. v. The sum of N814.94 million was recovered from debtors of 14 DMBs in-liquidation during the period under review. Similarly, the sum of N58.12 million and N7.44 million were recovered from debtors of five PMBs and 10 MFBs in-liquidation, respectively. The total recovery from the risk assets of banks in-liquidation for the period was N880.51 million.

4.7.2 Challenges

Regardless of the achievements mentioned above, the NDIC is still confronted with the following challenges: i. Difficulty in debt recovery. ii. Difficulty in execution of judgments. iii. Protracted legal processes. iv. Non-availability of title documents. v. Poor documentation by failed banks and inadequate information on borrowers.

4.8 Conclusion

Through its various activities on Deposit guarantee, Bank supervision, Distress resolution, and Bank liquidation, the Corporation has consistently pursued the achievement of its public policy objectives of depositors' protection, enhancing public confidence, and promoting financial system stability.