NDIC QUARTERLY JOURNAL MAR/JUN 2024 VOLUME 39, NUMBER 1 & 2

5.0 Introduction

Activities of the NDIC in the Second Quarter, 2024

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

5.1 Update on Corporate Strategic Performance

The NDIC continued to implement its various strategic initiatives in the period under review. At end-June 2024, the Corporation:

i. Trained and certified 14 Staff, Lead Implementers, and Lead Auditors on the updated version of the ISO/IEC 27001:2022 standard to equip them in implementation and addressing minor non-conformities. ii. Completed the integration of the three ISO standards: 22301 (BCMS), 20000 (SMS), and 27001 (ISMS) to enhance operational efficiency and address Non-Conformities, Observations and Opportunities for Improvement (OFIs) identified during the stage 2 Audit. iii. Commenced mid-term 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. iv. Commenced the biennial review of Standard Operating Procedures (SOPs) of all Departments, Units, and Zones (DUZs) to promote efficiency and facilitate on-the-job training for newly recruited or newly assigned staff. v. Conducted the NDIC's Composite Rating (CR) for the third and fourth quarter of 2023 and the first quarter of 2024, with a rating of 69.33 per cent, 70 per cent, and 89 per cent, respectively. The cumulative Composite Rating of the Corporation for the three quarters resulted in an Average Composite Rating (ACR) of 76.11 per cent.

5.2 Corporate Operational Performance

5.2.1 Payments to Insured and Uninsured Depositors of Closed Insured Banks

i. In the third quarter of 2023, the NDIC paid N4.49 million to 26 insured depositors and in the second quarter of 2024, the NDIC paid N8.25 billion to 119,984 insured depositors of Heritage Bank in-liquidation and N474.32 million to uninsured depositors of banks in-liquidation. Cumulatively, the NDIC had paid N16.53 billion to 564,198 insured depositors and 105.76 billion to uninsured depositors of 50 DMBs in-liquidation as at end-June 2024. ii. The NDIC also paid 20.33 million to 304 insured depositors, while N19.02 million was paid to uninsured depositors of one Microfinance Bank (MFB) in-liquidation during the review period. Cumulatively, the NDIC had paid N5.14 billion to 135,500 insured depositors and N247.01 million to uninsured depositors of 546 MFBs in-liquidation at end-June 2024. iii. During the second quarter of 2024, 10 insured depositors were paid N3.60 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 2,687 depositors of closed PMBs stood at N362.67 million, and N261.99 million to the uninsured depositors as at June 30, 2024.

NDIC QUARTERLY JOURNAL MAR/JUN 2024 VOLUME 39, NUMBER 1 & 2

5.2.2 Payments to Creditors of Banks in-Liquidation

The NDIC paid N612,500.00 to one creditor of a MFB in-liquidation during the period under review. The cumulative payment to 1,034 out of 1,320 creditors, therefore, is N1.28 billion at end-June 2024.

5.2.3 Payments to Shareholders of Banks in-Liquidation

During the period under review, the NDIC paid the sum of N839,457.50 to seven shareholders of closed DMBs in-liquidation. Consequently, the cumulative sum of N4.90 billion had been paid to 1,007 shareholders as at June 30, 2024.

5.3 Asset management activities

5.3.1 Risk Assets Recovery

The sum of N125.22 million was recovered from debtors of 13 DMBs in-liquidation during the second quarter of 2024. Similarly, the sum of N10.73 million and N9.07 million were recovered from debtors of four PMBs and 12 MFBs in-liquidation, respectively. The total recovery from the risk assets of banks in-liquidation for the period was N145.02 million, as detailed in Table 5.1.

Table 5.1: Loan Recoveries’(N' Million) for the First Quarter and Second Quarter of 2024

INSURED INSTITUTIONS	January N'mn	February N'mn	March N'mn	TOTAL N'mn	April N'mn	May N'mn	June N'mn	TOTAL N'mn
DMBs	64.10	126.38	3.55	194.03	27.00	35.06	63.15	125.22
PMBs	66.95	7.99	4.57	79.51	6.29	4.45	-	10.73
MFBs	8.61	1.57	10.91	21.09	4.02	1.42	3.63	9.07
GRAND TOTAL	139.66	135.94	19.03	294.63	37.30	40.93	66.79	145.02

Source: NDIC

The total risk assets recovery of N145.02 million represented a decrease of N149.61 million (50.78 per cent) from N294.63 million recovered in the first quarter of 2024. The total recovery in the first quarter represents 11.16 per cent of the Corporation's full-year Risk Assets Recovery target of N1, 300 million.

At end-June 2024, the cumulative recovery of Risk Assets of all banks in-liquidation stood at N32,802.67 million, comprising N31,462.61 million, N931.45 million and N408.61 million from debtors of DMBs, PMBs, and MFBs in-liquidation, respectively.

5.3.2 Disposal of Physical Assets of Banks in-Liquidation

The total amount realised from the sales of physical assets of banks in-liquidation in the second quarter ended June 30, 2024, was N7.01 million, compared with the sum of N36.77 million realised in the first quarter of 2024. The recovery of N7.01 million comprised the sum of N44,477.50, N178,677.50, and N6.79 million realised for DMBs, PMBs, and MFBs, respectively.

As at June 30, 2024, the cumulative realisation from Physical Assets and Rent collected on property of banks in-liquidation stood at N23,885.60 million. This figure comprised N22,528.27 million, N233.60 million, and N1,123.72 million for DMBs, PMBs, and MFBs in-liquidation, respectively.

NDIC QUARTERLY JOURNAL MAR/JUN 2024 VOLUME 39, NUMBER 1 & 2

5.3.3 Realisation of Investments of Banks in-Liquidation

The amount realised from investments of 59 banks in-liquidation during the second quarter of 2024 was N10.23 million, compared with N4.78 million realised during the first quarter of 2024. The sum comprised N2.39 million, N2.01 million, and N5.83 million for 32 DMBs, 25 PMBs, and two MFBs in-liquidation, respectively. Table 5.2 presents the summary of quarterly recoveries against the target for the year.

The cumulative sum realised from investments of banks in-liquidation stood at N6,006.01 million at end-June 2024. This figure comprised realisations of N5,805.34 million, N74.90 million, and N125.77 million from the sale of investments of DMBs, PMBs, and MFBs, respectively.

Table 5.2: Year to date Actual Recoveries/Realisations by Asset Category’(N' Million) at the end of the Second Quarter 2024

S/N	ASSET TYPE	RECOVERY '(N'mn)
1	Risk Assets	439.66
2	Physical Assets	43.78
3	Investments	15.01
TOTAL		498.45

Source: NDIC

5.4 Bank Supervision

5.4.1 Risk Based Examination (RBS) - On-Site Examination of DMBs

In the second quarter of 2024, the CBN/NDIC conducted risk-based supervision (RBS) of non-interest banking window of the SunTrust Bank and maiden examination of Alternative Bank (Sterling Bank), and the reports writing/vetting exercise of these banks were concluded during the period under review.

Furthermore, as at June 30, 2024, the NDIC monitored 40 examined banks. The monitoring exercise aims to assess the extent of the banks' implementation of previous examiners' recommendations.

5.4.2 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 150 MFBs. Accordingly, the examination reports of 69 MFBs were issued to the banks and CBN, and the report writing exercise for the 81 MFBs is on-going, while the examination of 10 PMBs will be conducted within the third quarter of the year

5.4.3 Investigations/Consumer Protection

At the end of the second quarter of 2024, 195 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 279. These complaints involve the sum of N493.28 million and US$225,807.92 deducted from customers' accounts. Of the 279 complaints, 223 (79.93 per cent), were fully

NDIC QUARTERLY JOURNAL MAR/JUN 2024 VOLUME 39, NUMBER 1 & 2

resolved, and 48 (17.20 per cent) were still being investigated. In contrast, 8 (2.87 per cent) were stepped down because account details and disputed amounts were not provided. In addition, out of the 223 investigations concluded, the NDIC successfully ensured the affected banks refunded the sum of N11.87 million and recommended a further refund of N14.22 million to the complainants. However, the amount borne by the complainants due to their negligence was N18.10 million during the quarter under review, representing a 62.56 per cent decrease compared with N48.34 million recorded in the quarter ended March 2024.

In the PMB-MFB sub-sector, the NDIC received 14 customer complaints from various banks during the second quarter ended June 30, 2024, in addition to 18 complaints received in the first quarter. When added to the 13 brought forward from the fourth quarter of 2023, the total complaints totaled 45.

5.4.4 Premium Assessment, Collection and Deposit Verification on Insured banks

During the quarter under review, the NDIC collected an additional premium of N115.54 million from 77 MFBs and one PMB, bringing the total premium collected in the first six months of 2024 to N2.31 billion from 313 banks comprising 310 MFBs and three PMBs. The premium collected in the first six months of 2024 represented 177.69 per cent of the N1.3 billion target collection of 2024 for the PMB-MFB sub-sector. Notably, the increase in premium collection was due to the premium payment of N1.4 billion by Moniepoint MFB.

5.4.5 Fit and Proper Persons Enquiries

At end-June 2024, the NDIC received and treated 86 requests (involving 349 individuals) from the other financial sector regulators (CBN, National Insurance Commission, National Pension Commission) to conduct due diligence on prospective appointees in the financial sector

5.5 Legal Activities

The major legal activities of the Corporation for the quarter ended June 30, 2024 were as follows:

i. The NDIC monitored 84 debt recoveries "f "N100 million and above", 71 debt recoveries of "below N100 million", 46 corporate cases, 27 High Profile Defensive Litigations, six defensive cases involving MFBs & PMBs, 70 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 50 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 120. iii. The NDIC further monitored 15 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.

5.6 Enterprise Risk Assessment

In the second quarter of 2024, the Enterprise Risk Management activities of the NDIC included:

i. Reviewed the Enterprise Risk Management Framework, Incident Log, and the improvement register. ii. Conducted internal audit of the Business Continuity Management System (BCMS).

NDIC QUARTERLY JOURNAL MAR/JUN 2024 VOLUME 39, NUMBER 1 & 2

iii. Also, conducted a facility test, IT application test, Business Impact Assessment (BIA), and risk assessment on the NDIC Academy (Alternate site) to assess the Corporation's resilience. The significant risks identified during these exercises were profiled, and appropriate controls were reinforced.

5.7 Achievements/Challenges

5.7.1 Achievements

The following are some of the notable achievements of the NDIC during the quarter ended June 30, 2024:

i. The NDIC received the ‘2024 Africa Regulatory Technology' award on Regulatory Standards & Compliance from RegTech Africa. ii. The Corporation also received the “Most Attended Government Organisation” merit award at the 35th Enugu International Trade Fair. iii. The Corporation reviewed the maximum deposit insurance coverage for all categories of banks' depositors in the country, from N500,000.00 to N5,000,000.00 for DMBs and MMOs, N500,000.00 to N2,000,000.00 for PSBs, as well as from N200,000.00 to N2,000,000.00 for PMBs, and MFBs consistent with international best practices. iv. The NDIC paid the maximum deposit insurance coverage of N5,000,000.00 to verified defunct Heritage Bank Plc depositors whose operating licence was revoked by the CBN) on Monday 3 June 2024. v. The Corporation was able to commence payment of insured deposits to depositors of the defunct Heritage Bank Plc within a record time of four (4) days. vi. The Corporation obtained a total of 3 judgments in various courts of the federation, two of which were in its favour, while one was against the Corporation. vii. The NDIC paid N8.25 billion to 119,984 insured depositors of Heritage Bank in-liquidation and N474.32 million to uninsured depositors of 50 DMBs in-liquidation. The NDIC also paid 20.33 million to 304 insured depositors, while N19.02 million was paid to uninsured depositors of one MFB in-liquidation. In addition, the Corporation paid 3.60 million to uninsured depositors of 55 PMBs in-liquidation during the review period. viii. The sum of N125.22 million was recovered from debtors of 13 DMBs in-liquidation during the second quarter of 2024. Similarly, the sum of N10.73 million, and N9.07 million were recovered from debtors of 4 PMBs and 12 MFBs in-liquidation, respectively. Consequently, the total recovery from the risk assets of banks in-liquidation for the period was N145.02 million.

5.7.2 Challenges

Regardless of the achievements mentioned above, the NDIC is still confronted with the following challenges:

iii. Difficulty in debt recovery. iv. Difficulty in execution of judgments. v. Protracted legal processes. vi. Non-availability of title documents.

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vii. Poor documentation by failed banks and inadequate information on borrowers

5.8 Conclusion

Through its various activities, the Corporation has consistently pursued the achievement of its public policy objectives of depositors' protection, enhancing public confidence, and promoting financial system stability.