Worried by the resurgent huge toxic loans in the banking sector, the Managing Director/Chief Executive Officer, Asset Management Corporation of Nigeria, Mr Ahmed Kuru, on Wednesday, called on the Nigerian authorities to revisit the Failed Bank Act so that operatives in the banking sector would be made to account for their actions.
Kuru made the call when officials of Risk Management Association of Nigeria paid a visit to AMCON’s Lagos office.
In a statement, he urged banks to immediately strengthened their risk management framework to stem the negative growth.
He said 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.
Having been privileged to have been on both sides of the divide – as a banker and now on the regulatory side, Kuru explained that given the huge resources that were available to financial institutions and the pivotal role they played in the development of the economy, it made it mandatory for them 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 a need to fight against impaired and arranged credits so that operators were held responsible for booking credits contrary to their credit policy that went bad under their supervision.
He reiterated that one of the reasons 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.
He added that 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 adherence to laid down principles that governed credit approvals by financial institutions.
He stated, “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 in 2009, they insisted that risk management must be given prominence right from the board level to the account officer.”