(Abuja)- A legal luminary and Senior Advocate of Nigeria(SAN) Mr Chris Umar has identified delays in legal proceedings, Non-performing loans(NPLs) and high cost of Liquidation as some of the challenges in Bank Liquidation in Nigeria.
Other challenges, according to him, are public panic and depositor uncertainty, and limited awareness of Deposit Insurance.
The Managing Partner of Chris Umar Solicitors was speaking at the just concluded Sensitization Seminar for External Solicitors of the Nigeria Deposit Insurance Corporation(NDIC) held in Abuja.
In his paper presentation titled: ‘Legal and Practical Considerations in Winding Up Failed Banks’, the former Solicitor General and Permanent Secretary in Kaduna State noted that prolonged court processes slow down the Liquidation timeline.
On Non-Performing Loans in the banking system, the erudite lawyer observed that there have been difficulties in recovering bad debts adding that the development reduces asset value.
He posited that panic on the side of the public can indeed lead to loss of trust and confidence in the banking system apart from legal fees, administrative expenses and asset recovery costs which undoubtedly, increase financial burdens on the side of the liquidator.
He however outlined some recommendations for seamless bank Liquidation in the country which includes enhancing legal and regulatory frameworks to expedite the Liquidation process, capacity building for both NDIC and CBN officials to improve efficiency and expertise in handling failed banks.
Others are: Increase public awareness campaigns to educate depositors on their rights and deposit insurance benefits, introduction of alternative resolution mechanisms such as Mergers and Acquisitions to absorb failing banks, bridge banks apart from strengthening asset recovery strategies to maximize funds available for distribution to depositors and creditors respectively.
He said liquidation of failed banks require a balanced approach, combining legal compliance with practical efficiency, stressing that judicial oversight and regulatory frameworks play vital roles in ensuring fairness and stability in the process.
He called for vigorous implementation of structural reforms and improving public awareness which will enhance the efficiency, while advocating a stronger, Well- regulated financial sector that will protect depositors and promote economic stability in Nigeria.
By Ewache Ajefu