Personal Interest

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PERSONAL INTEREST
Every profession has sacred principles or ethics governing its operation or activities. Banking is no exception. Some of these principles defining sound banking behaviours are; 1. control mismatch between assets and liabilities

2. know your counterparty
3. expand cautiously into unfamiliar activities
4. avoidance of undue concentration of loans to a single activity, individuals and group But in a situation where banks all over the world are found wanting in terms of corporate greed every now and then call to question the sacredness of these ethics. This current trend was the reason behind the protest in the world street some weeks ago. But that of Nigeria is getting out of hand.

In October 2010, the CBN in collaboration with the NDIC withdrew the licenses of 103 microfinance banks. The reason behind the withdrawal was cheating and defrauding of depositors fund which is unethical. The NDIC boss, Alhaji Umuru Ibrahim, “the directors, employees and any other player of the microfinance banks that contribute to the downfall of the MFBs will be brought to book. This statement is a pointer that the act is not a banking culture. He further said that some insiders like directors, managers, employees abused their positions by regularly taking loans without repaying them” .This behaviour is unethical and must be stopped for sound banking operations. However, this phenomenon is not only isolated to Microfinance Banks Deposit money Banks are also plagued with it. Immediately after the consolidation exercise in 2007, Spring Bank Plc was declared distressed by the then CBN governor, Prof. Charles Soludo. Even in this dispensation of Sanusi three banks were declared distressed and hence taken over by Asset Management Company of Nigeria (AMCON). The reason behind the distress is non-performing loans and advances. According to IMF, “a loan is nonperforming when payments of interest and principal are past due by 90 days or more, or at least 90...
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