Collapse of the Universal Banking in Nigeria
THE COLLAPSE OF UNIVERSAL BANKING SYSTEM IN NIGERIA:
AN ASSESSMENT OF THE INTRODUCTION OF SPECIALZED BANKING AND HOLDING COMPANY SYSTEM.
BY
AIMINHIEFE OSAGIE BENEDICT
Osazemogie@yahoo.co.uk, 08055819143
BEING AN M.Sc. (ACCOUNTING AND FINANCE)
SEMINAR PAPER,
DEPARTMENT OF ACCOUNTING,
FACULTY OF MANAGEMENT SCIENCES,
BENUE STATE UNIVERSITY, MAKURDI.
Abstract
The Central Bank of Nigeria (CBN) recently reviewed the universal banking system in favour of separate banking licenses under the Banks and Other Financial Institutions Act (BOFIA). The proposed changes are as a result of 2009′s audit of Nigeria’s entire banking sector that found a number of banks in a “grave situation” with a high percentage of non-performing loans in their books, poor risk management, and weak corporate governance structures in place. According to the Central Bank of Nigeria, banks in Nigeria currently carry out a wide range of banking and non-banking services, which include insurance, investment advisory, asset management services, etc, by virtue of the universal banking license regime. The regime, however, has exposed the banking business to greater risks that challenges the stability of the financial system. The new Regulations require banks to divest from all non-banking businesses and obtain fresh licenses to operate as commercial, merchant, specialized or development banks. This paper examines the collapse of the universal banking system and the assessment of the adoption of the specialized banking and holding company model. The paper has carefully examined the causes of the collapse of the universal banking system and assessment of the introduction of specialized and holding banking system. The paper is of the view that although changes in system and structure may have good intention, the supervisory and regulatory authorities should ensure adequate supervision of these banks, so that the nation will have no cause to revert to the repealed system of universal
AN ASSESSMENT OF THE INTRODUCTION OF SPECIALZED BANKING AND HOLDING COMPANY SYSTEM.
BY
AIMINHIEFE OSAGIE BENEDICT
Osazemogie@yahoo.co.uk, 08055819143
BEING AN M.Sc. (ACCOUNTING AND FINANCE)
SEMINAR PAPER,
DEPARTMENT OF ACCOUNTING,
FACULTY OF MANAGEMENT SCIENCES,
BENUE STATE UNIVERSITY, MAKURDI.
Abstract
The Central Bank of Nigeria (CBN) recently reviewed the universal banking system in favour of separate banking licenses under the Banks and Other Financial Institutions Act (BOFIA). The proposed changes are as a result of 2009′s audit of Nigeria’s entire banking sector that found a number of banks in a “grave situation” with a high percentage of non-performing loans in their books, poor risk management, and weak corporate governance structures in place. According to the Central Bank of Nigeria, banks in Nigeria currently carry out a wide range of banking and non-banking services, which include insurance, investment advisory, asset management services, etc, by virtue of the universal banking license regime. The regime, however, has exposed the banking business to greater risks that challenges the stability of the financial system. The new Regulations require banks to divest from all non-banking businesses and obtain fresh licenses to operate as commercial, merchant, specialized or development banks. This paper examines the collapse of the universal banking system and the assessment of the adoption of the specialized banking and holding company model. The paper has carefully examined the causes of the collapse of the universal banking system and assessment of the introduction of specialized and holding banking system. The paper is of the view that although changes in system and structure may have good intention, the supervisory and regulatory authorities should ensure adequate supervision of these banks, so that the nation will have no cause to revert to the repealed system of universal