2013年-世界发展银行全球_Financial_Sector_Assessment_Program___Nigeria_-_Crisis_Management_and_Crisis_Preparedness_Frameworks_49页_1mb

Summary of the Financial Sector Assessment Program (FSAP) for Nigeria: Crisis Management and Crisis Preparedness Frameworks

Core Content

This document outlines the findings and recommendations from the Financial Sector Assessment Program (FSAP) for Nigeria, focusing on crisis management and preparedness frameworks within the financial sector. It provides an analysis of the Nigerian banking crisis of 2008-2009, the institutional framework for systemic risk monitoring, and the need for strengthening the resolution and deposit insurance regimes. The recommendations are aimed at aligning Nigerian practices with international standards and improving the resilience of the financial system.

Main Points and Key Information

I. The Nigerian Banking Crisis of 2008-2009 and Policy Response

• Crisis Background: The crisis was triggered by the global financial crisis and domestic events, including excessive margin lending, unhedged loans to oil importers, and credit malpractices.
• Impact: 10 banks, representing about a third of the banking system's assets, were found to be insolvent or undercapitalized. Nonperforming loans (NPLs) rose sharply from 6% to 28% of total loans in December 2009.
• Policy Response:
  • The CBN injected €620 billion in liquidity (approximately US$4.1 billion) into the banking sector.
  • A blanket deposit guarantee was introduced, covering all deposits and foreign credit lines.
  • The CBN replaced management in eight banks and initiated legal actions against former CEOs and directors.
  • The Asset Management Corporation of Nigeria (AMCON) was established to purchase NPLs and recapitalize banks.
• Outcome: By the end of 2011, the banking sector had significantly improved, with NPLs down to 5% of total loans and the average capital adequacy ratio (CAR) at 17.9%.

II. Institutional Framework and Coordination Arrangements

• Key Agencies:
  • CBN (Central Bank of Nigeria): Primary financial stability authority, responsible for monetary policy, prudential regulation, and crisis management.
  • NDIC (Nigeria Deposit Insurance Corporation): Administers deposit insurance, supervises banks, and acts as a resolution authority.
  • FSRCC (Financial Services Regulation Coordinating Committee): Inter-agency committee for coordination of financial sector regulation.
  • PENCOM (Pension Commission): Regulates pension matters.
  • SEC (Securities Exchange Commission): Oversees securities market.
  • NAICOM (National Insurance Commission): Supervises the insurance sector.
• FSRCC Role:
  • Established in 1994, it coordinates financial regulation and supervision.
  • Lacks an express mandate for financial stability and crisis management.
  • Currently functions as a forum for information sharing and regulatory coordination.
• Recommendations:
  • Expand FSRCC's mandate to include systemic risk monitoring and crisis preparedness/management.
  • Formalize PENCOM’s membership in the FSRCC.
  • Enhance cross-border cooperation and domestic MoUs to cover crisis management and resolution.
  • Strengthen the FSRCC analytical framework for financial stability monitoring.
  • Implement recovery and resolution planning for systemically important financial institutions (SIFIs).

III. Supervisory Early Intervention

• Existing Framework:
  • The Supervisory Intervention Framework (SIF) of 2011 includes a Prompt Corrective Action (PCA) regime.
  • The Bank and Other Financial Institutions Act (BOFIA) provides early intervention powers.
• Recommendations:
  • Align BOFIA and SIF to ensure a statutory basis for PCA.
  • Introduce mandatory recapitalization and statutory bail-in as part of the resolution toolkit.
  • Allow resolution authorities to override shareholder rights and prevent suspension of proceedings.
  • Expand resolution triggers to include a broader range of financial distress indicators.

IV. Crisis Management Tools

• CBN's Role:
  • Provided emergency liquidity support and interbank guarantees.
  • Has a broad toolkit for bank resolution, including M&A, bridge banks, and AMCON.
• Recommendations:
  • Develop an Emergency Liquidity Assistance (ELA) framework for the CBN.
  • Enable the Federal Ministry of Finance (MoF) to provide solvency support.
  • NDIC should no longer provide liquidity support and its role should be limited to resolution assistance.
  • Unwind the blanket deposit guarantee with appropriate communication.
  • CBN should be empowered to appoint NDIC as liquidator immediately upon revocation of a bank's license.

V. Deposit Insurance Framework

• NDIC Role:
  • Administers the deposit insurance scheme.
  • Has broad supervisory and resolution responsibilities.
• Current Status:
  • Deposit insurance coverage is adequate.
  • The scheme is ex-ante funded.
• Recommendations:
  • Exempt NDIC from the Fiscal Responsibility Act to allow fund buildup.
  • Provide a credit line to the MoF instead of the CBN.
  • Shorten the statutory payout period to 15 days and implement gross payout.
  • Limit NDIC's financial assistance to insured deposit payouts.

VI. Legal Protection

• Need for Legal Safeguards:
  • CBN, NDIC, and AMCON require legal protection to prevent liability in crisis management actions.
  • Judicial review and indemnity for legal costs are recommended.
• Recommendations:
  • Reverse the burden of proof in legal cases related to crisis management.
  • Elevate the threshold for initiating legal actions.
  • Provide express indemnity for legal costs incurred by staff of crisis management agencies.

VII. AMCON Recommendations

• AMCON's Role:
  • Established in 2010 to purchase NPLs and recapitalize banks.
  • Played a central role in the crisis response.
• Current Issues:
  • AMCON has a notional 10-year lifespan, but this is not formally assured.
  • It has acquired problem assets, which may be counterproductive once the system is stable.
• Recommendations:
  • Discontinue AMCON's acquisition of problem assets.
  • Formally establish a sunset clause for AMCON, with a firm end-2017 closing date.
  • Set annual targets for asset disposal.
  • Divest ownership in the three "AMCON banks".
  • Approve the Resolution Cost Fund bill and clearly earmark proceeds for repayment of outstanding bonds.

Table of Recommendations

Conclusion

The Nigerian financial system, particularly the banking sector, was significantly impacted by the 2008-2009 crisis. While the initial response was effective in stabilizing the sector, the long-term challenge lies in creating a credible exit strategy and strengthening the resolution framework. The recommendations focus on institutional coordination, legal reforms, enhanced crisis management tools, and reforms to the deposit insurance and AMCON frameworks. These steps aim to align Nigerian practices with international good standards and ensure a more resilient and sustainable financial system.