There are indications that the Central Bank of Nigeria has sacked various directors of major lenders due to their profile of nonperforming loans.
According to Punch Newspaper, a director with the Nigeria Deposit Insurance Corporation, NDIC, Mr. Adedapo Adeleke revealed at a training for journalists that several directors recently lost their seats to their inability to service their loan portfolios.
The deposit insurance agency said the activities of the directors amounted to an abuse of office and a contravention of corporate governance.
Adeleke stated, “We have the Code of Corporate Governance and Code for Bank Directors. You sign these codes before you become a director. It is part of the employment terms. One of the things in these codes is that if you are having a non-performing loan, it is a ground to remove you from being a director.
“Some banks have also included this clearly in their Memorandum of Association. So, this is the stand of the regulator in terms of the NPL by a director and it is being enforced. Maybe the regulator has not been dramatic in publishing the names of those that have been removed.”
Adeleke said, “In line with the CBN prudential guidelines, banks make provisions for non-performing loans after 90 days, 180 days and 360 days. But what the IFRS 9 is saying is that if you are expecting a loss, you need to be forward looking by making provision for that loss ahead.”
It is on record that only few lenders were not adversely affected by the recession, Forex shortages which increased non-performing loan profiles.
There are indications that many more directors will be shown the exit doors as their loans reach certain thresholds.