PRESIDENT OF THE SENATE
FEDERAL REPUBLIC OF NIGERIA
TEXT OF A SPEECH BY SENATOR ANYIM PIUS ANYIM
PRESIDENT OF THE SENATE, FEDERAL REPUBLIC OF
NIGERIA ON THE OCCASION OF THE OFFICIAL OPENING
OF THE HEAD OFFICE BRANCH OF NAL BANK PLC ON
TUESDAY, 2 APRIL 2002 AT LAGOS.
I am pleased to be invited as a Special Guest of Honour to the Official Opening of the Head Office Branch of NAL Bank Plc. I am proud to be associated with NAL for several reasons: First, it is a great national institution – the nation’s pioneer merchant bank, founded over 40 years ago. With such a long history, NAL has not only made great strides, it has contributed significantly to our nation’s socio-economic growth.
Over half of publicly quoted companies on the Nigerian Stock Exchange have benefited from the bank’s unparallel capital market services and expertise. NAL has also played a very supportive role in the nation’s privatisation programme. Many of the great businesses doting our industrial centres today have received some level of funding from the bank. I am also aware that AL’s yearly Charity Walk, which epitomises the bank’s sense of social responsibility as a good corporate citizen has become a reference point in corporate sponsored physical fitness exercise.
I understand that the branch we are commissioning this morning was conceived to reflect NAL’s new status as a universal bank. A few other branches I am informed are also strategically being developed in other commercial centres across the country. Expectedly, through the envisaged network of branches, NAL will bring its wealth of experience and professionalism to the banking public across the country.
I congratulate the Board, Management and staff of the bank for its vision in taking advantage of the opportunities that abound in universal banking. I should however advise bankers that they should see the challenges of universal banking beyond the need to reap from the vast opportunities available. High quality, wide-ranging services and customer satisfaction should be the hallmark of universal banking. It is distressing that customers still leave banking halls these days with series of complaints about unprofessional conducts.
The overriding essence of universal banking should be to ensure that we create a banking system that iS internationally competitive and functionally relevant to most of today’s customer requirements. You will also agree with me that universal banking also raises some issues between the Operators and Regulators that need to be constantly fine-tuned. The involvement of multiple regulatory authorities in overseeing the activities covered by universal banking is a common knowledge. May I assure you in that regard, that the National Assembly will treat with dispatch legislative proposals to streamline areas of conflict and duplication of functions to ensure the Country derives optimal benefit from the introduction of universal banking.
Recently there appears to be renewed concerns among the banking public of a resurgence of widespread distress in the banking sector. I note however that the Central Bank of Nigeria has vigorously dismissed such fears as unfounded and exaggerated. Nevertheless, the apparent anxiety calls for meaningful alertness on the part of the regulatory authorities and the Board of each Bank.
I therefore urge the public not to get into unnecessary panic. Let me seize this opportunity to assure the public that the National Assembly appreciates the vital role that a strong and professional banking sector can play towards achieving the goal of a virile national economy. It is in this regard that we have held several public hearings and consultations on banking and related matters to promote an enabling environment.
To this extent, we have x-rayed the problems working against the financial institutions. And have successfully isolated the constraint of poor board of directors composition as a major contributing factor to bank failure/distress. This single factor cut across banks, be it communities banks, merchant/commercial banks and even specialised government banks.
Significantly, the office, position, power, duties and responsibilities of a Director are provided for by our statute books. The Company and Allied Matters Act (CAMA) 1990 as amended contain elaborate provisions on the office of a Director. These provisions applies to a director be it a public corporation, public limited company or private limited company.
While I shall refrain from quoting copious provisions of CAMA, I must state that it is of primary importance that a director must in exercise of his fiduciary obligations to a company exhibit a sacred duty of care and skill. This duty of care and skill goes to the root of the success, well-being, progress or distress of the company. The pertinent questions are:
(1) With the manner most of our companies particularly banks are being run and the state of its affairs, can one truly and validly say the directors are living up to the statutory duty of care and skill?
(2) With the benefit of our not too distant past experience of failed banks and shrinked companies in-addition to the unpalatable news of resurgence of distress in our banks, are the appointed/elected directors by their training, experience and antecedents really skilled?
Ladies and gentlemen, these are my worries and anxiety. Commenting on this duty of care and skill, Professor (Senator) A.O. Osunbor stated, inter alia: this meant that if a company appointed a moron as its director it could only expect from him the standard of skill of a moron”.
By extension therefore, if a company appointed a half-backed professional, a person of doubtful character, a person of questionable past and/or a person of base ethical values as its director, what it could reap is assured.
I am also aware that the BOFID and the FAILED BANK DECREE (Now Act) as amended contains various provisions that dovetailed to the office of the director.
It is therefore urgent that the regulatory bodies (CBN,NDIC, SEC) and the law enforcement agencies should work in concert with the legislature to ensure that the provisions of the Law on who is a director or ought to be a director are complied with.
There is a compelling need to protect the Nation’s economic and financial matrix. There is the need to check inherent abuses in the system under the guise of corporate majority rule. There is the need and indeed a challenge to fine-tune our existing rules on Corporate Governance to protect the interest of the bullied minorities. Above all, there is also the need to protect the uninformed public. For instance, the innocent Okada rider who keeps his savings in the bank is not bothered with the fine points and logic of corporate governance.
And in moment of distress and/or liquidation, he suffers most. And ironically, the so-called share capital of any existing bank pales to insignificance when compared with its deposit liability. Yet, the faceless depositors have minimal remedies against the distress institution and its appointed/elected directors.
My dear distinguished audience, there lies the challenge and interest of the National Assembly. On our side, the Senate under my leadership is in the process of reviewing all legislations that impact on the health of the Nation’s economic and financial activities. Accordingly, I hereby propose a joint action committee comprising the relevant committees of the National Assembly,CB, NDIC and SEC to verify and screen the particulars, status, records, qualifications and suitability of serving appointed/elected directors in all Financial Institutions in Nigeria. This I believe is a practical path to ethical and moral rectitude in our Nation’s corporate governance. This approach will curtail distress syndrome and assets stripping of banks.
Clearly, this approach will robustly check the erosion of ethical values and professionalism in our banks. The Chairman, Captains of Industries and commerce, distinguished ladies and gentlemen, I am indeed delighted to identify with the vision and mission of NAL Bank Pic. I congratulate the board, management and staff of the Bank on this important occasion of the official opening of the Head Office branch. I sincerely wish the new Head Office branch a successful operation and bountiful returns.
I thank you.
Senator Anyim Pius Anvim GCON
April 02, 2002.