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Silicon Valley Bank: NDIC Tasks Regulators on Risk Management

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The Nigeria Deposit Insurance Corporation (NDIC) has urged regulators in the banking industry to draw supervisory lessons from the failure of Silicon Valley Bank and Credit Suisse by ensuring proper manage risks.

Report says Mr Mustapha Ibrahim, the Executive Director (Operations), NDIC, gave the advice at the Chartered Institute of Bankers of Nigeria (CIBN) advocacy dialogue series 7.

0, held physically and virtually, on Thursday in Lagos.

that the discussions were under the theme: `Failure of Silicon Valley Bank in USA: Global Impact and Lessons for the Nigerian Financial System.

The CIBN Advocacy Dialogue Series is a thought-leading programme created to empower various stakeholders with knowledge on emerging issues affecting the banking industry and the economy.

The series typically features subject matter experts and operators with the aim to generate ideas that can help individuals and organisations make better and informed decisions amid challenges in matters relating to banking, finance, and the economy, at large.

Giving illustrations from the insights provided by Clive Briualt, Chairman of the Toronto Centre, Ibrahim drew up 10 lessons that financial supervisors in Nigeria should leverage.

According to him, there is a need for financial sector managers and regulators to, first and foremost, understand the business that they are involved in.

He explained that knowing the nature of the business would help in structuring and regulatory approach as well as aid supervisors’ understanding of the business on both sides of the balance sheet — liabilities and asset sides.

Ibrahim urged supervisors to bear in mind the dangers involved in rapid growth expansion and treat it as a warning sign of higher risk.

He called on supervisors to understand the nature of deposit risks.

“It is not just enough to mobilise deposits but there is a need to know the behavioural pattern and nature of the depositors,” Ibrahim said.

According to him, supervisors have to understand the nature of the markets to be involved, the need for stress testing, consideration of the issue of recovery planning, crisis preparedness, among others.

He, therefore, charged Nigerian banks to prioritise risk management, responsible lending practices, market awareness and collaboration with regulators.

This, he said, would help in ensuring that they were operating in a sustainable and responsible manner while supporting the growth of the local tech and startup industries.

Ibrahim also explained that effective regulation and supervision of banks had the potential to make banks less likely to fail and also contribute to the stability and robustness of the financial systems.

Earlier, Dr Ken Opara, President/Chairman of CIBN, noted that Silicon Valley Bank was one of the most prominent lenders in the world of technology start-ups.

Opara said that it had grown extraordinarily fast, with total assets almost doubling from $116 billion at the end of 2021 to $216 billion at the end of 2022, making it the 16th largest bank in the U.S.

Opara, who was represented by Prof. Pius Olanrewaju, First Vice-President, CIBN, noted that the bank, however, collapsed for multiple reasons which sent shockwaves through the financial system, reviving memories of the global crisis in 2008.

“This occurrence has sparked a chain reaction of similar failures, including Credit Suisse, First Republic Bank, Signature Bank and Silvergate Bank while amplifying the need for experts across the globe to discuss the systemic issues plaguing the U.S. banking system, the regulatory gaps as well as its global impact.

“Additionally, policymakers and regulators are sifting through the rubble to consider what steps must be taken to prevent a similar crisis from occurring again.

“It is important to state that this event, of course, happened in the United States, however, because the world is inextricably linked by globalisation, could greatly destabilise markets and economies around the globe.

“So, it is pertinent to discuss the global impacts to extract insights to strengthen the banking system and ways to further improve the operational efficiency of Nigerian banks, in particular,’’ Opara said. (NAN)

Economy

Value Addition is new Standard in Mining Operations – Alake

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The Minister of Solid Minerals Development, Dr Dele Alake has declared value addition as the new indispensable standard for mining operations in the country.

Alake made the declaration in a statement issued by his Special Assistant on Media, Mr Segun Tomori, on Tuesday in Abuja.

The minister had earlier said that the federal government had resolved to ensure compliance to value addition before permitting investors to operate.

He said that his seven-point agenda for the ministry had placed the mining sector on the global front burner since assuming office, which had generated renewed interest from the international community in Nigeria`s mineral resources.

According to the statement, the minister lauded a mining company, African Natural Resources and Mines Ltd.

(ANRML), during an inspection tour in Kaduna State, for its 600 million dollar facility dedicated to the mining and processing of magnetite iron-ore.

He described the move as in line with the government`s resolve for value addition, which is especially apt given President Bola Tinubu`s quest to develop the solid minerals, to boost Nigeria`s economic profile and to meet the global upsurge in energy transition.

“The company aligns with our vision of value addition and beneficiation through its processing of iron-ore, and I urge other mining companies to take a cue from them, “ he said.

He reiterated the government`s commitment to abstain from granting mining licenses to companies that lack the necessary plans for value addition.

The minister acknowledged that resilience, courage and laying a solid foundation were critical in contributing to the company success.

He added that such factors also serve as guidelines for President Tinubu`s administration in its efforts for economic transformation.

“ We have set our minds in this administration and invariably in Nigeria to achieve success, that is why Mr President is restructuring the economy.

“When this company (ANRML) started seven years ago, we saw one of the foundations through the video documentary, the amount of concrete that went in to erect a foundation, just to carry a giant edifice.

“That is what we are going through. When we get through the gestation period, the results will manifest, and it will herald prosperity, “he said.

The minister had stated that no license would be granted to companies wishing to enter the mineral sector without presenting a plan for value addition, such as processing and refining which has multiplier effect on the economy. (NAN)

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Economy

Life Insurance Records 95% Net Claims in Q4 2023-NAICOM

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The National Insurance Commission (NAICOM) says Life insurance business recorded about 95 per cent net claims of the total claims in the fourth quarter of 2023.

A report by NAICOM in Abuja on Tuesday hinted that the record was due to the direct reflection of the ongoing regulatory measures by the Commission regarding claims settlements.

NAICOM said the insurance market average stood at about 71.

4 per cent of the N536.
5 billion gross claims reported at the close of the fourth quarter.

The Commission said the market also recorded retention of about 87.7 per cent for the life business, 54 per cent for non-life while the aggregate market average retention stood at 66.

7 per cent for the period.

It showed that the insurance industry sustained its progressive trend of positive market performance at the close of 2023 fourth quarter.

According to NAICOM, the insurance market recorded a milestone growth to close at N1.003 trillion, representing about 27 per cent growth compared to the N790 billion recorded in 2022.

”Major growth drivers in the non-life segment of the market were oil and gas and fire Insurances contributing 27.3 per cent and 24.1 per cent respectively.

”In a direct reflection to the “no-premium no-cover” policy of the Commission, the outstanding premium continues to decline.

”The premium posted 1.6 per cent as outstanding of all the premiums generated in the market during the period.

”Statistics also shows that the market recorded total assets of about N2.67trillion and capitalisation of N851billion in 2023,” NAICOM said. (NAN)

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Economy

No Mining License without Mineral Value Addition Plans-Alake Warns

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The Minister of Solid Minerals Development, Dr Dele Alake has warned that no mining license would be issued to prospective investors without requisite plans for value addition on minerals.

Alake gave the warning in a statement  by his Special Assistant on Media, Segun Tomori on Tuesday.

He said the Federal Government had resolved to ensure compliance before permitting investors to operate.

He said that his Seven -Point Agenda for the ministry had placed the mining sector on global front burner since assuming office, which had generated renewed interest from the international community in Nigeria’s mineral resources.

He said the support of the executive and the legislature had enabled the ministry to showcase the solid minerals sector globally, resulting in his election as the Chairman of the Africa Minerals Strategy Group (AMSG) at the Future Minerals Forum in Riyadh, Saudi Arabia.

According to him, with the pact that led to the formation of the AMSG, there is now unity of purpose on the African continent regarding the issue of local value addition.

“We are no longer going to allow anybody or license any company that wants to go into the mineral sector without giving us a plan for local value addition,  like processing, refining and this has a multiplier effect on the economy.

“It instantly generates employment rather than a few people carting away lithium, gold, and the likes to other countries to sell.

“These minerals must now be processed in Nigeria, creating more value and beneficiation for local communities where they are sourced, ” he said.

Reports says that the minister had earlier received members of the House Committee on Solid Minerals who were on oversight visit to his office.

The minister commended the lawmakers for their support in repositioning the mining sector, stressing that boosting the economic profile of Nigeria required joint task by both the executive and legislature.

He acknowledged the significant contribution of sub-nationals to mining development, emphasising that state chairmen of  Mineral Resources and Environmental Management Committee (MIREMCO) and five committee members were nominated by state governments. (NAN)

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