CBN May Adopt New Supervision Model
Financial Nigeria is reporting that the CBN may adopt a new supervision model for banks in Nigeria. Here is the report:
The Central Bank of Nigeria (CBN) may have begun moves to develop a home grown supervisory model that takes into account international requirements and standards in banking supervision.
Indications to this effect emerged from a presentation that a Special Assistant to the Governor of the CBN on Banking Supervision made to the Bankers’ Committee during recent meeting of the body.
Coming from a close aide of the governor, some industry analysts see the development as a prelude to the unfolding of a supervisory approach that tries to harness the current consolidated supervisory approach and a home grown approach.
Last year, the apex bank rolled out a consolidated supervisory approach, which ensures that banks and their subsidiaries are treated as a group for effective supervision. Besides, it ensures that credit processes are consolidated so that warning signals can be sent out on time.
THISDAY gathered that the CBN governor’s aide canvassed the view that both the regulator and the operators should have the same expectations on supervisory activities. He also stressed the need for the Banking Supervision department, the CBN and the operators to work together to ensure a safe and sound financial system for Nigeria.
His presentation, which dwelt on Basel 2 and consolidated supervision, covered several areas, noting that the initial perceptions being that there was huge growth in the industry and the attendant high level of shareholders’ expectations. The other major issues he addressed were risk management, corporate governance, overheated real estate values, among others.
He said the success of supervision depends on the quality of the exercise. To ensure that supervision achieves the objectives it is meant to achieve, the CBN official suggested building of institutional capacity in the Banking Supervision of CBN, redefining the role of supervision, employing risk based supervision and consolidated supervision.
Besides, he called for the strengthening of corporate governance and risk management systems in banks, as well as an enabling legal framework that will facilitate supervision. Following the conclusion of the reforms of the banking sector and the emergence of mega banks, the calls for a new supervisory approach have become more strident. The calls are based on the fact that banks need to be more closely monitored now to prevent the possibility of them going under to avoid loss of investment by shareholders and other stakeholders.
Source: Thisday
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donne4real | May 28, 2008