Rufus Folorunso Akinyooye - St Clements University

virtue of the exercise. The loss of jobs by the erstwhile employees of the liquidated banks also
has its cost implication for the country.
The light at the end of the tunnel however is that a successful implementation of the Accord
should produce a salutary effect on banking in Nigeria by reducing the rate of bank failures.
Bank failure is an anathema in any economy, developed, developing or underdeveloped. No
matter how small the bank is, its failure is usually felt in its immediate vicinity and even far
beyond it. In order to develop, every economy needs a resilient banking industry.
As the erstwhile Finance Minister Dr. Mrs. Ngozi Okonjo-Iweala (2004) rightly stated, “a stable
and virile financial system is crucial to the growth and development of every economy”. This
she said is because the financial system, particularly the banking sector performs the vital role
of financial intermediation. The effectiveness and efficiency of these, she said would depend on
the degree of safety, soundness and the stability of the banking system. She acknowledged the
importance of the banking sector in economic development, that, she said is the more reason,
governments the world over regulate it more than other sectors. In addition, she said, bank
failures are widely viewed in all countries as more damaging to the economy than failures of
other types of firms of similar size. She said their failure may produce losses to depositors and
other creditors, break long-standing bank-customer relationships, disrupt payment system,
and spill over in a domino fashion to other banks, financial institutions and markets, and even
to the entire macro-economy.
Even though the Nigerian Deposit Insurance Corporation (NDIC) in its role as a government
owned insurer of bank deposits would naturally come in as liquidators to line up the banks
assets against its deposit liabilities, the refund of deposits is usually too little and too late.
Despite Presidential assurances, the famous soccer star Austin J. J. Okocha is yet to get back his
US$1m. or so trapped in closed Savannah Bank Plc. the liquidation process of which is still
pending in the courts. Most of the depositors of this bank have not been paid and no one
knows when they would be. As a matter of fact Ogunleye (2004) stated that out of the 32
insured banks closed in 1998 only 9 have gotten their depositors fully repaid the statutory
limits of their insured deposits as at the end of January 2004. The banks are:
(1) ABC Merchant Bank Ltd.
(2) Alpha Merchant Bank Ltd.
(3) Amicable Bank of Nigeria Ltd.
(4) ICON Ltd. (Merchant Bankers).
(5) Kapital Merchant Bank Ltd.
(6) Nigeria Merchant Bank Ltd.
(7) Pan African Bank Ltd.
(8) Premier Commercial Bank Ltd.
(9) Rims Merchant Bank Ltd.