Rufus Folorunso Akinyooye - St Clements University

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to redeem it from the issuing bank for the gold or silver coin it represented. In effect while the governments were minting coins, the circulation of paper money was a private affair between individuals and their banks. The Royal Bank of Scotland traced the history of British banking on its web site and according to them an Act of 1708 restricted banks with more than six partners from issuing bank notes. As a result many of the then new banks remained small partnership well into the nineteenth century, in order to retain this very profitable right of note issue. Indeed, it says, in 1784 only seven banks had more then one office and this led to the formation of an increasing number of separate but allied banks. In response to these developments in the provinces says RBS two distinct kind of banks were emerging in England in the forms of the West End bankers with a clientele of landed aristocrats and the City bankers serving merchants and manufacturers and acting as agents to country banks. The majority of British banks in Georgian Britain were partnerships with their solvency dependent on the personal wealth of the partners and the confident they could command in the local community. This appears to be the reason for the people’s above-board expectation of modern day bank workers. They are expected to be impeccable in their character and like Caesar’s wife, to be above board. RBS disclosed that many banks collapsed during the early nineteenth century when sudden “runs” i.e. panic cash withdrawals by nervous customers rendered them insolvent. More banks failed forcing the United Kingdom government to permit from 1826 the formation of joint stock banks allowing the risk to be spread amongst many proprietors. Lancaster Banking Company was said to become the first British joint stock bank in 1826. Many others were established thereafter with many branches across England and Wales. The issues of banknotes had to be dealt with by the passage of the 1844 Bank Charter Act by the government of Sir Robert Peel regulating the issue of English banknotes. A year later a similar act was passed limiting the note issue of the nineteen banks in Scotland and requiring any excess to be partly covered by bullion reserves. The result was to stop the formation of new banks and perpetuate the tradition of separate Scottish note issues. More banks failed later including Overend, Gurney and Co. in 1866 and City of Glasgow Bank in 1878 (RBS 2005). It is worthy of note that with a bank being Sole Proprietorship or a Partnership the prime movers are not insulated in the event of a collapse. As a matter of fact, they face ruins in their private lives. As limited liability companies however they only need to obtain license to operate and open even just a branch office. Depositors’ cash would start flowing in from the very first day, available for their use any way the operators liked. If the bank failed they simply go home. Honohan (1997) identified this problem as one of the three failure syndromes under “Poor management and other microeconomic deficiencies” His review of international experience shows a multitude of cases where the simplest explanation for bank failure is poor management manifested partly in self-lending or lending to entities associated with the bank’s shareholders or managers. He said as a matter of fact that over the years, many banks – even successful ones – have been set up with the idea of providing a convenient and inexpensive form of financing to the founder’s enterprises. Back home here in Nigeria this has been the underlying cause of many bank failures. Below are examples.
HIGHLIGHTS OF FACILITIES GRANTED TO OWNERS AND DIRECTORS OF SOME SELECTED BANKS IN-LIQUIDATION S/N BANK IN-LIQUIDATION NO OF DIRECTOR INVOLVED AMOUNTS AT AS CLOSURE % OF TOTAL RISK ASSETS GRANTED TO OWNERS 1. Alpha Merchant Bank Plc 11 1,314,418,700.43 33% 2. United Commercial Bank Ltd. 3. Financial Merchant Bank Ltd 5 741,755,808.86 30% 1 383,061,096.00 100% 4. Highland Bank of Nig. Plc 12 33,197,157.58 38% 5. Commercial Trust Bank Ltd. 1 247,749,719.10 38% 6. ABC Merchant Bank Ltd 8 272,981,634.00 49% 7. Royal Merchant bank Ltd 7 646,940,182.23 69% 8. North-South Bank of Nig. Ltd. 9. Abacus Merchant Bank Ltd. 13 240,668,637.62 32% 14 568,888,254.11 47% 10. Credite Bank Nig. Ltd 6 379,634,611.47 76% 11. Prime Merchant Bank Ltd 1 539,292,310.00 64% 12. Amicable Bank of Nig. Ltd. 13. Century Merchant Bank Ltd 7 149,854,896.00 56% 5 272,072,261.00 32% 14. Group Merchant Bank Ltd 13 595,836,077.20 80% 15. Commerce Bank Plc 4 1,294,851,665.64 52% 16. Pinnacle Comm. Bank Ltd 10 298,766,751.76 20% 17. Republic Bank Ltd. 1 161,375,466.00 38% SOURCE: NDIC QUARTERLY JUNE 2002
Page 1: THE CHALLENGES OF IMPLEMENTING THE
Page 4 and 5: DEDICATION I dedicate this research
Page 6 and 7: Abstract The Basel 2 Accord is a co
Page 8 and 9: vii TABLE OF CONTENT CHAPTER I - In
Page 10 and 11: viii
Page 12 and 13: ix Table 4.1.2: Distribution of Res
Page 14 and 15: It should be mentioned that prior t
Page 16 and 17: The NDIC itself was created in 1988
Page 18 and 19: Nigeria as a sovereign has the addi
Page 20 and 21: (6) Crown Merchant Bank Ltd. 1988 1
Page 22 and 23: what makes up the Nigerian banking
Page 24 and 25: maximum losses the bank’s counter
Page 26 and 27: Cribb (1999) also show that in othe
Page 30 and 31: Honohan (1997) appreciated this kid
Page 32 and 33: An amendment to the Act in 1865 gra
Page 34 and 35: that country would become expensive
Page 36 and 37: - Lebanon 286.8 - Belgium 257.8 - P
Page 38 and 39: The Bretton woods agreement The Sec
Page 40 and 41: and forms of agreements between cre
Page 42 and 43: for losses and of Capital reserves
Page 44 and 45: (d) The Committee promised to close
Page 46 and 47: development banks. They are to attr
Page 48 and 49: 20% (1) Claims on banks in Nigeria/
Page 50 and 51: As mentioned above CBN does not mak
Page 52 and 53: As mentioned above the Group of Ten
Page 54 and 55: Items 41-43 - Are on the amendments
Page 56 and 57: Item 54 directs that at national di
Page 58 and 59: Sovereign to AA- A - to BBB- to B -
Page 60 and 61: Item 72 states that lending fully s
Page 62 and 63: Item 81 states that at national dis
Page 64 and 65: Item 100 says whether the bank inte
Page 66 and 67: wider range of credit risk mitigant
Page 68 and 69: collateral will receive the risk we
Page 70 and 71: Supervisory haircuts Item 151 conta
Page 72 and 73: Items 173 to 177 are on the treatme
Page 74 and 75: - An instrument that embodies an ob
Page 76 and 77: (1) Composition of minimum requirem
Page 78 and 79:
orrower and facility grades of pool
Page 80 and 81:
Item 425 directs that borrowers and
Page 82 and 83:
of member countries but stress that
Page 84 and 85:
lending standards in use when the d
Page 86 and 87:
(3) statistical default models. Oth
Page 88 and 89:
REQUIREMENTS FOR RECOGNITION OF LEA
Page 90 and 91:
national Supervisors when there is
Page 92 and 93:
Item 550 defines Excess spread as g
Page 94 and 95:
(f) An opinion must be obtained fro
Page 96 and 97:
Item 645 outlines three methods o c
Page 98 and 99:
Footnote to the title The Standardi
Page 100 and 101:
Item 664 is on the Advanced Measure
Page 102 and 103:
Under the IRB approach, a bank esti
Page 104 and 105:
Nigeria responded to this questionn
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of all external financial assets of
Page 108 and 109:
Accord is of sovereigns, banks and
Page 110 and 111:
of this fact is that under the Base
Page 112 and 113:
the same nationality. The rule of t
Page 114 and 115:
sovereign ratings. The eight variab
Page 116 and 117:
investor makes the final decision t
Page 118 and 119:
Brazil (B2/B+/B+) China A2/BBB/A-)
Page 120 and 121:
Latvia (A2/BBB+/BBB+) Lithuania (A3
Page 122 and 123:
Slovakia (A3/BBB/BBB+) Slovenia (As
Page 124 and 125:
Israel (A2/A-/A-) Malaysia (Baa1/A-
Page 126 and 127:
Russia (Baa3/Ba2/NR) Spain Aaa/AA+/
Page 128 and 129:
(B1/BB-/BB-) Source: Global Economi
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UNDER BASEL 1 AAA 0.03 8 1.6 1.13 A
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other on-site expenses, plus a US$1
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39 CHI Channel Islands - - - - 40 C
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108 LSO Lesotho 6 6 6 6 109 LBR Lib
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176 ZAF South Africa 3 3 3 3 177 ES
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ultimately lead to calls for offici
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Nigerian banks, like banks all over
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Totals 100.0 100.0 100.0 100.0 100.
Page 146 and 147:
Prior to the on-going consolidation
Page 148 and 149:
Item 726 to this end states that ba
Page 150 and 151:
Item 743 directs the bank to establ
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Principle 4: Supervisors should see
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(4) Procedures for the efficient re
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number of issues which according to
Page 158 and 159:
(j) Inability to settle guaranteed
Page 160 and 161:
With the above developments one wou
Page 162 and 163:
Item 760 and 761 are on how Supervi
Page 164 and 165:
Structural Challenges - Pillar 3 Pi
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if investors do not know the risk p
Page 168 and 169:
month would be the due principal an
Page 170 and 171:
(1) Disagreement between Board and
Page 172 and 173:
3.Implementation of Basel 2: Practi
Page 174 and 175:
3. Implementation of Basel II in Ni
Page 177 and 178:
CHAPTER THREE RESEARCH METHODOLOGY
Page 179 and 180:
Decision rule For decision rule, wh
Page 181 and 182:
Fig. 2: Response Distribution on ef
Page 183 and 184:
4. Are there internal rating system
Page 185 and 186:
Fig.6 Response on the issue of fore
Page 187 and 188:
Fig.8 Response Distribution on asse
Page 189 and 190:
Fig.10 Response Distribution on the
Page 191 and 192:
Fig.12 Response Distribution on the
Page 193 and 194:
Table 4.2.1: Response Distribution
Page 195 and 196:
3. Should the following be disclose
Page 197 and 198:
In another response it was also dis
Page 199 and 200:
v) Geographical distribution of exp
Page 201 and 202:
4.3 ANALYSIS OF QUESTIONS ON SUPERV
Page 203 and 204:
Table 4.3.4 Response on the issue o
Page 205 and 206:
BCP 24.0 Host Country Supervision
Page 207 and 208:
10. The issue of resurgence of high
Page 209 and 210:
When the respondents were presented
Page 211 and 212:
hypothesis chosen are deemed true b
Page 213 and 214:
improved working environment need n
Page 215 and 216:
H12: Inadequate operational and fin
Page 217 and 218:
Sub-Hypotheses on structural change
Page 219 and 220:
SA 41 71 -30 900 12.67 A 28 71 -43
Page 221 and 222:
Decision From the table 4.5.5 above
Page 223 and 224:
H8: The present management capacity
Page 225 and 226:
H10: The issue of resurgence of hig
Page 227 and 228:
SD 36 71 -35 1225 17.25 TOTAL 284
Page 229 and 230:
Decision The result in table 4.5.14
Page 231 and 232:
CHAPTER V DISCUSSION OF THE RESULTS
Page 233 and 234:
(b) It has an Operational risk mana
Page 235 and 236:
Another significant finding in this
Page 237 and 238:
e implemented. Judging from the cal
Page 239 and 240:
Proof for Null hypothesis Twelve (H
Page 241 and 242:
As shown in this research many inst
Page 243 and 244:
anks need to fully comply with the
Page 245:
profit that could translate into lo
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(b) No (c) (d) I Don’t Know. (e)
Page 250 and 251:
(b) No If yes, what were they? (8)
Page 252 and 253:
(1) As supervisors, would you say c
Page 254 and 255:
(iv) Procedures for efficient resol
Page 256 and 257:
LC (C) MNC “ 1.6 Information shar
Page 258 and 259:
LC (C) MNC “ 11.0 Country Risk (d
Page 260 and 261:
LC (C) MNC “ 22.0 Remedial Measur
Page 262 and 263:
(D) NC = Noncompliant (8) How soon
Page 264 and 265:
(a) Yes (b) No (c) I don’t know.
Page 266 and 267:
(x) Total and Tier 1 capital ratio.
Page 268 and 269:
(a) Yes (b) No © I don’t know. (
Page 270 and 271:
successfully implemented. 2. The hi
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Rufus Folorunso Akinyooye - St Clements University

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