Nigerian Banks Can’t Grow without Strict Internal Controls’
The financial growth potential of Nigerian banks can not be achieved without strict but simple internal control systems.This was expressed by Mr. Atuche, MD of Bank PHB at the Committee of Chief Inspectors of Banks Meeting hosted by the bank in Lagos.The quarterly meeting is rotated among banks and discount houses in Nigeria to discus critical issues facing the banking industry.
S p e a k i n g on 'Business Focused Control in a Consolidated Bank',he said that chief inspectors of banks hold the key to unleashing another round of growth in the banking industry, noting that the industry looks up to inspectors to put in place the controls/risk management systems that will give most bank chief executives the courage to sign off on products like asset backed securities, uncollaterized limit based credit cards, futures and options, collaterised debt obligations (CDOs) and Credit default swaps (CDS) among other financial instruments. If the inventory ever gets taken, we may have to reckon that that the size of business currently being held back due to fear of inadequate control coverage may be much larger than the business currently on our combined balance sheets.
He noted that over 65 percent of the Nigerian capital market depends on the reliability of the controls and risk management system in place in the various banks and that is over N5 trillion of shareholders wealth, about the same amount in depositors funds but more importantly, the growth engine for our nation's emergence as top 20 economy by 2020 is also in your hands. Just about everyone is vulnerable in an increasingly complex financial services industry where best in class control/risk management are compromised. He however called on business leaders to consider how best to achieve a balance between maintaining control and delivering business growth through encouraging their organizations to develop a culture of intelligent risk taking.
The best outcome for banks, he noted, would be for the investment in compliance and control to actually become a value creating exercise in itself. He suggested several steps that could be adopted to put in place adequate control and risk management system into its risk profile, providing a clear and business plan that can be implemented, keeping the implementation approach simple, ensuring a clearly defined organization roles and accountability and building on existing workable systems as well as aligning the risk assessment and reporting cycles within the bank’s business.
S p e a k i n g on 'Business Focused Control in a Consolidated Bank',he said that chief inspectors of banks hold the key to unleashing another round of growth in the banking industry, noting that the industry looks up to inspectors to put in place the controls/risk management systems that will give most bank chief executives the courage to sign off on products like asset backed securities, uncollaterized limit based credit cards, futures and options, collaterised debt obligations (CDOs) and Credit default swaps (CDS) among other financial instruments. If the inventory ever gets taken, we may have to reckon that that the size of business currently being held back due to fear of inadequate control coverage may be much larger than the business currently on our combined balance sheets.
He noted that over 65 percent of the Nigerian capital market depends on the reliability of the controls and risk management system in place in the various banks and that is over N5 trillion of shareholders wealth, about the same amount in depositors funds but more importantly, the growth engine for our nation's emergence as top 20 economy by 2020 is also in your hands. Just about everyone is vulnerable in an increasingly complex financial services industry where best in class control/risk management are compromised. He however called on business leaders to consider how best to achieve a balance between maintaining control and delivering business growth through encouraging their organizations to develop a culture of intelligent risk taking.
The best outcome for banks, he noted, would be for the investment in compliance and control to actually become a value creating exercise in itself. He suggested several steps that could be adopted to put in place adequate control and risk management system into its risk profile, providing a clear and business plan that can be implemented, keeping the implementation approach simple, ensuring a clearly defined organization roles and accountability and building on existing workable systems as well as aligning the risk assessment and reporting cycles within the bank’s business.
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