Between now and next year there will be some shake up in the banking industry, ahead of and after the proposed recapitalisation. There will be mergers and acquisition (not a problem) but also take overs and liquidation of failed banks (not too good). Though most of our banks up till now are financially healthy and the NDIC was established to handle the latter case, to protect depositors in the course of liquidation of failed banks. Yet, it too has its own limitations as to what it can do, depending on the current liquidity of the bank's assets and liabilities before failure. That's why you must have heard of the limit of what it can refund for the moment in the recent case of Heritage Bank.
Actions
- Make sure that you maintain accounts with only Tier-1 or Tier-2 banks. If you can, avoid Tier-3 banks.
- Tier-1 banks are FUGAZ banks: FBN Holdings (First Bank), Access Holdings (Access Bank), GTCO (GTBank), UBA, and Zenith).
- Tier-2 banks include FCMB, Fidelity, Sterling, Wema, Ecobank, Stanbic IBTC and Unity (there's a reason for the last one). Union Bank is okay but under contention due to its affiliation with Titan Bank.
- Tier-3 banks include most of those not listed above, especially those new ones whose names sound funny (I will not mention them) and whose ownership or board of directors aren't clear, with issues of good morning corporate governance.
- Try not to have up to or more than N5m in any of the banks in no. 3, otherwise move it to no. 2 and 1.
- Bigger amount, especially parish funds, should be moved to Tier-1 and Tier-2 banks unless you have a short-term more profitable transaction with others.
Remember the wise words of Desiderius Erasmus_: locus praeventioni melior quam rememdium (prevention is better than cure) or (had I known).
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