Deposit insurance helps preserve assets of failed institutions — Odey

By Mashe Umaru Gwamna

Deposit insurance plays a critical role in improving the preservation and maintenance of assets in failed financial institutions, an Estate Surveyor and Valuer, ESV Inyaka John Odey, has said.

Odey stated this in Abuja yesterday, stressing that effective management of physical assets was essential to successful bank liquidation and the recovery of funds for depositors and other creditors.

He explained that following the revocation of the licence of an insured financial institution by the Central Bank of Nigeria (CBN) and the appointment of the Nigeria Deposit Insurance Corporation (NDIC) as liquidator, the Corporation assumes responsibility for the orderly closure of the institution and realization of its assets.

According to him, in its fiduciary capacity as liquidator, the NDIC pays insured deposits from the relevant Deposit Insurance Funds, while liquidation dividends are paid from proceeds realised from the assets of failed institutions, in accordance with the NDIC Act, 2023.

He noted that the effective identification, preservation, valuation and disposal of physical assets were therefore critical to maximising recoveries for uninsured depositors, creditors and, where applicable, shareholders.

Odey said asset management begins with taking possession of the properties and other physical assets of a failed institution, followed by proper identification, inspection and reconciliation with available records to establish ownership, location and condition.

He stressed that timely possession was necessary to protect assets against theft, vandalism, unauthorised occupation, encroachment and deterioration.

He added that assets awaiting disposal should be adequately secured, periodically inspected and maintained where necessary to preserve their realisable value and minimise avoidable losses.

On valuation and disposal, Odey said qualified Estate Surveyors and Valuers appointed from the Corporation’s approved pool were responsible for independently assessing identified assets.

He explained that valuation reports were reviewed and adopted to guide disposal decisions, while assets approved for sale were advertised through appropriate channels, including national newspapers, to promote transparency and competitive participation.

He said proper approvals, competitive bidding, documentation and reconciliation of proceeds were also essential to strengthening accountability and integrity in the disposal process.

Odey further emphasised the importance of timely disposal, noting that prolonged retention of assets could lead to deterioration, increased security and maintenance costs, as well as adverse changes in market value.

He identified incomplete ownership records, defective titles, litigation, encumbrances, unauthorised occupation, dispersed asset locations and delays in disposal as some of the major challenges capable of reducing the recoverable value of failed-bank assets.

According to him, recovery could be enhanced through early possession of assets, proper documentation, periodic inspection, timely valuation and regular review of unsold properties.

He also advocated the use of electronic asset registers, digital document repositories, photographic records and geo-tagging to improve monitoring, accountability and decision-making in the management of failed-bank assets.

“Effective collaboration among relevant departments, valuers, legal practitioners and other professionals is also critical to resolving impediments and ensuring timely realisation,” he said.

Odey noted that effective physical asset management ultimately supports successful bank liquidation by preserving asset value, facilitating transparent disposal and maximising recoveries available for the payment of liquidation dividends to uninsured depositors and other entitled creditors.