A connect avow is a temporary coast organized by the regulators (CBN & NDIC) to apportion the deposits and liabilities of a failed bank. Under the arrangement, the Nigeria set up Insurance Corporation (NDIC) is current to operate a failed bank for a period until a buyer can be found for its operations. The span hope option is a veritable tool of enhancing depositor protection and promoting self-assurance by ensuring seamless continuity of banking operations.
Clearly, when in the opinion of CBN, a NDIC-insured bank is in financial trouble, the CBN and NDIC may establish a bridge bank to;
* look at the deposits of the closed bank;
* Assume such other liabilities of the closed bank as the cleave Insurance Corporation may determine to be entrance;
* Purchase such assets of the closed bank as the nonplus Insurance Corporation may determine to be take over; and
* Perform any other temporary function which the Deposit Insurance Corporation may prescribe in uniformity with this Act.
Bridge banks must be chartered as issue banks. To the extent possible, bridge banks are required to honor the commitments of the failed bank to its customers, and not to interrupt or terminate adequately secured loans.
Bridge banks are authorized to seek to liquidate failed banks, either by finding buyers for the bank as a going concern, or by liquidating its portfolio of assets, within two years, which can be prolonged by an additional year.
Should the bridge bank fail to twisting down its operations within the allotted time, the bridge bank must notify the Governor of the CBN of its intent to dissolve the bridge bank. Under this situation, the NDIC is appointed as the receiver of the bridge banks assets
In the Nigeria case, the Central Bank of Nigeria (CBN) on August 5, 2011, revoked the operating licenses of ternary banks including; Afribank, Spring Bank, and BankPHB, which according to it, they did not shown enough capacity...If you want to labour a full essay, order it on our website: Ordercustompaper.com
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