THE LIABILITY REGIME OF BANK DIRECTORS AND OFFICERS FOR NEGLIGENCE IN UNSAFE OR UNSOUND BANKING PRACTICE IN NIGERIA

Abstract

The term"unsafe or unsound banking practices" serves as a statutory trigger for virtually everykey administrative sanction available against bank directors. Given the potential breadth of theterm, the banking agencies have the ability to seek administrative reme dies in cases covering abroad range of director conduct Thus; "unsafe or unsound banking practices" is a potent source ofdirector liability. Nigerian banking sector struggle with challenges in the day to day running oftheir business activities, challeng es are enormous and can either be market or operationalchallenges and regulatory or reforms challenges instituted by the regulatory agencies such as CBN,NDIC, SEC and CIBN etc. Therefore, this paper seeks to examine the liabilities facing the directorsa nd also analyse the principles of safety and soundness which create a higher standard of care forbank directors than that imposed by the common law fiduciary duty of care. The result reveals thatmyriad of challenges and challenges exist in the Nigerian b anking sector some of which arechallenges both within and outside Nigeria. Banks are left behind in technological innovationaspect of banking transactions, movement of high volume of deposit or capital flight to foreignbanks by the political class which reduce banks opportunity to expand their market base and theprevalent of fraud in the sector also hinders the banks progress, these challenges pose unhealthybanking resulting in unsafe or unsound banking practice in Nigeria. It is recommended that thatgovernment and relevant regulatory agencies should put heads together to render support andaddress those identified issues on unsafe and unsound banking practices of bank directors inNigeria.