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 every key administrative sanction available against bank directors. Given the potential breadth of the term, the banking agencies have the ability to seek administrative reme dies in cases covering a broad range of director conduct Thus; "unsafe or unsound banking practices" is a potent source of director liability. Nigerian banking sector struggle with challenges in the day to day running of their business activities, challeng es are enormous and can either be market or operational challenges 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 directors a nd also analyse the principles of safety and soundness which create a higher standard of care for bank directors than that imposed by the common law fiduciary duty of care. The result reveals that myriad of challenges and challenges exist in the Nigerian b anking sector some of which are challenges both within and outside Nigeria. Banks are left behind in technological innovation aspect of banking transactions, movement of high volume of deposit or capital flight to foreign banks by the political class which reduce banks opportunity to expand their market base and the prevalent of fraud in the sector also hinders the banks progress, these challenges pose unhealthy banking resulting in unsafe or unsound banking practice in Nigeria. It is recommended that that government and relevant regulatory agencies should put heads together to render support and address those identified issues on unsafe and unsound banking practices of bank directors in Nigeria.