Sustenance of stakeholder value in the nation’s banking sector may remain a pipe dream unless the current rising cost of compliance breaches by banks with its attendant reputation damage is radically tackled.

This was the core submission of Mr. Ifie Sekibo, Managing Director of Heritage Bank, in a goodwill address to members of the Committee of Chief Compliance Officers of Banks in Nigeria (CCCOBIN) at the August edition of their monthly meeting hosted by the bank in Lagos on Thursday, August 28, 2014.

He observed that compliance function has been elevated to play a pivotal role in the sustenance of stakeholder value in the nation’s banking sector because compliance risk has become a core risk in banking business and every time a bank pays a penalty for compliance infraction, value is destroyed.

According to him, “The business, regulatory and legal landscape around the globe is increasing in complexity while the scrutiny by the banking public, law enforcement agents and regulatory bodies is intensifying. Meanwhile, Financial Institutions now have to grapple with the rising cost of compliance breaches and the underlying risk of reputation damage. Banks in particular also have to navigate the proliferation of new regulatory requirements and address stakeholder expectations”.

Mr. Sekibo commended CCCOBIN’s past and on-going efforts at ensuring a healthy banking sector in the country through its numerous interventions and tasked the body not to relent in getting the sector off to a healthier state.

He said, “I congratulate you on the success of the 2014 Compliance Conference that Heritage Bank proudly co-sponsored. I am also not unaware of the giant strides that CCCOBIN has made in assisting to get Nigeria off the Financial Action Task Force (FATF) Grey List, the introduction of Uniform Account Opening Forms in collaboration with the Central Bank of Nigeria and other contributions to policy development especially in the area of AML/CFT; but, there are operational issues that compliance officers need to handle to get us to the promised land”.

While identifying internal stakeholder knowledge gap as a great problem besetting the banking sector, the Heritage Bank helmsman called on Compliance practitioners in the sector to re-examine their relationship with other staff within their jurisdiction who view compliance professionals and their activities as a pain rather than a value enhancer.

“The failure of all internal stakeholders to recognize that a regime of compliance failure destroys value and that compliance frameworks around liquidity, credit, operations, treasury and other departments are designed to enhance value remains a big threat”, Sekibo stated.

Speaking further, he noted that, “It is people and not institutions that fail to comply. The depth of trust deficit existing between compliance officers and the larger staff has some part to play in the people risk and knowledge gap that local and global financial institutions currently face; compliance officers therefore need to do more to reduce this trust deficit to such levels that can promote greater incentive to comply more without coercion”.

Earlier in his opening remarks at the event, CCCOBIN Chairman and Chief Compliance Officer of Access Bank, Pattison Boleigha, thanked Heritage Bank for hosting the August edition of the body’s monthly meeting. He pledged the commitment of the body and its members to the task of sanitizing the nation’s banking sector in order to deliver maximum value to all stakeholders.