BusinessDay Online has a report on the fraud and its effects on banks:

Banks record N9bn fraud as ratio of assets to GDP reaches 82%

Despite N8.8 billion worth of fraud that hit the banking system last year, the ratio of banks’ assets to the Gross Domestic Product (GDP) still grew by 82.3 percent.

Banking system recorded more than 1,553 cases of attempted fraud and forgery worth N8.8 billion ($591,487.8, €35,390.76 and £12,410), an increase of 30.17 percent compared with 1,193 reported cases worth N4.6 billion ($1.8 million and £14,399.74) in 2006.

Out of the 1,553 reported cases, 825 cases resulted in losses to the banks amounting to N2.7 billion ($238,621.50, €390 and £12,410.00) compared with 612 cases involving N4.6 billion ($1,753,024.06 and £14,399.74) in 2006.

The complaints comprised excess charges by banks, manipulation and fraudulent practices on customers’ accounts, conversion of invested funds, irregular clearing of customers’ cheques and non-refund of wrong debit to customers’ accounts, among others.

Nigerian financial sector grew stronger in 2007 as indicated by the various performance measures in all the segments. The depth of the financial sector increased as broad money supply to nominal GDP ratio rose to 21.1 percent from 19.8 percent at the end of 2006. The banking sector also showed stronger capacity to finance real sector activities with substantial credit flow to the core private sector as Cp/GDP ratio increased from 13 percent to 21.7 percent at end-2007.

According to the Central Bank of Nigeria (CBN) yearly report for 2007, the ethics and professionalism sub-committee of the Bankers’ Committee handled complaints among banks as well as between banks and their customers.

The CBN said that the increased use of the various electronic money products reflected the shift away from cash transactions thus an improvement in the efficiency of funds intermediation.

“Consequently, the ratio of currency outside banks to broad money supply fell further to 15.2 percent from 18.8 percent end-2006. The money market was further deepened with the introduction of the 10-year government bond, while liquidity was enhanced through the trading of the bonds in secondary market using the two-way quote system. Thus, the ratio of money market assets outstanding to GDP at end-2007 rose to 9.9 percent, from 8.8 percent at end-2006.”

The outcome of monetary policy actions of the CBN was modest in 2007 as broad money supply grew by 30.9 percent compared with 30.6 percent at end-2006 and the target of 24.1 percent for the fiscal year.

The reserve money target end-June 2007 exit point of the Policy Support Instrument (PSI) was met, although the end-year indicative target was missed. “The Nigerian Risk-Free Yield curve incorporating treasury bills and bonds at the short and long benchmarks, respectively, was launched in 2007. The yield curve remained normal throughout the year. Also, with the appointment of 19 primary money market dealers, secondary market activities in FGN bonds commenced.”

At end-December 2007, the Nigerian financial system comprised the CBN, the Nigerian Deposit Insurance Corporation (NDIC), the Securities and Exchange Commission (SEC), the National Insurance Commission (NAICOM), the National Pension

Commission (PENCOM), 24 deposit money banks (DMBs), five discount houses (DHs), 709 microfinance banks (MFBs), 112 finance companies (FCs), 703 bureaux-de-change (BDCs), one stock exchange, one commodity exchange, 93 primary mortgage institutions (PMIs), five development finance institutions (DFIs) and 77 Insurance companies.