In an era marked by economic volatility, ethical lapses, and mounting mistrust in financial institutions, it is imperative for Nigerian bankers to revisit and strictly adhere to Hugh McCulloch’s timeless advice. McCulloch, an American banker and the first Comptroller of the Currency in the United States, introduced the Bankers’ Creed in 1863. This creed is not just a relic of history but a robust guide to ethical banking practices that resonate with the current realities of Nigeria’s financial sector. If Nigerian bankers adopt these principles, they can foster stability, rebuild trust, and contribute to sustainable economic growth.

The Nigerian banking sector is a microcosm of the nation’s economy. It wields immense power to shape financial inclusion, economic stability, and development. However, the industry has not been without its challenges. Cases of unethical practices, reckless lending, insider abuses, and corporate governance failures have often marred its reputation. Instances such as the 2009 banking crisis, which exposed massive non-performing loans (NPLs) and led to the dismissal of several bank executives, underscore the critical need for stringent adherence to ethical principles.

McCulloch’s advice offers a pragmatic solution. By aligning their operations with the creed’s principles, Nigerian banks can enhance their resilience and reaffirm their role as pillars of economic progress.

Revisiting McCulloch’s advice from the perspective of securing lending practices, it is germane to opine that his advice begins with a fundamental rule: “Let no loans be made that are not secured beyond a reasonable contingency.” This principle is especially pertinent in Nigeria, where non-performing loans have been a recurring problem. Banks must prioritize due diligence, ensuring that loans are extended only to creditworthy borrowers and secured with adequate collateral. Reckless lending fosters a culture of speculation and financial instability, as seen in the collapse of several banks in Nigeria’s history.

From the perspective of avoiding speculation, McCulloch’s warning against fostering speculation is critical in today’s context. Speculative activities, such as risky investments in volatile assets, have led to significant losses in the banking sector. Nigerian banks should focus on funding legitimate and productive ventures that contribute to economic growth, such as infrastructure, agriculture, and small and medium enterprises (SMEs). This approach not only ensures sustainable profitability but also aligns with national developmental goals.

On diversified lending, the creed’s emphasis on distributing loans rather than concentrating them in a few hands addresses a common pitfall in Nigerian banking, overexposure to large corporate borrowers. Such concentration poses systemic risks, as the default of a single entity can jeopardize a bank’s solvency. By diversifying their loan portfolios and extending credit to a broader customer base, banks can mitigate these risks and promote financial inclusivity.

From the perspective of customer-centric policies with firm control, McCulloch’s advice to treat customers liberally while retaining control over banking policies is a call for balanced customer relations. Nigerian banks must build trust with their customers by providing transparent services, fair lending rates, and innovative financial solutions. However, they should resist external pressures to compromise their policies for short-term gains. This balance is essential for long-term success.

From the side of integrity and accountability, the creed’s stance on integrity is unambiguous: “If you have reasons to dismiss the integrity of a customer, close his account.” In a nation where corruption is pervasive, this principle should be non-negotiable. Nigerian banks must establish stringent measures to detect and deter fraudulent activities. Dealing with dubious characters under the guise of profitability not only undermines a bank’s reputation but also exposes it to regulatory sanctions.

In a similar vein, from the perspective of fair compensation and ethical leadership, McCulloch’s advice to pay bank officers respectable salaries and ensure they live within their means is vital for maintaining ethical leadership. Nigerian banks must invest in robust human resource practices that prioritize merit, integrity, and accountability. Any signs of financial impropriety or extravagant lifestyles among staff should be addressed promptly to uphold public confidence.

Also, from the angle of capital authenticity and responsible banking, the creed’s insistence on real, not fictional, capital underscores the importance of financial transparency. Nigerian banks must maintain robust capital adequacy ratios and comply with regulatory requirements. Furthermore, they should avoid the allure of “splendid financing” schemes that promise high returns but entail significant risks. Legitimate banking should always take precedence over speculative ventures.

Against the foregoing backdrop, it is expedient to ask, “How can the Creed be implemented in Nigeria by bankers?” To adopt McCulloch’s principles effectively, Nigerian bankers and regulators must take deliberate steps that cut across enhanced regulatory oversight, capacity building, transparency, technological integration and stakeholder collaboration. 

To put the foregoing in an explanatory detail, it is germane to suggest in this context that the Central Bank of Nigeria (CBN) should strengthen its supervisory role by ensuring strict compliance with lending guidelines, capital adequacy requirements, and corporate governance standards.

Secondly, banks should invest in continuous training for their staff to instill a culture of ethical banking and sound risk management practices, even as financial institutions must prioritize transparency in their dealings, providing clear and timely information to stakeholders.

In a similar vein, there is the need for leveraging technology for credit risk assessment, fraud detection, and customer service can enhance operational efficiency and reduce human errors. Also, banks, regulators, and industry associations should collaborate to promote ethical practices and address systemic challenges collectively.

Without a doubt, Hugh McCulloch’s Bankers’ Creed is more than a historical artifact; it is a beacon of wisdom that can guide the Nigerian banking sector toward stability, integrity, and prosperity. By adhering to these principles, Nigerian bankers can navigate the complexities of modern finance while maintaining their ethical compass. In doing so, they will not only safeguard their institutions but also contribute to the broader goal of national economic development. It is high time for Nigerian banks to embrace this timeless advice and uphold their responsibility as custodians of the nation’s financial future.