TSA: CBN pumps N740bn into banks

Daily Trust - - FRONT PAGE - From Sun­day Michael Ogwu, La­gos Gover­nor, Mr. Emafiele

The Bankers Com­mit­tee (BC) has con­firmed that the Cen­tral Bank of Nige­ria (CBN) has in­jected N740 bil­lion as the Cash Re­serve Ra­tio of public sec­tor funds mopped up from com­mer­cial banks fol­low­ing the Septem­ber15 dead­line for the take-off of the Trea­sury Sin­gle Ac­count (TSA).

The apex bank con­firmed this at the week­end fol­low­ing con­cerns about how banks would fare in the face of the risk in the econ­omy as fears mount that the econ­omy could lose an es­ti­mated N492.5bn ($2.5bn) worth of in­vest­ments af­ter United States in­vest­ment banker JP Mor­gan Chase & Co. an­nounced it would make good its threat to delist Nige­ria from its Gov­ern­ment Bond In­dex for Emerg­ing Mar­kets (GBI-EM).

There had also been panic in the bank­ing in­dus­try over the fed­eral gov­ern­ment’s de­ci­sion, in strict im­ple­men­ta­tion of its TSA pol­icy, to mop up public funds from com­mer­cial banks and ware­house them in the CBN. Funds so mopped up were es­ti­mated to be around N3 tril­lion.

The CBN Gover­nor, God­win Eme­fiele, af­ter the Mon­e­tary Pol­icy Com­mit­tee (MPC) meet­ing on Sept 22, an­nounced that the reg­u­la­tor had slashed its Cash Re­serve Ra­tio (CRR) to 25 per cent from 31 per cent but re­tained the Mon­e­tary Pol­icy Rate (MPR) at 13 per cent and liq­uid­ity ra­tio at 30 per cent.

The CRR is a fi­nan­cial guide­line used to set the least de­posits com­mer­cial banks must hold as trea­sury rather than lend out.

As the CBN Di­rec­tor of Bank­ing Su­per­vi­sion, Mrs Agnes Tokunbo-Martins told re­porters af­ter the BC’s meet­ing, “The Com­mit­tee is sat­is­fied that the banks are safe and sound and ad­vises banks to im­prove their risk man­age­ment and hold suf­fi­cient cash to mit­i­gate any shock that may arise.”

The Man­ag­ing Di­rec­tor of First Bank Plc, Stephen Onasanya also told the re­porters that the Com­mit­tee eval­u­ated the JP pull-out and de­cided there must be life in the Nige­rian econ­omy af­ter the in­vest­ment banker’s hard de­ci­sion. “It has hap­pened and we have to move on. There is no need for panic as the CBN mea­sure has helped to sta­bi­lize the ex­change rate mar­ket,” Onasanya re­marked.

He ex­pressed the Com­mit­tee’s sat­is­fac­tion with the po­si­tion of the apex bank on the is­sue, stress­ing that “the in­ter­est of the coun­try must come first in ev­ery con­sid­er­a­tion of the reg­u­la­tory au­thor­ity.”

The meet­ing also dis­cussed the im­pact of the TSA on the op­er­a­tion of com­mer­cial banks, amid fears that it would re­sult in mas­sive job loss and con­strain the banks’ abil­ity to lend to the real sec­tor.

Fi­delity Bank’s chief ex­ec­u­tive of­fi­cer, Nnamdi Okonkwo noted that the fears be­ing ex­pressed by the public are founded on the tur­bu­lence ex­pe­ri­enced in the bank­ing sec­tor when the gov­ern­ment first ex­per­i­mented with the idea in 1988.

Okonkwo stated that in­dus­try liq­uid­ity has re­mained strong af­ter banks’ com­pli­ance with the TSA di­rec­tive, which lapsed on Septem­ber 24. “No bank is dis­tressed on ac­count of this move­ment,” he main­tained.


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