Anx­i­ety as CBN beams searchlight on more banks

Daily Trust - - BUSINESS - From Sun­day Michael Ogwu & Omobayo Azeez, La­gos

In a move that gen­er­ates anx­i­ety among banks cus­tomers, the Cen­tral Bank of Nige­ria (CBN) has dis­closed that it is mon­i­tor­ing ac­tiv­i­ties of some com­mer­cial lenders.

This de­vel­op­ment came on the heels of change in the man­age­ment of the Skye Bank by the CBN, af­ter the bank had failed to meet pru­den­tial ra­tios.

Last year, the CBN gave three com­mer­cial banks un­til June 2016 to re­cap­i­talise af­ter they failed to hit a min­i­mum cap­i­tal ad­e­quacy rate of 10 per cent.

Mrs. Tokunbo Martins, the Di­rec­tor, Bank­ing Su­per­vi­sion, CBN, last week said that “one or two” com­mer­cial banks have failed liq­uid­ity tests but they were not in the same sit­u­a­tion as Skye.”

The cen­tral bank had dis­closed that Skye Bank’s liq­uid­ity ra­tio was be­low the reg­u­la­tory limit for a while and it had re­sorted to its re­dis­count win­dow for sup­port, prompt­ing its top ex­ec­u­tives to re­sign.

Skye Bank’s shares on Fri­day on the Nige­rian Stock Ex­change (NSE) dropped by 8.42 per cent, fol­low­ing in­vestors con­tin­ued re­ac­tion to the re­moval of the bank’s board and ex­ec­u­tive man­age­ment.

The bank lost 8k to close at 87k per share.

The bank’s shares had de­pre­ci­ated by 9.5 per cent on the pre­vi­ous Mon­day, forc­ing it to close at 95k per share.

How­ever, Martins said that the cen­tral bank was work­ing with the banks to re­store their ra­tios and re­as­sured de­pos­i­tors that there was no need to panic.

“We have our eyes on one or two other banks right now but they are not in a state of dis­tress,” she said, adding that the bank­ing in­dus­try was healthy.

“We have our eyes on all banks. Af­ter re­plac­ing Skye’s ex­ec­u­tives on Mon­day (last week), de­pos­i­tors rushed to with­draw their funds. Skye was able to meet its obli­ga­tions and the cen­tral bank is pro­vid­ing sup­port un­til the new man­age­ment can bring in fresh funds.

“Skye’s prob­lems wors­ened af­ter it used short-term fund­ing to ac­quire Main­street Bank in 2014 but failed to at­tract fresh funds.”

“The whole bank­ing sec­tor is un­der pres­sure in Nige­ria, given the slow growth and av­er­age loan-book ex­po­sure to oil and gas of 30 per cent,” a Lon­don-based econ­o­mist at Bank of Amer­ica, Mer­rill Lynch, Oyin Anubi, said.

The CBN, in a swift re­sponse through its Act­ing Di­rec­tor, Cor­po­rate Com­mu­ni­ca­tions, Mr Isaac Oko­rafor, said that the at­ten­tion of the cen­tral bank was drawn to ma­li­cious ru­mours and un­founded spec­u­la­tions that some banks in the coun­try might have gone or be go­ing into dis­tress.

It re­it­er­ated that no bank in the coun­try was in dis­tress, re­as­sur­ing bank cus­tomers that their de­posits were safe.

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