Anxiety as CBN beams searchlight on more banks

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.
Source: Dailytrust