Fidelity bank banner NewsExpress advert
3 Nigerian banks in danger of collapse, says CBN

By News Express on 31/10/2015

Share on facebook Yahoo mail icon Gmail icon Share on Google+

Views: 4,056


A liquidity stress test conducted by the Central Bank of Nigeria (CBN) has revealed that capital position of ‘three small banks’ have fallen below regulatory capital requirement.

The test, contained in the CBN Financial Stability Report released yesterday, showed the Capital Adequacy Ratios (CARs) of the affected banks were below five per cent regulatory threshold.

The three banks are not among the domestic systemically important banks (D-SIBs), it said.

The report, which measured the lenders’ positions as at June this year, showed that the number of banks with CAR less than five per cent also increased from zero to three from December 31, 2014 to June 30, 2015. The CAR is a ratio of a bank’s assets to its risks

According to CBN’s Director, Financial Policy and Regulation Department, Kelvin Amugo, the liquidity stress test was conducted using the Implied Cash Flow Analysis (ICFA) and the Maturity Mismatch/Rollover Risk approaches to assess the resilience of the banking industry to liquidity and funding shocks.

He said the ICFA approach assessed the ability of the banking system to withstand unanticipated substantial withdrawal of deposits, as well as short-term wholesale and long-term funding over a 5-day and cumulative 30-day periods, with specific assumptions on the fire sale of assets.

The report said liquidity ratio (LR) of the Nigerian banking industry decreased by 6.5 percentage points to 39.3 per cent from the 45.8 per cent December 2014 position. The decline in the LR position was driven mainly by the large and medium banks with 6.5 and 7.4 percentage points decrease respectively from their December 2014 LR position to 36.9 per cent and 45.5 per cent respectively. This decline may be traced to the sustained tight monetary policy stance of the CBN.

The test results revealed that the industry liquidity ratio declined to 9.30 and 6.10 per cent, from 39.3 per cent baseline position after the five-day and cumulative 30-day shocks, respectively. The result of the stress tests indicated potential vulnerability to liquidity risk in the event that these scenarios crystallized.

“Overall, there was an improvement in the baseline CAR of the Nigerian banking industry at end-June 2014 compared to the December 2014 position. The baseline CAR rose by 0.23 percentage point over the December 2014 position to 17.38 per cent at end-June 2015. This was driven mainly by improvements in the baseline CAR of the large banks which rose by 1.03 percentage points over their December 2014 position to 18.56 per cent at end-June 2015,” the report said.

“Equally, the number of banks with CAR greater than the 15 per cent prudential hurdle rate for international banks increased from 13 at end-December 2014 to 16 at end-June 2015. However, the number of banks with CAR less than five per cent also increased from zero to three over the period”.

Commenting on the report, CBN Governor, Godwin Emefiele, said it captures the headwinds remain, given that oil exports from Iran and lower global demand will further dampen oil prices, thus portending continued decline in oil revenue accruing to Nigeria. (The Nation).

•Photo shows CBN Headquarters.

Source News Express

Posted 31/10/2015 08:41:56 AM

 

Share on facebook Yahoo mail icon Gmail icon Share on Google+


 

CLASSIFIED ADS

REVEALED: 3 natural ways to get stronger erections, last 25 minutes on bed, and increase manhood size without using drugs. Also, Natural Prostrate Enlargement Remedy.. Get In HERE...

 

You may also like...
BREAKING: Portfolios of Buhari’s ministerial nominees leaked •All...

War on Terror: Fallen heroes never forgotten: COAS...

Lulu-Briggs dumps PDP, joins APC

Weatherman predicts sunshine, clouds and thunderstorm today

Names on the final list of National Conference...

JUST IN: Prof. Momoh, DG, National Electoral Institute,...

Buhari presides over first FEC Meeting in 2017...

Obasanjo awards Nigeria's democrcy pass mark

Mutiny: We have not reversed death sentences —Military...

Chelsea back from the dead, overcome PSG to...

Real Madrid sets up Champions League final showdown...

Shiites launch mass protest in Kaduna over prolonged...

 

Latest News World Cup: Mexico stun champions Germany 1-0 Ohakim, Okorocha and the battle of the cowshed, By Collins Ughalaa 31 reported dead as bombs rock Borno Atiku returns from lesser hajj, expresses condolences over Bauchi windstorm Man knifes himself to death ‘because he thought he was wearing a stab-proof vest’ Prof. Chukwuka Okonjo, foremost academic and traditional ruler, turns 90 Govt declares indefinite curfew in Abuja community after crisis SERAP asks court to compel Fashola to account for spending on power Darkness looms as electricity supply drops in FCT, states; 6 power stations shut down 1 killed, 29 arrested in Nasarawa cult clashes APC convention will be hitch-free - VON DG NAFDAC urges FG to establish institute for herbal medicine

 

Most Read Nigerian female sex addict opens up, says ‘I like it with both men and women’ (351,399 views) NUDE PHOTO OF OMOTOLA JALADE-EKEINDE surfaces online (350,374 views) Shameless Genevieve Nnaji exposes breasts in public (279,412 views) Finally named: The full list of friends of Nigerian female sex addict who prowled Facebook (229,419 views) Igbo scholar disgraces Femi Fani-Kayode •Demolishes claims on Igbo/Yoruba history with facts and figures (208,614 views) OLUMBA OLUMBA OBU (the one who called himself God) IS DEAD (208,005 views) Breaking News: POPULAR REVEREND CONVERTS TO ISLAM in Kaduna (Nigeria) (181,223 views) OBJ’s son reported dead in Lagos plane crash •Names of more victims emerge (163,316 views) THE FINAL DISGRACE: Igbo scholar unleashes more facts about Igbo/Yoruba history, finishes off Femi Fani-Kayode with second article (153,410 views) My wasted years in Olumba Olumba Obu’s Evil Brotherhood (148,024 views) Lagos plane crash: Journalist releases victims’ names (143,431 views) Gunmen kill ASP, 2 other police officers in vain bid to kidnap Rivers PDP chieftain (135,319 views)

 

Categories Advertorials (3) African Press Organisation (81) Art & Literature (50) Business & Economy (3,239) Business Verdict (44) Columnists (868) Complaints & Requests (94) Enterprise & Opportunities (207) Entertainment (503) Features (606) Global Business Monitor (280) International (2,029) Interview (153) Live Commentary (28) Love Matters (123) News (36,268) Opinion (1,000) Pidgin (10) Politics (5,265) Religion (770) Sports (1,549) Stock Watch (30) AMA & Al Jazeera Global Update

 

CBN banner

Firstmobile banner

 

 

NEWS EXPRESS TV

Royal Wedding 2018 of Prince Harry and Meghan Markel

 

APO Group Partner

 

 

CLASSIFIED ADS

GOCOP Accredited Member

GOCOP Accredited member

 

 

Africa Media Agency and Al Jazeera

Advertisement