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Banking Sector: CBN Governor Speaks On Strength

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Central Bank headquarters
  • Banking Sector: CBN Governor Speaks On Strength

The Governor of Central Bank of Nigeria, Mr. Godwin Emefiele has explained that the fact that some banks failed the stress test doesn’t literally mean the country’s banking sector is weak.

The CBN Governor, while speaking at the International Monetary Fund and World Bank annual meetings, Washington DC, United States, noted that the stress test was done to check the financial health of banks.

According to a financial report published on the CBN website, seven banks failed to meet the benchmark set by the apex bank at the end of 2018.

The end-December 2018 banking industry stress test, which covered 21 commercial and 5 merchant banks, was conducted to evaluate and determine the resilience of the industry to
probable and adverse shocks, including credit, liquidity, interest rate and contagion risks.

“The fact that you read that seven banks failed stress test does not mean that those banks are weak but what we are saying is that if Bank A fails liquidity, then we tried to address it with that bank.

“So it has nothing to do with the weakness of any bank that would lead to panic or systemic crisis in the banking industry,” the apex bank Governor said.

According to him, the stress test was a strategic approach introduced by the Central Bank to assist banks that fail to meet the set benchmark and improve its capital adequacy.

“The strategic health of the Nigerian banking industry remains very strong and the Central Bank had as a matter of policy since 2015 tried to avoid being sensational about stress testing.

“Stress testing has become part of our normal routine in trying to check the health of all the banks in the industry.

“So what you will find is that from time to time, if one bank fails one ratio, we advise the bank to improve on that ratio or if its capital adequacy or liquidity or prudential ratios that we prescribe to the banking industry.

The stress test revealed that the banking industry could withstand a shock of up to 75 percent increase in the industry NPLs as the capital adequacy ratio (CAR) remained above 10 percent.

However, the industry was vulnerable to shocks above 100 percent increase in non-performing loans (NPLs) as the industry CAR fell below 10 percent.

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Finance

DSS Arrests EFCC, Acting Chairman, Magu

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Dss Arrests Ibrahim Magu

DSS Arrested Magu, the Acting Chairman of EFCC

The Department of State Services (DSS) has arrested the acting chairman of the Economic and Financial Crimes Commission (EFCC), Ibrahim Magu, on allegation bordering on financial misappropriation, abuse of power and embesslement.

The Acting Chairman was accused of siphoning part of the money recovered from looters, a Punch reported stated.

The report stated “It was learnt that the security details to Magu put up a stiff resistance during the arrest of their principal, as they objected to the DSS move.

But he is now undergoing interrogation at the DSS Headquarters In Aso Drive.

This is happening barely two weeks after the Attorney-General of the Federation, Abubakar Malami (SAN) reportedly complained to the President, Major General Muhammadu Buhari (retd.) about Magu’s conduct and advised that he should be relieved of his appointment.

The AGF was said to have accused Magu of insubordination and discrepancies in the figures of funds recovered by the EFCC.

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Finance

Again CBN Debits Banks N118 Billion for Failing to Meet CRR Target

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CBN Debits Deposit Money Banks N118bn for Not Meeting CRR Target

The Central Bank of Nigeria (CBN) on Friday debited the nation’s deposit money banks a total sum of N118 billion for failing to meet 27.5 percent Cash Reserve Ratio (CRR) target.

This is the fourth of such action, bringing the total amount debited so far this year to N2.2 trillion.

According to Tunde Abidoye, an analyst at Lagos-based FBN Quest, the move brings “further downward pressure on banks liquidity ratios and earnings.”

“Based on the total sum that each bank has been debited this year, and our NIM assumptions for each bank, we estimate an aggregate opportunity cost of funds of N86bn for our universe of banks coverage,” Abidoye stated in a note to clients.

The central bank continues to debit banks to force them to loan more into the real sector and also reduce their forex purchasing power to better manage the nation’s weak foreign reserves and curb capital outflow. A series of recent reports have pointed to a possible foreign exchange devaluation to ease pressure on the nation’s reserves.

The report shows that the Stanbic IBTC and Guaranty Trust Bank were debited N15 billion each.

Details later…

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Finance

Debt Market: Dangote Cement Raises N250 Billion in H1, 2020

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Dangote Cement Raises N250 Billion From Debt Market in H1 2020

Dangote Cement raised a total sum of N250 billion from the nation’s debt market in the first half of the year, according to the FMDQ Securities Exchange Limited.

In the statement published on the FMDQ website, the N250 billion debt includes the N100 billion Series 1 Bond raised under Dangote Cement’s N300 billion Bond Programme and the N150 billion Commercial Paper (Series 13-16 Domestic CP Issuance Programme) offered earlier in the year and now listed and quoted on FMDQ Securities.

Mr Michel Puchercos, the Chief Executive Officer, Dangote Cement, was quoted as saying, “This landmark transaction is the largest-ever bond issuance by a corporate issuer in Nigeria.

“It allows us to further broaden our sources of funding by accessing long-term debt at competitive costs from the capital market and builds further on the success of our domestic commercial paper programme.

“The success of these transactions, in the current challenging environment, illustrates investors’ continuous confidence in Dangote Cement’s strategy, strong cash generation and solid credit profile.”

Mr Kobby Bentsi-Enchill, the Executive Director and Head of Debt Capital Markets, Stanbic IBTC Capital Limited, said, “Stanbic IBTC Capital Limited has a long history of partnering with Dangote Cement Plc, and are delighted to have advised on this landmark corporate bond issuance, which reflects the depth and diversity of the Nigerian debt capital markets.”

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