The Central Bank of Nigeria (CBN) has denied reports that three Nigerian banks are in dire conditions and seven others undercapitalised, saying the reports are false
The apex bank also threatened to bar bank customers who flout its international spending limit on naira MasterCard.
Briefing journalists yesterday at the end of the bankers’ committee meeting held in Lagos, director of banking supervision of the CBN, Tokunbo Martins, assured that the banks in the country were strong enough to absorb the losses that may arise from non-performing loans.
International rating agency, Moody’s and analysts at Dubai-based investment firm, Arqaam Capital, in their reports on Monday, said Nigeria’s banking industry was experiencing a “full-blown financial crisis” with some banks facing insolvency.
Non-performing loans in the industry had risen from 5.3 per cent as at the end of December 2015 to 11.7 per cent at the end of June this year, way above the regulatory ceiling of five per cent, according to the Financial Stability Report issued by the apex bank.
Martins, while dispelling fears on the rising level of NPLs in the industry, said the banks had the capital base to absorb losses from the NPLs.
“That certain banks are undercapitalised is certainly not true. That is not to say that the banking sector is not feeling the economic headwinds, so is every other jurisdiction, so non-performing loans at 11 per cent is not what we need to focus on.
“What we need to focus on is that do the banks have the capacity to absorb all the losses that will arise from those loans and the answer is yes, they do. They have very strong capital buffers. The banks have very huge capacity to generate income apart from the capital buffers that they already have.
“They have huge capacity to generate income to absorb those losses if they do arise. And those NPLs, can they perform, yes they can because the underlying assets are still there and they are good. I think we should totally dispel or ignore this kind of story, it’s not one that we should take seriously at all,” the director emphasised.
Meanwhile, Martins said the apex bank will commence taking strict measures against customers who make foreign exchange withdrawals above the stipulated limit. She noted that the apex bank was aware that bank customers had been breaching the international spending limit on naira cards but had not taken any steps in the hope that customers would comply.
She, however, said that henceforth, any bank customer who exceeds the daily and annual limits would no longer have access to foreign exchange. Martins noted that since all cards are linked to the Bank Verification Number, card users with multiple cards should tread with caution or risk losing access to foreign exchange.
LEADERSHIP recalls that the apex bank had cut international spending limit on naira cards via ATMS, POS and Web to $50,000 annually and $300 daily as the country struggles to meet foreign exchange demands.