Nigerian banks sound, strong, resilient – CBN

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  • Suspends processing fees for large cash deposits in banks

BY FESTUS OKOROMADU, ABUJA

The Central Bank of Nigeria has confirmed that the Nigerian banking industry is sound, strong and resilient just as it has suspended processing fees for large cash deposits in banks.

The CBN in a statement by the Acting Director of Corporate Communications, Mrs. Hakama Sidi Ali said banks were meeting up with the different regulatory requirements.

The CBN said that some media reports that some Nigerian banks had failed the Capital Adequacy Ratio stress test for international authorisation should be ignored.

She said, “The attention of the Central Bank of Nigeria (CBN) has been drawn to reports in some media outlets suggesting that some licensed commercial banks in the country had failed the CBN’s Capital Adequacy Ratio (CAR) for international authorisation. We wish to clarify that the Nigerian banking industry remains resilient as key financial soundness indicators were within the regulatory thresholds as captured in the CBN’s most recent Economic Report of 2023 Furthermore, the CBN is engaging with various critical stakeholders to sustain the level of confidence in the Nigerian financial sector.

“We, therefore, appeal to Nigerians to disregard the media reports listing banks as failing the Capital Adequacy Ratio (CAR) stress test for international authorisation as the report did not emanate from the Central Bank of Nigeria (CBN).”

Meanwhile the apex bank has issued a new directive to all banks, other financial institutions, and non-bank financial institutions, suspending the processing charges previously imposed on large cash deposits.

This change, referenced under the “Guide to Charges by Banks, Other Financial Institutions, and Non-Bank Financial Institutions” dated December 20, 2019 (FPR/DIR/GEN/CIR/07/042), affects deposits over N500,000 for individual accounts and N3,000,000 for corporate accounts.

Previously, these deposits attracted processing fees of 2% and 3%, respectively.

Effective immediately, the CBN has put a hold on these charges.

This suspension is a significant shift in policy and will remain in effect until the end of April 2024. The move is seen as a response to the evolving financial landscape and the needs of depositors across Nigeria.

The directive mandates all financial institutions regulated by the CBN to comply by not imposing any charges on cash deposits that meet or exceed these thresholds.

This development is expected to encourage more significant cash deposits, enhance liquidity, and possibly impact various sectors positively, including small and large businesses.

NGX new listings contribute 10% to capital market growth in two years — Popoola

Meanwhile, the Nigerian Exchange Limited has experienced a remarkable surge in market capitalization, with new listings contributing over 10% in the past two years, according to data released by the Exchange.

This underscores NGX’s growing prominence as a preferred destination for corporate listings and capital raising.

Speaking at the MTN Capital Markets Day in Abuja, the Chief Executive Officer, NGX Limited, Temi Popoola, addressed the global challenge faced by exchanges with increasing delistings.

Popoola noted, “There has been quite a bit of news lately about delistings in our market, and that is a trend we are seeing not just in Nigeria but on major exchanges globally. Take Johannesburg, for instance; it has been struggling with delistings.”

Globally, Initial Public Offerings have witnessed a slowdown of more than 60% in the last two years, according to market data provider PitchBook.

Additionally, there has been a noticeable scarcity of smaller cap stocks on public exchanges due to various factors such as voluntary and involuntary delistings, mergers and acquisitions, and liquidations.

Popoola commented on this shift of capital from public markets to private ones, especially among smaller companies.

He emphasized NGX’s strategy to replace delistings faster than they occur.

“What most exchanges aim to do is replace those delistings faster than they occur, and that has formed the crux of our strategy at NGX. We have had notable listings within the last two years including BUA Foods, Geregu – which is our first power sector listing, MeCure Industries, VFD Group, and interestingly our first listed Investment Trust, Nigeria Infrastructure Debt Fund,” he said.

Addressing potential solutions, Popoola stressed the significance of government advocacy and policymaking.

Drawing on historical examples, he highlighted the transformative impact of government interventions through policy changes, citing the banking sector and pension reforms of 2004 as notable instances that have positively influenced market growth.

“As NGX continues to position itself as a dynamic and resilient exchange, the commitment to proactive strategies and collaboration with government initiatives remains at the forefront” Popoola said.