CBN Mulls New Recapitalisation For Banks

The Central Bank of Nigeria (CBN) says it is planning to implement a new round of banking recapitalisation for the Deposit Money Banks (DMBs). Mr Olayemi Cardoso, the CBN Governor, announced this at the 58th Annual Bankers’ Dinner organised by the Chartered Institute of Bankers of Nigeria (CIBN) on Friday night in Lagos. The planned recapitalisation means that DMBs will be required to raise additional capital to meet the demands of Nigeria’s economy. Cardoso noted that President Bola Ahmed Tinubu in his Policy Advisory Council report on the national economy, had set an ambitious goal of achieving a Gross Domestic Product (GDP) of one trillion dollars by 2030, with clearly defined priority areas and strategies. According to him, it is important that banks have a role to play in the anticipated one trillion dollars economy by 2030. Cardoso said going by the huge developmental role the apex bank would want the banks to play in the next seven years, it had become imperative to demand their recapitalisation. To achieve the target, Cardoso said that Nigeria needed to experience a more rapid and inclusive economic expansion. “The administration has already commenced this journey through fiscal reforms, including the removal of petrol subsidies and the unification of the foreign exchange market rate. “Considering the policy imperatives and the projected economic growth, it is crucial for us to evaluate the adequacy of our banking industry to serve the envisioned larger economy. “It is not just about the stability of the financial system in the present moment, as we have already established that the current assessment shows stability. “However, we need to ask ourselves: Will Nigerian banks have sufficient capital relative to the financial system’s needs in servicing a $1.0 trillion economy in the near future? In my opinion, the answer is “No!” unless we take action. “Therefore, we must make difficult decisions regarding capital adequacy. As a first step, we will be directing banks to increase their capital,’’ he said. The CBN governor also announced the approval of another round of Open Market Operations (OMOs) to mop up excess liquidity from the banking system. OMOs are the main monetary policy instrument, through which the central bank buys or sells securities with financial institutions in the open markets, thereby influencing the amount of money in circulation and/or interest rates. Cardoso said, “An OMO auction was recently held with a stop rate of 17.5 per cent for the one-year tenor, attracting oversubscription of N350 billion. “Another round of OMO has been approved to further reduce excess liquidity. “Offering N108.1 billion worth of Treasury Bills with three tenors to the investing public, which can help reduce liquidity in the banking system and support government fundraising.’’ Cardoso said the apex bank would use its monetary policy tools to keep inflation low and stable. He said, “the Central Bank of Nigeria is committed to achieving monetary and price stability. This is not just a technical objective, but it has real-life implications for the well-being of our citizens. “Through targeted policies, transparent market operations, and coordination between monetary and fiscal authorities, we can ensure a more stable exchange rate, control inflation, and create an enabling environment for businesses and individuals to thrive.’’ He noted that the apex bank had taken steps to improve the effectiveness of its monetary policy tools and to strengthen the transmission mechanism so that its policy decisions have a greater impact on the economy Cardoso added that the ability of the monetary policy committee to influence the economy through its decisions had been weakened because the channels through which monetary policy was transmitted had become disrupted. The CBN governor said the apex bank was planning to make changes to the country’s foreign exchange regulations by developing new guidelines and legislation. He stated that banks and foreign exchange operators would be consulted before making any final decisions.

Day 2 Nationwide Strike: NLC Pickets Banks, Courts, Govt Offices

The nationwide strike declared by the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC) entered its second day with intensified actions across various states, including Kaduna, Rivers, Edo, Yobe, and others. Union officials, spearheading the strike, engaged in picketing activities targeting banks, courts, and government offices to press for compliance with their demands. In Kaduna, the enforcement team led by NLC Chairman Ayuba Suleiman took measures to ensure full compliance with the strike. Gates of the Kaduna State Secretariat, housing several ministries, were locked along the independence way. Similarly, all banks along the Yakubu-Gowon Way remained closed for regular business, except for Automated Teller Machine (ATM) services. Additionally, the National Union of Electricity Employees (NUEE) halted operations at the Transmission Company of Nigeria (TCN) power plant in Mando, while the Kaduna Electricity Distribution Company’s headquarters remained shut. Expressing contentment with the level of compliance, Suleiman reiterated the unions’ commitment to maintaining the strike until the government addresses their demands comprehensively. Moving to Rivers State, workers’ protest actions resulted in the closure of the Court of Appeal and several other offices on Moscow Road, Port Harcourt. Notably, facilities hosting agencies like the Nigerian National Petroleum Company Limited (NNPCL), housing the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), were also locked down. Vehicles belonging to workers lined the roads, while operations remained suspended. In Edo State, Organised Labour leaders monitored compliance and disrupted the inaugural sitting of the Edo State Local Government Election Petition Tribunal, impacting activities at the NNPC Mega Filling Station on Sapele Road in Benin City. The strike also affected schools and banks in the region. However, in Yobe State, the strike experienced partial compliance as some government and private offices operated behind closed doors. In response, the NLC/TUC Task Force shut down offices that were not adhering to the indefinite strike in Damaturu, the state capital. NLC Chairman Muktar Tarbutu emphasized ongoing efforts to sensitize members for complete compliance with the national directives. The second day of the nationwide strike witnessed varying levels of impact across different regions, with intensified efforts by union officials to enforce compliance and escalate the strike’s influence until their demands are met. *Channelstv.com

Telcos Mull Legal Action Against Banks Over N130bn USSD Debt

The Association of Licensed Telecoms Operators of Nigeria (ALTON), has said that it may take legal action against banks in order to recover their unpaid N130 billion Unstructured Supplementary Service Data (USSD). The National Chairman of the telecom operators’ umbrella group (ALTON), Engr. Gbenga Adebayo, said ALTON has decided to take the option of legal battle as the last resort, after several failed attempts to amicably resolve the indebtedness matter. He explained the issue of unpaid USSD debt was part of the association’s submission to the new Minister of Communications, Innovation and Digital Economy, Dr. Bosun Tijani, when the ALTON’s team paid a courtesy visit to him last week in Abuja According to him, the minister expressed his concern over the lingering issue of unpaid USSD debt and advised telecom operators to have an independent Think-Tank that would look at the issues surrounding telecoms operations in Nigeria and develop empirical data that would best explain the economic implications of the challenges. The ALTON President said: “The issue of USSD debt was discussed with the Minister, and he was quite concerned and worried that the matter has lingered for too long unresolved. “Since the matter has dragged for too long, the best bet is to withdraw the USSD service from the banks and challenge them to pay for the accumulated debt that has reached N130 billion as at September this year. To get this done, we are contemplating at going to court to resolve the matter. “The issue has lingered for too long and debt accumulated, and I think it’s time to go to court to address the issue. We are thinking so because every effort made by telcos and the government to make the banks pay their debt, has not yielded positive result. It has been like taking two steps forward and taking one step backward”, Adebayo added. He said telecom operators have a commercial service agreement with the banks several to provide them with the USSD service that would enable seamless financial transactions like money transfers through the mobile phones, lamenting that despite the agreement, the banks have refused to obey the terms of the agreement, which had provisions for third party intervention, that include legal action. “The agreement permits parties to go to anywhere, including law court to resolve issues. So instead of the continuous meetings that have not yielded results, we are contemplating taking the next line of action, which is to go to court,” he said.

Banks secured ₦12trn in borrowings over 8 months -CBN

Central Bank of Nigeria (CBN) data indicates that between January and August of the current year, commercial and merchant banks accessed a total of ₦12.46 trillion in borrowings. This data underscores an escalating dependence on the regulatory body for liquidity. Comparatively, this amount signifies a 79% Year-on-Year surge in borrowing when contrasted with the ₦6.96 trillion recorded during the same period in 2022. The increased reliance on borrowing was mainly triggered by the CBN’s new naira note policy, which led to a cash crunch in the economy, impacting the initial months of the year. Banks interact with the CBN through two avenues: the Standing Lending Facility (SLF) for liquidity access and the Standing Deposit Facility (SDF) for cash deposits. The growing trend of banks seeking liquidity from the SLF mirrors the expanding currency outside banks and currency in circulation (CIC) in the economy. In the initial five months of 2023, borrowing from the CBN surged to ₦7.5 trillion, marking a remarkable 276% increase from the ₦1.99 trillion recorded in the same period of 2022. This upward trajectory continued into the first half of the year (H1), reaching ₦10.25 trillion, a 138% Year-on-Year surge from the ₦4.3 trillion borrowed in H1 2022. A detailed monthly breakdown of the 2023 borrowing figures reveals that ₦528.16 billion was accessed by banks in January. The following month, February 2023, saw the figure slightly decrease to ₦453.7 billion. March 2023 experienced a substantial spike of 776.22%, soaring to ₦3.98 trillion. April 2023 witnessed banks borrowing ₦4.47 trillion from the CBN. Subsequent months reflected borrowing amounts as follows: ₦590.29 billion in May, ₦235.06 billion in June, ₦908.43 billion in July, and ₦1.3 trillion in August.