CBN’s Report: We’re Unaware Of Stressed Banks – NDIC
- Says no cause for alarm
BY COBHAM NSA, ABUJA – The Nigeria Deposit Insurance Corporation (NDIC) has distanced itself from reports that some Deposit Money Banks (DMBs) are facing financial straits having failed recent stress test conducted by the Central Bank of Nigeria (CBN).
However, the Corporation assured that its public policy objectives of contributing to Nigeria’s financial system stability as well as protecting small and less financially sophisticated depositors will not be compromised.
Claiming it is not yet privileged to such information circulating in the public domain, the Corporation said reports of any stress within the banking system are yet to be confirmed by officials from its bank examination department.
NDIC’s reaction is coming against the backdrop of reports that CBN’s Stress Test results indicated the funding positions of seven (7) commercial banks are grossly insufficient at the moment.
The said financial stability report, signed by the apex bank’s Director, Financial Policy and Regulation Department, Kelvin Amugo, was released on Thursday, October 17, 2019.
But NDIC’s Director, Bank Examination, Mr O. O. Babatolu, while answering questions during the 30th anniversary media briefing in Abuja on Friday, said the Corporation is unaware of any adverse information on banks as reportedly conveyed in the CBN’s Stress Test document.
Maintaining that its officials have no knowledge of the reported stress involving some banks, Babatolu said; “NDIC is not yet privy to such information that you say is in the public space. More so, it is not our usual style to make disturbing comments concerning the nation’s banking industry given its delicate position as it affects the economy.”
With deposit guarantee as a key and distinct mandate of NDIC, the Director said the Corporation has continued to partner effectively with CBN in proactively responding to developments and challenges in banking operations through appropriate policy framework.
As explained at the briefing, the collaboration has produced great results in the banking sector as represented by huge successes the NDIC recorded in areas such as: Adoption of risk-based supervision framework; Development of framework for Early Warning Signals to detect problem banks; Development of framework for Identification and measurement of Systemically Important Banks (SIBs); and Articulation of a Framework for the Provision of Financial and Technical Assistance to deserving Insured Institutions.”
The Corporation however assured that its collaboration with CBN will continue to ensure the nation’s financial institutions remain healthy at all times and in the event of challenges, “they are detected and addressed promptly.”
Though the CBN report failed to name affected banks among the list of Nigeria’s current 24 DMBs, it stated that the cumulative position for the industry showed an excess of N4.8 trillion assets over liabilities.
It also showed that in the less than 30-day period analysis, seven (7) banks were not sufficiently funded, while in the 31 to 90-day window, nine (9) banks had the funding gap challenges.
Covering the period ending December 2018, the report indicated that six (6) banks accounted for 82 per cent (N252.00 billion) of total placements and 86 per cent (N 266 billion) of total takings, of which 71 per cent (N190 billion) was provided by the top four placers of funds in the sector.
Also, the stress test result showed that, after a one-day run scenario, the liquidity ratio for the industry declined to 34.69 per cent from the 51.87 per cent pre-shock position and to 17.55 and 13.48 per cent after a five-day and cumulative 30-day scenarios.
Furthermore, it revealed that, under five-day and cumulative 30-day run scenarios on the banking industry, liquidity shortfalls dropped to N1.58 trillion and N1.98 trillion.
Additionally, the stress test on banks’ default in exposure to oil and gas sector indicated the banking industry could withstand up to 50.00 per cent default as the post-shock Capital Adequacy Ratio (CAR) remained at 10.24 per cent.
