CBN: Banks No Longer Threat to Economy

Posted by admin CBN (Central Bank of Nigeria), National Politics Wednesday, February 2nd, 2011

The Central Bank of Nigeria (CBN) said Tuesday that the banking system no longer posed any systemic risks to the nation’s economy as a result of the ongoing reforms in the industry.

Also, the apex bank said it expects four of the six rescued banks to sign a Memorandum of Understanding (MoU) that will lead to their recapitalisation before the end of this week although it remains unclear, who their new investors are.

Director, Banking Super-vision, CBN, Mr. Samuel Oni, who disclosed this at a press briefing in Abuja at the close of the Bankers’ Committee meeting yesterday also said two other banks are expected to sign MoU for recapitalisation in a fortnight.

Meanwhile, the committee has come up with a guideline for dealing with Forward Contract in Foreign Exchange transactions.

Speaking on behalf of the Committee, Group Managing Director/Chief Executive Officer (CEO), United Bank for Africa (UBA) Plc, Mr. Philips Oduoza, said the contract which is expected to kick-off soon aims to stabilise the forex market and prevent speculative tendencies.

He said this move would allow anyone who has foreign exchange transaction for a future date to immediately enter into the contract as “there is sufficient foreign exchange to serve everybody”.

Also yesterday, the committee disclosed that the banks had resolved to raise their total loan portfolio to agriculture from 1 per cent to 3 per cent although this is still considered low compared to other countries in Africa.

The banks also agreed to set up agric desks in their respective institutions to be able to analyse the sector with a view to de-risk it.

According to the CBN Director, the Bankers’ Committee deliberated on the concept of non-interest banking (Islamic banking) with a view to rolling out a robust guidance that will guide the operation of non-interest banking and ensuring that those who would run the banks are experts in non-interest banking.

The bankers also raised concern over the need to control the replication of infrastructure within the industry by embracing the idea of shared services which they hope could reduce banks’ cost of doing business and ultimately lower their lending rates to customers.

The committee he said, noted that some banks had already reviewed their interest rates to reflect the new Monetary Policy Rate (MPR) set by the CBN at 6.5 per cent.

It added that banks have started lending to corporate entities at single-digit rates.

Managing Director, Citibank Nigeria, Mr. Emeka Emuwa, said the banks had agreed to continue to give support to few segments of the economy including power and assist to build capacity within the banking sector and understand how to finance projects in that sector.

Speaking on the fate of banks’ customers who are yet to comply with the recent directive by the CBN to update their information with respective banks, the committee said although the curtain had fallen, banks could still use their discretion to allow those who are willing to comply do that.

The CBN is however expected to make a pronouncement on the outcome of the exercise.

Oduoza said although erring customers could still access their accounts that could only be possible when they might have obeyed the directive.

-ThisDaywp_posts