Free Trade Zones

NEPZA promises a wider corridor for female investors

For the first time in 2022, the Central Bank of Nigeria (CBN) wielded the big stick and debited Zenith Bank Plc, Providus Bank, First City Monument Bank (FCMB) Limited and 11 other banks the sum of N356.1 billion. for failing to meet its 27.5% cash reserve requirement (CRR).
The new debit, according to The Tide’s source, which took place last Friday, has upset many in the banking industry, with the apex bank recently suspending banks’ debit for failing to meet the requirement.
According to the data, Zenith Bank and Providus Bank were the most affected while Fidelity Bank Plc was the least debited bank by the CBN.
A breakdown showed that Zenith Bank and Providus were debited N170 billion and N40 billion respectively. The others are: FCMB N39 billion, First Bank of Nigeria Limited N27 billion, Guaranty Trust Bank Plc N20 billion and Citibank N12 billion
Stanbic Bank IBTC, Union Bank of Nigeria Plc and Polaris Banks were debited N10 billion each, Keystone Bank was debited N6 billion, Ecobank Nigeria N5 billion, Sterling Bank Plc N3.6 billion naira, Fidelity Bank of 2 billion naira and Nova Merchant Bank of 1.5 billion naira.
The last time CBN debited 16 banks and two merchant banks N175 billion was in mid-December 2021.
CBN data showed that Zenith bank was the most debited bank on November 17, 2021, followed by Access Bank Plc and United bank for Africa Plc (UBA).
The breakdown of some affected banks revealed that Zenith Bank – N90 billion, Access bank – N25 billion, Unity Bank Plc – N500 million, FCMB Limited – N5 billion and Stanbic Bank – N4 billion, Polaris – 3 billion naira and UBA – 25 billion naira.
The CBN had, on December 8, 2021, debited seven banks and two merchant banks with a sum of N29.6 billion.
Analysts estimate that liquidity reserves are historically between 5% and 10% of LCY deposits.
Analysts from Agusto & Co. In a report titled “Economic Outlook for 2022. Our Scenario”, explained that: “At the end of 2021, the mandatory CRR for banks amounted to approximately 35% of LCY deposits.
Historically, liquidity reserves have been between 5 and 10% of LCY deposits. In Ghana and Kenya, there are currently 8% and 4.25% of LCY deposits respectively.
“In addition to these mandatory CRRs, Nigerian banks hold ‘Special Notes’, issued by the CBN, which bear interest at 0.5% per annum. These ‘Special Notes’ are not easily convertible into cash and constitute, in substance, interest-bearing cash reserves.
In early 2020, the apex bank’s Monetary Policy Committee (MPC) increased the CRR by 5%, from 22.5% to 27.5%, against its intention to tackle currency-induced inflation while retaining the benefits of its Loan Deposit Ratio (LDR) of 65%. Politics.
The monetary policy introduced by the CBN in 2019 drew mixed reactions from stakeholders who cited, among other things, a decline in bank profits.
At the end of January 2020, the CBN Governor, Mr. Godwin Emefiele, MPC noted that “the committee is confident that the increase in CRR at this time is fortuitous as it will help combat currency-induced inflation while retaining the benefits of the Bank’s LDR policy, which has succeeded in significantly increasing credit to the private sector and lowering market interest rates.
“The Committee further encouraged the Bank’s management to be more vigorous in its efforts to improve access to credit by pursuing the loan-to-deposit ratio policy, as this would not only help create job opportunities, but also stimulate production growth and moderate prices,” he said.