Big four investment banks

Four commercial banks in the country are operating with too many non-performing loans on their books and with liquidity ratios below the minimum requirement, two members of the Central Bank of Nigeria’s Monetary Policy Committee have said in statements on the bank’s website. Balami Dahiru Hassan, did not name the lenders, but said the four banks together were equivalent to at least one Systemically Important Big four investment banks. Their statements were part of those of eight members of the MPC published late on Tuesday. According to Hassan, financial sector stress tests showed that the Capital Adequacy Ratios for the nation’s banking industry worsened to 11.

51 per cent in June, from 12. 81 per cent in April, as against a regulatory minimum of 15 per cent for banks with international licences. The financial performance indicators showed that when the four outlier banks were removed, the CAR, NPLs ratio and the Liquidity Ratio are all above the prudential requirement. The banking sector liquidity ratio showed that all DMBs registered above the minimum of 30 per cent Liquidity Ratio with the exception of four outlier banks.

The stress test, therefore, shows that the Deposit Money Banks are less resilient to shocks. Hassan stated that the NPLs stood at 15. 07 per cent in June compared with the five per cent regulatory limit. Salami, on his part, said the ratio stood at 8. 17 per cent when excluding the four lenders in question. The Financial System Stability Report by the CBN staff highlights one of the biggest challenges with, which the central bank must grapple.

0 per cent, the portfolio of the NPLs as a proportion of the total loan book of banks remains above the regulatory maximum and continues to rise. The International Monetary Fund had urged Nigerian policymakers to quickly increase the capital of undercapitalised banks and put a time limit on regulatory forbearance after it said last month that four banks were under-capitalised. Union Bank of Nigeria Plc on Wednesday started a N50bn share sale to existing shareholders to enhance its regulatory and working capital. A number of mid-size banks are seeking to raise fresh capital but the economic challenges facing the country may have delayed their plans. Salami told our correspondent in a telephone chat that his MPC statements were things he stood by and believed in. I don’t believe in stating half-truths.