Contrary to claims by the Central Bank of Nigeria (CBN), that none of the 25 banks in the country was distressed, there are indications that about six commercial banks are in need of recapitalization or would have merger if they are to stay in business by 2016.
CBN Governor, Mr. Godwin Emefiele, had dismissed reports that eight banks where in need for fresh liquidity claiming “there is no Nigerian bank that has capital adequacy problem today and all the news around that is false.
“We stress-test banks’ balance sheet and profit loss accounts on a regular basis using different scenarios. That is what we do as a responsible central bank that monitors the strategic health of banks. We carry this exercise out as a practice and I hope this puts this matter to rest.”
But Thewhistler learnt that the Treasury Single Account (TSA) and continued plunge of oil prices in the global market has put most banks under strain as most debtors can no longer service their debts while government funds are now domiciled with the apex bank.
Crude oil prices have fallen to as low as $38.11 per barrel from over $110 per barrel a year ago. This has adversely affected banks’ oil assets.
Besides, the level of non-performing loans in the sector has risen.
Managing Director, Sterling Bank Plc, Yemi Adeola, who disclosed this, said he envisaged possible shrinking in the number of local banks in the New Year.
There are already moves suggesting that trend, he said, but did not name any bank.
Meanwhile, the Naira continued its free fall on Thursday, crashing to N280 against the United States dollar at the parallel market. The greenback sold as much as N275 on Wednesday.
The naira, which had been trading around 241 and 243 against the greenback for a long time, began a steady decline about three weeks ago when the Central Bank of Nigeria stopped the sale of foreign exchange to over 1,600 Bureaux De Change operators due to improper documentation.
On Wednesday, however, the CBN cut the amount it sold to each of the 2,270 BDCs that participated in the weekly forex sale to $10,000, down from the $30,000 it sold to them last week.
While the central bank sold $84.5m to the BDCs last week, the amount was reduced to $23m on Wednesday.
According to analysts, the significant cut in forex supply to the BDCs coupled with the existing huge unmet demand at the CBN official window has led to the recent pressure on the naira at the parallel market.