Four of Nigeria’s commercial banks are believed to be operating with huge non-performing loans on their books, with liquidity ratios below the minimum requirement. This was the position of two members of the Central Bank of Nigeria (CBN)Monetary Policy Committee (MPC) said in statements on the apex bank’s website.
Although the names of the affected lenders were not revealed, indication are that the four banks liabilities together are said to be equivalent to at least one systemically important bank, according to renowed economist Doyin Salami, who is also an MPC board member, in his statement, published late on Tuesday.
Financial sector stress tests showed capital adequacy ratios for the industry in Nigeria worsened to 11.51 percent in June, from 12.81 percent in April, as against a regulatory minimum of 15 percent for lenders with international licenses.
“The financial performance indicators showed that when the four outlier banks were removed, capital adequacy, (NPLs) non-performing loan ratio as well as liquidity ratio are all above the prudential requirement,” another member, Balami Dahiru Hassan, said.
NPLs stood at 15.07 percent in June compared with 5 percent regulatory limit. Salami said the ratio stood at 8.17 percent when the four lenders in question are excluded.
Recall that the International Monetary Fund (IMF) had earlier urged Nigerian authorities to quickly increase the capital of undercapitalised banks and put a time limit on regulatory forbearance after it said last month that four lenders were under-capitalised.
Meanwhile, Union Bank on Wednesday flagged of its N50 billion share sale to existing shareholders to enhance its regulatory and working capital.