By Chinwendu Obienyi
FOR failing to meet their Cash Reserve Requirement (CRR) targets, Nigeria’s top 5 banks, First Bank, UBA, GT Bank, Access Bank, and Zenith Bank (FUGAZ) were debited by the Central Bank of Nigeria (CBN) to the tune of N1.98 trillion in the second quarter of 2020.
The CBN had since 2019 debited Nigerian banks a chunk of their deposits as part of a mutually inclusive CRR and Loan to Deposit Ratio (LDR) policy that is targeted at compelling banks to lend more to the private sector.
Following the implementation, the apex bank now holds a total of N6.57 tril- lion in CRR debits from the nation’s top 5 banks, higher than the N4.59 trillion held in March 2020 and more than double the N3.5 trillion CRR debits as at December 2019. As at the time of the debit, Daily Sun findings re- vealed that the five banks’ total customer deposits stood at N18.26 trillion, representing about 35.9 per cent of total industry customer deposits as of June 2020. For instance, First Bank alone suffered a N576 billion debit in the second quarter of the year, with its total CRR debit of N1.6 trillion kept with the CBN. UBA, followed with a CRR debit of N521.7 billion in the quarter ending June 2020 with bank’s total deposit at N1.5 trillion. GT Bank reported a CRR debit of N251.5 billion in the quarter under review representing about 8.4 per cent of its N2.49 trillion customer deposits while Access Bank reported a CRR debit of N158.6 billion, the lowest of the FUGAZ banks in the quarter under review. According to analysts, the apex bank is likely to continue with this controversial policy as it continues to pressure banks to lend. Meanwhile, experts say the downward trend in Tbills yields is expected to continue this week. This was as the treasury bills secondary market traded with bullish sentiments, as average yield across asset classes contracted by 23 basis to 2.5 per cent. The overall market was largely influenced by activities in the OMO segment (-31 basis points to 2.8 per cent), as local players picked on the relatively attractive yields in the space, and covered for lost bids at the OMO auction. Elsewhere, yields at the NTB segment contracted by 11 basis points to 1.9 per cent, due to sustained demand by retail investors. At the OMO auction, the CBN offered bills worth N100.00 billion, with allotments of N10.00 billion of the 82-day, N10.00 billion of the 180-day and N80.00 billion of the 355-day – at respective stop rates of 4.86 per cent (previously 4.87 per cent), 7.68 per cent (previously 7.68 per cent), and 8.94 per cent (previously 8.94 per cent).
Analysts at Cordros Capital said, “We expect the downward trend in T-bills yields to continue next week, on the back of buoyant system liquidity. At the NTB segment, we expect focus to shift to the primary market where the CBN will be offering N128.06 billion worth of instruments to investors.”