CBN imposes fresh CRR debits on banks to the tune of N118 billion

On July 3rd, 2020, the Central Bank of Nigeria (CBN) once again debited many banks in Nigeria in line with its Cash Reserve Ratio (CRR) compliance requirement. This time around, about 14 banks were debited to the tune of N118 billion. These banks are:

Access Bank Plc: N3 billion

Guaranty Trust Bank Plc: N15 billion

First Bank of Nigeria Ltd: N12.4 billion

Ecobank Nigeria: N7 billion

Sterling Bank Plc: N5 billion

Fidelity Bank Plc: N11 billion

Union Bank of Nigeria Plc: N12.5 billion

First City Monument Bank Ltd: N10 billion

CitiBank Nigeria Ltd: N10.2 billion

Stanbic IBTC Bank: N15 billion Zenith Bank Plc: N7 billion Wema Bank Plc: N3 billion Titan Trust Bank: N2.5 billion Rand Merchant Bank Nigeria Ltd: N4 billion More details on these debits These constant CRR debits, which typically herald the apex bank’s FX auctions as Nairametrics was made to understand, have served to significantly reduce liquidity in the system. An insider who informed Nairametrics about the latest debit said “the liquidity within the system is now very tight”. As a matter of fact, liquidity is now reportedly below N100 billion.Apparently, the CBN is using these weekly CRR debits to mop up liquidity in the system. In other words, these debits help to prevent banks from coming to the FX auctions with lots of cash. Too much FX demands tend to put the apex bank under pressure.Note that inasmuch as the CBN is trying hard to stabilise the FX markets, these constant debits have inevitably affected banks negatively by leaving them cash-strapped. Our source, who was quoted above, earlier complained about these ‘indiscriminate debits’ when he said: “These are huge amounts that are leaving the banking sector. It’s a squeeze on the banks. A bank like First Bank, for instance, has about N1.4 trillion in CRR with the Central Bank. And there is Zenith Bank with equally as much as N1.5 trillion. These are monies that banks can potentially put in loans at 52% at 30%, or even put in money market instruments at maybe 10%. So, for a shareholder of these banks, this CRR debits are impairing the banks’ ability to increase their earnings because now are not able to use the funds that are legitimately theirs to create money for their shareholders. And the question is that […]

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