CBN faults ‘banks’ insolvent’ report

Will not yield to cheap blackmail

The Central Bank of Nigeria (CBN) has faulted the report of the Dubai-based Arqaam Capital, describing it as false and overstatement of issues.

It however, reiterated that Deposit Money Banks in the country are sound and have strong capital buffers, despite obvious challenges associated with oil and commodity-dependent economies across the globe.

The Director of Banking Supervision, Mrs. Token Martins, at the Bankers Committee meeting, said: “That the seven banks are undercapitalised is absolutely not true.

“But that is not to say that the banking sector is not feeling the economic headwinds. They are, just like those in every other jurisdiction. It is not strange. Non-performing loans (NPLs) at 11 per cent is not what we need to focus on.

“What we need to focus on is if the banks have the capacity to absorb losses that would arise from those NPLs? And the answer is yes. They have very strong capital buffers.

“Another thing that is important is that Nigerian banks have huge capacity to generate income to also absorb those losses, if they do arise.

And then the loans that are non-performing now, can they re-perform? Yes, because the underlying assets are still there and they are good,” she said.

According to him, the fact that the country has NPLs at a period like this should be expected and is not a thing that any jurisdiction should be demonised about or ridiculed by any report.

“There are countries that have NPLs as high as 15 per cent, some 30 per cent and some countries in Europe have NPLs as high as 80 per cent,” she noted.

Also, CBN spokesman, Isaac Okorafor, noted that by now everyone knows how the country got into the position it finds itself today, particularly through the “collective failure to make the right choices over the years, to plan, as well as non-development of the oil industry which saw the drop in crude oil price.”

“We are not joining issues with anybody and the CBN is not going to yield to any kind of blackmail. Whereby you block avenues through which people were doing round tripping and they go, organise some innocent women, print T-shirts for them to say they are protesting. We would not be deterred by such actions and blackmail.

“All we know is that our economy is facing very serious situation and both the monetary and fiscal authorities are putting their heads together to find solutions. Already, some of the solutions can be found in what we are already doing at the CBN.

“This includes making sure t hat we make judicious use of the foreign exchange that come in and direct it to the most important sectors, to stimulate the economy and create jobs,” he said.Meanwhile, First Bank in a formal reaction to the capital assessment, Wednesday, said the bank remains adequately capitalised as reported in the FBN Holdings H1 results released on July 26, 2016.

In a statement made available to The Guardian, the Chief Financial Officer (CFO), First Bank, Patrick Iyamabo, was quoted as saying: “At First Bank, we strive everyday to maintain our position as the safest and most respected banking franchise in the country. We continue to benefit and leverage our unique ability to grow and capitalise the institution – a testament to our solid track record.

“Our highest priority remains meeting the financing and banking needs of our customers, by providing world class services, knowledge and expertise to support our customers, even in very difficult times.”