CBN debits 26 banks N216bn excess cash ratio

Central Bank of Nigeria has debited N216 billion from 26 banks with excess cash holdings as part of measures to reduce the volume of cash in banks holding. The CBN does this on a regular basis to moderate inflation and also to support the exchange rate of the Naira. The Naira has come under intense pressure in recent months during the coronavirus pandemic, a sharp fall in the price of oil – Nigeria’s main export – and departing foreign investors, causing a large financing gap. The currency has been hitting new lows on the over-the-counter spot and black markets since March after the central bank adjusted its official rate, implying a 15% devaluation, to absorb the impact of an oil price crash.

The Naira traded at 385 on the official market this week, weaker than a quoted rate of 361, backed by the central bank. Banking sources said the liquidity withdrawal came before a foreign currency auction on Friday. Results of the auction were due later in the day. “The central bank is trying to manage the FX rate using the CRR (cash reserve ratio),” one banker said, adding that the debits had become frequent and over the 27.5% limit. He said offshore lenders were the most affected on the levies since they don’t operate retail business and are debited from their corporate deposits or borrowings. The bank is selling forex to importers and individuals with dollar expenses to keep its economy afloat. But it is yet to resume forex sales to investors that have sold assets and need to leave the country. 

The baks debited are: Access Bank Plc: N5 billion; Citibank: N11 billion; Coronation Merchant Bank: N2 billion; Ecobank: N9 billion; FBN Merchant Bank: N2.5 billion; Fidelity Bank Plc: N5 billion; First Bank of Nigeria Ltd: N15 billion; FCMB: N15.5 billion; FSDH: N251.2 million; Globus Bank: N1 billion; GTBank: N25 billion; Heritage Bank Plc: N1.5 billion; Keystone Bank Limited: N1.4 billion; Nova Merchant Bank Ltd: N6 billion; Providus Bank: N1.2 billion; Rand Merchant Bank: N335.5 million; Polaris Bank Ltd: N6 billion; Stanbic IBTC: N30 billion; Standard Chartered Bank: N10 billion; Sterling Bank Plc: N3.3 billion; SunTrust Bank: N683.9 million; Titan Trust Bank: N500 million; Union Bank of Nigeria Plc: N8 billion; Unity Bank Plc: N9 billion; Wema Bank Plc: N567.7 million; Zenith Bank Plc: N46.3 billion