1. Ten lenders have contributed N2.3 trillion to the Central Bank of Nigeria (CBN) in line with the Cash Reserve Requirement (CRR) policy of the regulator, Renaissance Capital (RenCap), an investment and research firm has said.
2. CRR is a portion of banks’ deposits kept with the CBN as reserves. The N2.3 trillion is deposited with the CBN at a in cash reserve at zero interest.
3. This represents an average CRR of 22 per cent for these banks, ranging from 18 per cent at First Bank of Nigeria Holding Company (FBNH) to 27 per cent at Zenith and Fidelity banks. On average, it said restricted deposits have grown by 127 per cent between 2012 and June 2014, ranging from 72 per cent at Skye to 186 per cent at Diamond banks.
4. The significantly tighter banking regulations explains the relatively low returns of the Nigerian banks versus sub Saharan Africa (SSA) peers; but on the flipside, they explain the country’s relatively stable macro conditions.
5. They opined that for the Nigerian banks’ returns to improve sustainably over time, some loosening of monetary policy front will be necessary, particularly on the CRR,” it said. It said last year was the year to take the pain, this year to stabilise and next year when lenders are expected to start seeing early signs of recovery. It said any loosening of monetary policy is unlikely until after the elections in December next year.
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