The Central Bank of Nigeria, CBN, has slammed a N576 million fine on four deposit money banks for misclassifying some public sector deposits and not remitting what they should as cash reserve requirement in 2014.
The Apex bank had in the first quarter of 2014 increased cash reserve requirement for public sector deposits from 50 per cent to 75 per cent in an effort to manage the pressures on the naira and the country’s external reserve.
This caused a liquidity crunch in the market taking out an additional N800 billion from the financial system.
However, as the credit crunch began to bite hard into banks’ profitability and the nation, the apex bank harmonized to 31 per cent, from 75 and 20 per cents cash reserve requirement (CRR) on the public and private sectors respectively.
Skye Bank paid the largest fine of N323 million, followed by Access Bank which paid N174 million while Sterling and Zenith a Banks paid N50 million and N32 million respectively. In 2014, Skye bank recorded a deposit base of N952.3 billion and a profit before tax of N10.47 billion.
The CRR misclassification fine was the biggest fine for Skye Bank which paid a total of N330 million for various contraventions in 2014. This was the same for the other three banks. Access Bank had paid N184 million as fines for various contraventions during the 2014 financial year of which 94 per cent was for PSD CRR misclassification. The bank had in 2014 posted an interest income of N176.91 billion and N52.02 billion profit before tax. It had a also recorded a customers deposit of N1.45 trillion.
From the total N51.5 million fine for various contraventions, Sterling Bank had paid 97 per cent to the CBN as PSD CRR misclassification fine. The bank had made a N77.93 billion interest income and N10.74 billion profit before tax in the 2014 financial year. At the close of business last year, the bank had a deposit base of N655.94 billion.
Zenith Bank had also paid 66.7 per cent of the N48 million total fine for misclassifying public sector deposits last year. The bank had which posted an interest income of N313.42 billion, recorded a profit before tax of N119.79 billion, while its deposit base stood at N2.53 trillion.