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Why CBN may sanction some banks over new lending policy

Not less than seven banks, including Guarantee Trust Bank (GTB) and Zenith Bank, are currently under pressure over CBN’s new lending policy.

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The Central Bank of Nigeria (CBN) may sanction not less than seven banks, should they fail to comply with its new lending policy.

The banks which may be intensifying efforts to avoid being sanctioned by the apex bank are Guaranty Trust Bank, Zenith Bank, First Bank of Nigeria (FBN), Ecobank Transnational Incorporated, Stanbic IBTC Holdings, Union Bank of Nigeria Plc, and United Bank for Africa Plc (UBA).

Godwin Emefiele, CBN Governor,

CBN Governor, Godwin Emefiele

Why the banks may be sanctioned: The affected banks’ financial report for 2019 Q1, shows that the banks recorded 51.6% Loan to Deposit Ratio (LDR), which represents 8.4% shortfall of the LDR target.

[READ MORE: CBN disburses N607 billion to fund agricultural projects]

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It was however gathered that the banks’ deposit stood at N20.12 trillion during the period under review, as they disbursed N10.4 trillion loans to their customers. Under the new policy, they would be required to disburse N12.1trillion loans.

Consequence: In view of the new policy that will be implemented in about two months’ time, the seven banks would have no choice but to increase their loan position with as much as N1.7 trillion, which represents the LDR shortfall recorded by the banks as at the end of March 2019.

Should the banks fail to create a window for the outflow of the credit facilities as at the given period, CBN may enforce a sanction of locking up half of the amount, which is about N844 billion.

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(READ ALSO: Bank CEOs declare war on debtors over N8.16 trillion bad loans)

Prior to this development, the apex bank had made known that its directive for DMBs to lend out a minimum of 60% of their deposits to the country’s real sector, will take effect from Monday, September 30, 2019.

Understanding the LDR: LDR is an instrument deployed to assess a bank’s liquidity by comparing its total loans to its total deposits for the same period. In this process, if the ration appears too high, it means that the bank may not have enough liquidity to cover any unforeseen fund requirements, especially if the loan repayments fall short of schedule. Conversely, if the ratio is too low, the bank may not be earning as much as it can from the deposits it had taken at a cost.

Famuyiwa Damilare is a trained journalist. He holds a Higher National Diploma (HND) in Mass Communication at the prestigious Nigerian Institute of Journalism (NIJ). Damilare is an innovative and transformational leader with broad-based expertise in journalism and media practice at large. He has explored his proven ability in the areas of reporting, curating and generating contents, creatively establishing social media engagements, and mobile editing of videos. It is safe to say he’s a multimedia journalist.

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Hospitality & Travel

COVID-19: Over 70% of jobs lost in aviation, tourism industries in 2020 – AfDB

The AfDB has stated that about 5 million jobs have been lost in the aviation and tourism industries in Africa due to the COVID-19 pandemic.

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Aviation in Africa

About 5 million out of Africa’s 7 million aviation and tourism industry-related jobs have been lost in 2020. Also, as much as $15 billion in revenue, half of this to African airlines.

This was disclosed by the African Development Bank (AfDB) in a statement issued and seen by Nairametrics on Friday.

Vice President for Infrastructure, Industrialization and Private Sector, AfDB, Solomon Quaynor explained that the pandemic’s effect was felt more in Africa, a claim that was backed up by numerous panelists at the just concluded AfDB’s webinar themed ‘African Aviation Recovery Conference: coordinating an efficient response to the COVID-19 crisis’s effects on the Aviation sector in Africa.’

He said, “The air transport system is really at the forefront of all our collective objectives to realize Africa as a single economic bloc. The centrality of the aviation sector to Africa’s long-term goals by referencing three flagship projects of the AU’s Agenda 2063 that aim to advance open skies and closer connectivity: SAATM, The African Continental Free Trade Area, and the African Passport-Free movement of people.

“The air transport system is really at the forefront of all our collective objectives to realize Africa as a single economic bloc of 1.3 billion people with a GDP of almost 3 trillion dollars, for which we want to begin to really focus and increase trade among ourselves, as well as investment.”

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Also at the event, Minister of Aviation, Hadi Sirika called on African governments to embrace full liberalisation of the aviation sector, invoking the Yamoussoukro Decision, which established an arrangement for the gradual liberalization of intra-Africa air transport services.

He said, “Nigeria today has all its bilateral air service agreements with the YD and was also among the first ten countries that signed a commitment to implement the Single African Air Transport Market.”

Dr. Amani Abou Zeid, African Union Commission for Infrastructure and Energy, explained that Africa’s aviation industry represents a huge market that the continent’s airlines need to exploit more fully, with technology and AI offering the way forward for expansion, regional development experts.

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“Technology and smart technologies are offering this fantastic opportunity, so let’s make use of AI, let’s make use of the Internet of Things, let’s capacitate our people to revamp and to rethink our industry, to make sure that both our airports and our airlines cater for the very near future,” said Zeid.

What they are saying

A key takeaway was the urgent need for coordinated action among the sector’s actors, including governments, aviation authorities and multilateral stakeholders such as the Bank.

“The time is now. All of us who have really been working on upstream issues such as SAATM, the World Bank, ourselves, the AU and others, now is the time to really pool our advocacy and resources to make this happen once and for all because if we continue to operate as a federation of 54 states as opposed to an integrated market, our economies will continue to be sub-optimal,” said Quaynor

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Energy

Autogas: Nigerians will not pay N250,000 for conversion, it is free – FG

The FG has clarified an earlier statement about Nigerians having to pay N250,000 to have their vehicles converted from diesel/fuel use to autogas.

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FG says vehicle owners to pay N250,000 to convert from petrol to autogas

The Federal Government has said that news reports of Nigerians having to pay N250,000 to convert their cars from diesel/petrol engines to gas is false and incorrect.

This was disclosed by Justice Derefaka, the Technical Adviser on Gas Business and Policy Implementation to Minister of State for Petroleum, Timipre Sylva, to newsmen on Friday.

On Friday, Derefaka clarified his position as wrong and said the FG plans make the conversion for free. He added that the FG plans to convert 1 million vehicles for free by the end of 2021.

“I granted an interview on Channels Television, where I stated the auto conversion of vehicles to gas will amount to N250k and Nigerians will need to pay for that. That statement is not correct, it is wrong.

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“On that note, I will like to state the position that has been made by my boss, Timipre Sylva, that FG will convert those vehicles for free for Nigerians, and we are looking at 1 million vehicles by the end of 2021,” he said.

What you should know 

  • Nairametrics reported earlier this week that  Justice Derefaka had said vehicle owners in the country would have to pay N250,000 to have their cars converted to autogas from petrol.

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Coronavirus

COVID-19: Moderna says it will produce 500 million vaccines by 2021

Moderna Inc, has said that the company has the capacity to produce up to 500 million coronavirus vaccines by 2021.

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Moderna COVID-19 vaccine passes safety test on animals

Stéphane Bancel, CEO of pharmaceutical company and Covid-19 vaccine maker, Moderna Inc, has said that the company has the capacity to produce up to 500 million coronavirus vaccines by 2021.

The CEO disclosed this at the Nasdaq Investor Conference, as reported by Reuters.

What you should know 

  • Nairametrics reported last month that the pharmaceutical company had stated that its Covid-19 vaccine was 94.5% effective in treating coronavirus, after preliminary analysis of a large late-stage clinical trial.
  • UK Health Secretary, Matt Hancock announced in November that the UK had secured 5 million doses of the vaccine.

The company disclosed that they had applied for emergency use of the vaccine in the United States and EU after finalizing clinical trials which showed 94.1% efficacy, and would hold a December 17 meeting with the American Food and Drug Administration to discuss emergency use.

For 500 million, I am very comfortable we are gonna get there (2021),” Bancel said at the Nasdaq Investor Conference.

The CEO added that the price for its vaccine would remain at $37 per dose, but expected it to fall to $25 as purchase volumes rose.

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Moderna says up to 125 million doses of its Covid-19 vaccine will be supplied globally by the first quarter of 2021.

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