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CBN urges banks to ‘support’ media, aviation industries to avert growing job losses

The media and aviation sectors are among the hardest hit by the pandemic, hence CBN’s call.

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Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, has advised Nigerian banks to support the media and aviation sectors through loan disbursements.

This is in view of the lingering Coronavirus pandemic which has wrought major economic havoc across different sectors, leading to revenue declines and multiple job losses.

In a series of tweets posted on Tuesday night via CBN’s official Twitter handle, it was disclosed that Emefiele asked the banks to help avert the spate of job losses already being recorded amongst journalists and aviation workers.

READ: Sterling Bank reveals N215 billion sequestered by CBN as CRR Debits

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Understanding COVID-19’s devastating impact on the media industry

The media and aviation sectors are among the hardest hit by the pandemic. An earlier report by Nairametrics uncovered how most print media organisations have had to slash salaries by 50% whilst laying off many staff, even as the current pandemic-induced economic climate continues to make it harder to operate.

As you may well know, the media industry mostly relies on advertising revenue to thrive. However, inasmuch as advertising is critical for most companies and organisations, they tend to drastically cut down on their advertising budgets during a recession. Unfortunately, Nigeria is in a recession, no thanks to the COVID-19 pandemic.

READ: Banks reduce dollar spending limit on naira debit cards to $100 

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Meanwhile, the pandemic grounded planes and dried up airlines’ revenues

Earlier this month, Nigeria’s Air Peace announced that it had sacked about 70 of its pilots and reduced staff salaries by as much as 40%. The sad decision was, of course, taken to protect the company against the adverse effects of COVID-19.

In a similar development, the management of Bristow Helicopters Limited also announced the sack of about 100 pilots and engineers. Bristow’s announcement came barely 24 hours after Air Peace’s announcement.

Bristow Helicopters, which provides auxiliary services to the oil and gas industry, also blamed COVID-19 for the decision to lay off the pilots.

READ: Facebook rivals TikTok with launch of video-sharing product inside instagram

For more than two months, local and international flights were suspended, as planes were grounded in a bid to curtail the spread of the deadly Coronavirus. This move, though necessary, understandably affected airlines’ revenues; hence the layoffs.

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Local flights only just resumed earlier this month, with international flights expected to follow suit later this week.

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Now, as planes resume flights, CBN’s Emefiele wants banks to do all that they can to avail airlines the financial support they need to bounce back.

READ: World Bank hopes to cut down debts of poor countries rather than delay payments

Lending amidst the uncertainties

Nigeria’s apex bank has always encouraged banks to lend. In late 2019, it carried out an upward review of the Loan to Deposit Ratio (LDR) from 60% to 65%, and directed Deposit Money Banks (DMBs) to comply.

Interestingly, the CBN’s stance on loans has been yielding results. Last week, Nairametrics reported that the value of loans given by banks to the private sector increased from N16.251 trillion in June 2019 to N18.632 trillion as at the end of May 2020. This represents a 21.53% (or N3.5 trillion) increase within a 1-year period.

Get economic data from Nairametrics on Nairalytics

Despite the progress, banks are being careful about who they lend to and how they lend. This is because they must guard against any possiblity of bad/non-performing loans.

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Speaking of non-performing loans, CBN Deputy Governor, Kingsley Obiora, while commenting on the recent increase in banks’ lending to the private sector, also noted that “non-performing loans (NPLs) decreased to 6.4% at the end of June 2020, compared to 9.4% in the corresponding period of 2019, reflecting recoveries, write-offs and disposals.”

It should be noted that the CBN had recently averted major bad loans by encouraging banks to restructure as much as 41% of their loans to customers. Nairametrics quoted Governor Emefiele, who explained why this became imperative.

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“If the CBN did not ask the banks to grant these forbearances to their customers, the loans will go bad immediately by our prudential ratios,” he said at the end of last month’s MPC meeting.

Emmanuel is a professional writer and business journalist, with interests covering Banking & Finance, Mergers and Acquisitions, Corporate Profiles, Brand Communication, Fintech, and MSMEs. He initially joined Nairametrics as an all-round Business Analyst, but later began focusing on and covering the financial services sector. He has also held various leadership roles, including Senior Editor, QAQC Lead, and Deputy Managing Editor. Emmanuel holds an M.Sc in International Relations from the University of Ibadan, graduating with Distinction. He also graduated with a Second Class Honours (Upper Division) from the Department of Philosophy & Logic, University of Ibadan. If you have a scoop for him, you may contact him via his email- [email protected] You may also contact him through various social media platforms, preferably LinkedIn and Twitter.

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Exclusives

CRR: Banks suffer N917.5 billion debits in latest CBN action

The central bank debited Nigerian banks N917.5 billion last week in its latest CRR action.

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CRR: Banks suffer N917.5 billion debits in latest CBN action

Nigerian banks suffered a total of N917.5 billion in new CRR debits from the Central Bank of Nigeria. Reliable sources inform Nairalytics Research that the latest debits occurred in the week ended October 23rd, 2020.

The cash reserve requirement is the minimum amount banks are expected to leave retained with the Central Bank of Nigeria from customer deposits. In January, the CRR was increased by 5% to 27.5% by the CBN Monetary Policy Committee (MPC) who explained that the decision was intended to address monetary-induced inflation whilst retaining the benefits from the CBN’s LDR policy.

READ: CBN says 17 banks to restructure over 32,000 loans

CRR Debits for Nigerian Banks.
Nairalytics Data

READ: Union Bank suffers N188 billion in CRR debits as at June 2020

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From the data, Zenith Bank topped the list with N285 billion followed by UBA with N160 billion. The rest of the FUGAZ, Access, FBN, and GTB were debited N140 billion, N95 billion, and GTB N55 billion respectively. The FUGAZ also suffered a N1.9 trillion debit in CRR sequesters in the second quarter of 2020 (April – June) alone.

READ: Nigeria’s forex devaluation timeline – 2020

Nigeria’s central bank has since 2019 debited Nigerian banks a chunk of their deposits as part of a mutually inclusive cash reserve requirement (CRR) and Loan to Deposit Ratio policy that is targeted at coercing banks to lend more to the private sector.

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READ: CBN reviews minimum interest rates on savings deposit to 1.25%

Last month, Nairametrics reported that the CBN now holds a total of N6.57 trillion in CRR debits from the nation’s top 5 banks a whopping 43% higher than the N4.58 trillion held in March and more than double the N3.5 trillion CRR debits as of December 2020. CRR debits in the third quarter of 2020 will be revealed when banks release their results in the coming days and weeks.

READ: Nigeria’s telecom sector posts double digit growth of 18.1%, manufacturing, others contract

Meffynomincs: CBN under the leadership of Godwin Emefiele has deployed several heterodox policies as it strives to stimulate the economy and manage the exchange rate crisis in the absence of strong fiscal support.

  • Interest rates on fixed deposits and money market instruments have fallen to single digits despite the galloping inflation rate.
  • Last month, the CBN monetary policy committee admitted it was no longer combating inflation but will direct its policies towards stimulating lending to the private sector hoping this will spur local production.
  • This policy has placed banks in the crosshairs with the Apex bank exposing them to CRR debits if they cannot use customer deposits to spur lending.

 

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ENDSARS

#EndSARS: Access Bank announces N50 billion interest-free facility for businesses

Access Bank Nigeria Plc has announced plans to offer N50billion interest-free credit facility to individuals and businesses. 

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Access Bank Plc, Nigeria's Creative Industry needs urgent financing from commercial banks to bridge unemployment gaps - Herbert Wigwe

Access Bank Nigeria Plc. has announced N50 billion in support of Nigerians through interest-free loans and grants to support communities, the youths, and micro, small and medium-sized businesses.

READ: Access Bank gets regulatory approval to become a Holding Company

READ: Banks lay-off 2,477 staff during lock-down

This information was disclosed by the bank through its official LinkedIn page. 

The bank’s official statement read thus,

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“Now more than ever, we remain committed to our purpose of impacting lives positively. In light of the recent occurrences, we will be supporting Nigerian businesses with 50 Billion Naira interest-free loans and grants. Watch this space for more information.”

READ: Access, GTBank, two others pay PWC & EY N1.5 billion as Audit fees in H1 2020 

Why it matters

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The impact of the pandemic, coupled with the hijacked #EndSARS protests that led to the looting of businesses and destruction of properties has thrown so many Nigerians into debts.

READ: $70 billion per annum will be needed to tackle pandemic induced poverty – World Bank

READ: WTO DG: US, EU divided over Nigeria’s Okonjo-Iweala and South Korea’s Yoo

This show of support from Access Bank will help alleviate and stimulate economic activities, as well as produce many positive multiplier effects on the economy.

READ: #EndSARS: Popular hacking group, Anonymous allegedly hacks Nigerian Govt. websites

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Financial Services

CBN reviews appointment requirements for CCOs in Banks

The CBN has reviewed the appointment criteria for CCOs in Merchant Banks and Regional Banks.

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Access Bank Plc, Herbert Wigwe, CBN, interest payment on bank deposits, CBN review appointment requirements for Chief Compliance Officers in Banks

The Central Bank of Nigeria (CBN) has reviewed the appointment criteria for Chief Compliance Officers in Merchant Banks and Regional Banks (Commercial and specialized).

This is according to a circular issued by the apex bank dated October 9, 2020, and signed by its Director of Financial Policy and Regulation Department, Kevin Amugo.

READ: CBN has rolled out new anti money laundering penalties that should get any banker worried

According to the latest notice, Merchant banks and Regional banks are hereby granted dispensation to appoint CCOs on a grade not below an Assistant General Managers. However, the CCOs will report directly to the ECO of the financial institutions who have sole responsibility for compliance matters in the bank.

READ: CBN to “reduce” savings rate to 1% declare OMO bills as “Poison”

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Backstory

This latest action by the CBN is the sequel to consultations and engagement with stakeholders emanating from its earlier circular referenced FPR/DIR/GEN/CIR/06/004 of September 28, 2016, in which the tentative requirements for Executive Compliance Officers and Chief Compliance Officers of deposit money banks were mooted.

(READ MORE:CBN moves to ring-fence Disco collections)

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Meanwhile, the requirements and responsibilities of Executive Compliance Officers remain as earlier communicated in the circular dated 28 September 2016.

A part of the recent circular signed by Mr. Kevin read thus,

READ: CBN grants approval for banks to debit accounts of loan defaulters 

“Further to the circular referenced FPR/DIR/GEN/CIR/06/004 of 28 September 2016 on the appointment of Executive Compliance Officers (ECO) and Chief Compliance Officers (CCO) of deposit money banks, the CBN has, after due considerations and presentations by stakeholders on the size, structure, operation, and dynamics of classes of operators in the sectors reviewed the requirements for the appointment of Chief Compliance Officers.”

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