Deposit Money Banks will need to begin aggressive moves to retain private sector customers following the recent increase in Cash Reserve Requirement of private sector deposits by the Central Bank of Nigeria’s Monetary Policy Committee.

The MPC had last week increased the CRR on private sector deposits to 15 per cent, up from 12 per cent.

Economic and financial analysts said the decision might lead to a slight increase in interest rate as banks begin moves to retain existing private sector deposits and also attract new deposits.

The Head, Investment Research, Afrinvest, Mr. Ayodeji Ebo, said, “We expect slight increased competition for private sector deposits which may lure banks to increase interest rate to preserve existing deposits and attract new deposits.”

The analyst said the MPC decision was in line with Afrinvest’s expectation as it had expected the CBN to uphold its ‘hawkish’ policy stance.

He, however, said the firm thought the benchmark interest rate (Monetary Policy Rate) would also be raised to calm foreign capital reversals as observed in other emerging markets.

He said such move would have eased the current pressure on the naira.

Ebo said, “As a result of the persistent capital flow reversals, the up-coming 2015 elections and the non-adjustment of the MPR in Nigeria to favour FPIs, we expect the naira to remain under pressure in the near term.

“Given the significant decline in the external reserves in 2014, the CBN might call for an emergency meeting before its May 2014 the MPC meeting if the reserve depletes below $35bn before May. This may necessitate the CBN to adjust the exchange rate band in the interim not minding its impact in form of imported inflation.

However, the CBN has insisted there is no plan to devalue the naira any time soon. The CBN Governor-Designate, Mr. Godwin Emefiele, has also said devaluation is dangerous for the country.

The Head, Intelligence and Research, BGL Plc, Mr. Femi Ademola, said it agreed with the MPC decision, although it was not as much as his firm had expected.

He said, “The MPC has information on the cause of the increased pressure on the naira exchange rate. The implications of the decisions may imply that; the tapering of the United States Quantitative Easing has been around for some time; hence it is expected that the market has reacted to it already and so no further reaction is expected in that regard.

“Also, the expected policy changes revolve around the increase in interest rate in most advanced economies especially in the US. However, this is not expected until the middle of 2015 when the Fed is expected to have completely halted it bond purchase programme, so we have some time to adjust.”

According to the MPC, shortfall in oil revenue is expected to be reversed with possibility of a significant accretion to foreign reserves based on the expectation of higher oil prices from the developments in Russia and Ukraine.

The BGL official said election spending posed significant threat to inflationary outlook but the projection of a strong agricultural harvest would douse the effect to a modest outlook.

This, he said, was part of the reason the MPC might have taken the decision to continue with monetary tightening.

Ademola recalled that most portfolio managers and currency traders had expected an adjustment to the midpoint of the naira exchange rate.

Part of their argument, according to him, is that the United States tapering has made emerging market and developing markets’ currencies to suffer depreciation as capital reverses back to the developed economies.

“The currencies of Brazil, Russia, India, China and South Africa depreciated by an average of 5.25 per cent since June 2013 to March 2014. However, the naira remained stable at N155.25/$ within the period,” he noted.

Consequently, the analyst said the naira might experience speculative attack in the next few weeks.

http://www.punchng.com/business/money/15-crr-banks-face-increased-competition-for-deposits/

LOL. Wrong audience. Is anyone on NL intelligent enough to understand this?

MaleoPearls:
.

ty265:
OK na

Babyboy1986:

Mattpopson101:

Keneking:
Ok

Nairalandar:
hh

They better start offering better services before BABA is sworn in on May 29 otherwise na Gbege oooo














Modified*********
I am secondus to commentus. I am dedicating this achievement to the amiable General M Buhari GCFR ( President of NIGERIA 2015-2019 and if he performs well, which we know he will, we shall massively return him 2019-2023)









APC!!! POWER TO NIGERIANS!!!!

OK na

This is One year old!
This MOD needs to be flogged with BROOM!
CRR had been 15% since last year.

Oh, the article is even March 2014 edition

Lol no comments, every body dey high tension for part 4 thread

Emiiyaseyi

I don't think anyone wants to read the news now, the presidential election result is what's HOT right now. After today, then we can revisit this news.

Ok...this is one sector the new government should look at critically.

1. A responsible economic manager should be appointed
2. A responsible CBN governor
3. Reverse our falling Naira
4. Make savings compulsory for Nigerians

kalindaminda:
LOL. Wrong audience. Is anyone on NL intelligent enough to understand this?

CBT

kalindaminda:
LOL. Wrong audience. Is anyone on NL intelligent enough to understand this?

Are you intelligent enough to understand it?

manny4life:


Are you intelligent enough to understand it?

When dry bones are mentioned...

Not a bad news since it is, at least, a little digression from the heat emanating from the election result tension.

15% still sounds awfully low.

That is how the American (and European) banks got themselves into the mess that almost completely destroyed the global banking sector.

Well, nice move by the CBN.

Cut short money supply and increase deposits, thereby making the banks especially the SIB's (Systematically important banks) more liquid..

but more devaluations, a big No No..

...and this news was Last Year tho.. cc:Ishilove.

#Nigeriadecides

Quite simple anyway. Since public accounts resident with these commercial banks has been domicile at CBN,they have no option than to mobilize for deposits in other to be liquid since the cash reserve ratio has double up.
Marketers in banks has a whole lot of work to do,if they will have to retain their jobs.

This is March 2014, so stale new

Alryt. If they want us to deposite money, they should give people jobs. An unemployed person has no business depositing money in banks.
Hopefully the wind of transformational change can bring about the future we desire.
Banks also deduct money from people's acct anyhow. Uba, Ecobk, firstbank shd take note

And some mofos still want continuity of gej. I pity them. Abeg like for GMB share for GMB kill yourself for Jonathan

This year is going to be a difficult one. Especially as the dollar rate shows no sign of coming down anytime soon!

More pressure for staff.

Is the Mod alright?
CRR since how many Months?

Back to Orubebe Matter Jare

D Man is a disgrace to this Nation
The result announcement is bn watch all over the world and he acted in such way

But I love Jega replied.
“ don't come and disrupt what we av started peacefully, you should also be careful of UR action in public.

Well the implication of this is that some DMBs already having liquidity problems may give out Rights issues and Bonus issues to raise funds and others might pressurize their marketers with unrealistic targets. Also, it will reduce the supply of money and will serve as a catalyst for the Cashless Policy because more people will make use of their Atm cards and POS. Lending rates may go up thus discouraging loan request from the deficit users in the economy while reaping abnormal profits for those who dare to obtain such loans backed with the agreement that the amount will still be domiciled with them thus creating a new account, increasing their deposit base all at an abnormal profit! Meanwhile more DMBs might incorporate their own MFBs targeting the Informal sector where we have the most unbanked population (and where most of the Political largesse causing the current liquidity squeeze are stuck!).

This is delivering more bank marketers to our beds.