Group Managing Director, Fidelity Bank Plc Nnamdi Okonkwo, has explained reasons why Deposit Money Banks (DMBs) in Nigeria do not give long term credit facilities, saying that bank’s deposits are mainly short-term in nature and lending such funds to customers for long-term can lead to asset mismatch.

Fidelity Bank MD, who spoke weekend at the 2016 Annual Conference organized by Finance Correspondents Association of Nigeria (FICAN) in Lekki, Lagos said although the banks would want the economy to grow by lending to farmers and other productive sectors of the economy, they also have to keep an eye on the stability of their institutions.

Speaking on the theme: ‘Nigeria Beyond Oil: Financing Options for Non-Oil Exports’, Okonkwo said “A whole lot of people do not realize that banks’ business is to buy and sell money. So, I come to the market to purchase my raw material is cash and my finished goods are also cash. Every other thing banks do are added services. Banks get a lot of bashing for not lending long-term."

Nnamdi Okomkwo stated further ,"Then I ask you, if as a banker, I know that secret place, where I can find long-term funds, we will be the number one bank in Nigeria today, because I can lend long-term. He reiterated that most depositors, who have huge amounts to save, invest in short term basis and collect huge interest on such deposits.

SOURCE: http://www.championnews.com.ng/fidelity-bank-md-explains-why-dmbs-dont-give-long-term-loans/