The liquidity crisis in the country may lead to the merger of at least seven commercial banks, which according to experts, are having a rough time.

Others it was gathered, may need to recapitalise this year in order to mitigate the effects of the challenges facing the banking sector.

Sources in the sector disclosed that a serious liquidity risk brewing in the sector could force some Nigerian banks to seek mergers, bailout from their foreign counterparts or settle for regional banking in 2017.


LEADERSHIP learnt that the liquidity problems were founded in the nation’s current economic downturn which is having a devastating effect on the banks.

Similarly, the managing director of the Nigeria Deposit Insurance Corporation (NDIC), Alhaji Umaru Ibrahim, had in December hinted that a lot of banks would need to recapitalise to overcome the daunting challenges that they faced, especially with respect to high interest rate.

“The banks are facing liquidity issues; unemployment is also affecting us globally, in addition to dwindling revenues and profits, high expectations of quality services from depositors and high expectations from investors,’’ Alhaji Ibrahim said, in Kaduna.

He also concurred that many of the banks needed to recapitalise.

LEADERSHIP reports that after the recapitalisation exercise of 2004/2005, the CBN had in 2015, about 10 years after, directed some systemically important banks, which were short of capital but considered too big to fail, to submit recapitalisation plans to it.

The CBN had said a few undisclosed banks did not meet the minimum Capital Adequacy Ratio (CAR) of 10 per cent and 15 per cent for regional/national and international banks, respectively, under Basel II.

The apex bank had, in 2014, classified eight Nigerian banks – First Bank of Nigeria Ltdd (FirstBank), Zenith Bank Plc, Guaranty Trust Bank Plc (GTBank), United Bank for Africa Plc (UBA), Access Bank, Ecobank Nigeria Plc, Diamond Bank Plc and Skye Bank Plc – as systemically important financial institutions (SIFIs) and imposed on them a new set of rules requiring them to maintain a minimum CAR of 16 per cent.

A financial analyst who craved anonymity told LEADERSHIP that “at least seven commercial banks are facing daunting financial challenges that could slide them into distress” in the nearest possible future based on what he described as “unfortunate” fiscal policies of the federal government.

He noted that most of the banks are only in business for survival and called on the government to review its fiscal policies.

According to financial experts, the implications of this development for the banking sector and the general economy are daunting.

http://leadership.ng/news/567632/2017-7-banks-may-seek-merger-over-worsening-liquidity lalasticlala, dominique

Nigeria is turning from Giant of Africa to midget.

Names of the 7 banks ooh...

3TC

Okay, let us have real banks and not all these recharge cards selling ones we have presently. Little wonder some made good profits last year while most companies were in distress-they were involved in FOREX, round tripping , pilfering from customers' account, treasury bills etc and not real banking.

kmaxx:
Names of the 7 banks ooh...

Listing out the banks now will only lead to panic...
Kudos to the CBN for identifying these challenges.
I hope their recapitalise soon and for those who cannot, merging with stronger banks remains the best alternative.

skye bank number one

uboma:



Listing out the banks now will only lead to panic...
Kudos to the CBN for identifying these challenges.
I hope their recapitalise soon and for those who cannot, merging with stronger banks remains the best alternative.

You are right bro.