Only 2 Banks Are Out of Clearing, Says CBN
By Olugbuyiro Akinola
The Central Bank of Nigeria (CBN) yesterday said only two banks have been suspended from the clearing system contrary to speculations that 25 banks were affected.
Addressing newsmen at the end of the 274th meeting of the Bankers' Committee yesterday in Lagos, CBN Director of Banking Operations, Dr. (Mrs.) Sarah Alade, disclosed that the two banks now suspended from clearing will join three others that had been out for long.
According to her, "banks go in and out of clearing and that it is not a reason for raising any alarm that the system may crash." There were reports early in the week that about 25 banks have been suspended from clearing over liquidity problem as a result of the apex bank's withdrawal of public funds from banks.
"The withdrawal (of public funds) is not a one-way traffic. Movement of public sector funds will be in and out of the system. When there is excess liquidity, it will be withdrawn and when there is shortage, the funds will be released to ease the effects of shortage," Alade said.
According to her, the speculated suspension of 25 banks is far from the truth," adding that two banks last week also had problems with their settlement bank but which has been resolved."
She further noted that the CBN and banks are on the same wavelength and have set up an ad hoc committee to meet with the media from time to time.
Alade had addressed journalists alongside Mr. Godwin A.T. Oboh, Managing Director/ Chief Executive, Union Bank Plc who chaired the briefing, Mr. Akin Kekere-Ekun, Mana-ging Director, Habib Nigerian Bank, Mr. Aigboje Aig-Imoukhuede, Managing Director, Access Bank Plc and Mr. Tony Ede, CBN spokesman.
Oboh told journalists that the meeting deliberated extensively on liquidity problem which has rocked the nation's banking industry and which resulted in CBN rescinding its decision to withdraw public sector funds from banks.
He explained that the discussion revolved around how to consolidate the industry so as to avoid crashlanding.
The Union Bank's boss disclosed that as at yesterday only N10 billion has been withdrawn from banks by the affected parastatals to the CBN.
He said the meeting considered the way to consolidate without distress and build the required confidence that will not allow unnecessary panic within the industry.
Oboh disclosed that the Small and Medium Scale Industry Equity Investment funds (SMIEIS) are to be used to finance agriculture, but that such finance will be determined by a limit to be set by the CBN.
"Nigerian banks have come a long way. We have built up a very good system. We have come together like today to discuss issues crucial to the industry, at all times mindful of what the public wants. On its own part CBN has been up and doing to come up with these reforms. For us, we want to build a stable and virile banking industry," Oboh said.
Also speaking at the briefing, Kekere-Ekun explained that the withdrawal of public funds by CBN is a monetary instrument which is employed to manage liquidity in the system.
He said the thinking of the apex bank was that there is excess liquidity in the system, hence the withdrawal of the N10 billion so far.
He added that the liquidity crisis being currently experienced by the banking industry made the CBN to halt further withdrawal of public sector funds.
He confirmed that banks are now better placed to accept the reality of the N25 billion capital base as not only good for the banks but also for the economy in general.
"The operators and the regulators agreed that consolidation is important and will therefore work together...," he said.
Aig-Imoukhuede also said that what is good for the country are strong banks. "Many banks are too small and we certainly do not want distress. We all have come to terms with consolidation as the best solution to the economic problem of this nation," he said.
He explained further that the Association of Nigerian Banks (ANB) was not inaugurated in response to the banking reforms rather it is meant to inculcate discipline in the practice of banking in Nigeria. He explained further that ANB is not a parallel organisation to the Bankers' Committee.
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