LAGOS, JULY 8, 2016 – The Central Bank of Nigeria is monitoring one or two commercial lenders for liquidity after Skye Bank failed to meet prudential ratios, prompting it to replace its top executives this week, the director of banking supervision said on Friday.
Banking supervision director, Tokunbo Martins, said “one or two” commercial banks had failed liquidity tests but that they were not in the same situation as Skye.
The central bank of Nigeria on Monday said Skye Bank’s liquidity ratio has been below the regulatory limit for a while and it had resorted to its rediscount window for support, prompting its top executives to resign.
Martins said the central bank was working with the banks to restore their ratios and sought to reassure depositors that there was no need to panic.
“We have our eyes on one or two other banks right now but they are not in a state of distress,” she told a local television station.
“We have our eyes on all banks.”
After replacing Skye’s executives on Monday, depositors rushed to withdraw their funds. Martins said Skye was able to meet its obligations and that the central bank was providing support until the new management can bring in fresh funds.
She added that the banking industry was healthy.
CBN has the authority to remove bank executives, powers which it exercised during the 2007-09 global financial crisis when it sacked nine CEOs at banks which were deemed undercapitalised.
Excessive risk taking and last year’s shifting of government funds from the banks into the central bank were partly responsible for the liquidity shortfalls, Martins said.
Skye’s problems worsened after it used short-term funding to acquire Mainstreet Bank in 2014 but failed to attract fresh funds, she said.
Last year, the regulator gave three commercial banks until June 2016 to recapitalise after they failed to hit a minimum capital adequacy rate of 10 percent.
