Panic as CBN plans to go tougher on bank capital rules

Panic as CBN plans to go tougher on bank capital rules

- The Central Bank of Nigeria (CBN) has promised to introduce fresh capital rules soon and also threatened to heap pressure on banks

- The move is expedient following the revelation of the National Bureau of Statistics on the debt figures of some banks

- CBN also vowed that it would work on rules that sought to protect the nation’s banks against embarrassing capital regulation

Following the rising figure of Nigeria's debts, the Central Bank of Nigeria (CBN) has promised to introduce fresh capital rules soon and also threatened to heap pressure on banks at the jugular of bad debts.

In a report available in The Punch, CBN lamented that the non-performing loans in the banking sector rose from N1.939tn to N2.245tn in the third quarter of 2018 according to data from the National Bureau of Statistics (NBS).

Legit.ng gathers that the NBS data had showed that the NPL ratio, which is a key metric for banks’ health, rose to 14.16% from 12.45% in the previous quarter, compared to a regulatory limit of 5%.

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Expressing shock on the rising figure in the debt on some of the banks, the apex bank has resolved to new requirements that would be stricter in terms of what funding qualified as capital and would also require lenders to create “capital conservation and counter-cyclical buffers.

CBN also vowed to work on rules that sought to protect the nation’s banks against shocks emanating locally abroad by increasing the level of regulatory capital and the quality of the assets.

The apex bank said: “Apply a leverage ratio to supplement existing capital ratios for lenders as well as “additional loss-absorbency requirements for domestic-systemically important banks.

Country and cross-border risk guidelines are being developed for the assessment of risks arising from across border operations of Nigerian banks.”

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Meanwhile, Legit.ng previously reported that the International Monetary Fund (IMF) said the world debt had hit an all-time record of $184 trillion, an upward review from the $182 trillion it reported last week.

The figure represented an average of $86,000 debt owed per person, according to a statement by Ting Yan, a press officer at IMF, on Global Debt Database (GDD) update.

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Source: Legit.ng

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