"They're not broke": Zenith Bank, Access Bank, UBA, Others Borrow N121 Trillion From CBN as Cash Scarcity Hits

"They're not broke": Zenith Bank, Access Bank, UBA, Others Borrow N121 Trillion From CBN as Cash Scarcity Hits

  • Commercial and merchants in Nigeria have increased borrowing from the CBN
  • Data from CBN shows that the banks’ borrowing increased to N12 trillion in the last eight months
  • The banks use the Standing Lending Facility to access funds from CBN when they are faced with cash liquidity

Indications are rife that commercial banks and some merchant banks have been relying on the Central Bank of Nigeria for cash in the last eight months.

Apart from August, commercial and merchant banks borrowed N12.46 trillion from the apex bank during the first six months of 2023.

CBN, SLF, borrowings
Top Nigerian banks increased borrowing from CBN Credit: CBN Archives
Source: Getty Images

How commercial and merchant banks get loan from CBN

The banks had borrowed N6.96 trillion from CBN in the first eight months of 2022.

PAY ATTENTION: Сheck out news that is picked exactly for YOU ➡️ find the “Recommended for you” block on the home page and enjoy!

Read also

Nigeria's external reserves lose $915 million after naira float, begins week on negative note

Punch reports that commercial and merchant banks access lending from the CBN from the Standing Lending Facility window (SLF) and deposit cash with the CBN via the Standing Deposit Facility (SDF) window.

Findings reveal that during the first eight months of this year, the banks accessed the SLF window against the bank’s tightening monetary policy outlook.

The banking regulator uses the SLF to allow banks to access liquidity to run their daily business operations.

CBN data reveals that between January and June 2023, commercial and merchant banks borrowed N10.25 trillion from the apex bank through the SLF, a spike of 138% yearly from N4.3 trillion borrowed during the corresponding period of the first half of 2022.

Breakdown shows how the banks increased borrowing from CBN

The monthly breakdown revealed that commercial and merchant banks in Nigeria borrowed N528.16 billion in January from the apex bank, but the figure declined to N453.7 billion in February this year.

Read also

NGX fines Ecobank, Fidelity Bank, PZ Cussons, 23 others N125m for missing deadline for report submission

In March this year, the figure spiked by 776.22% to N3.98 trillion, the second highest after the initial N4.47 trillion recorded in April.

CBN data revealed that the financial institutions borrowed about N590.29 billion and N235.06 billion for May and June this year.

Additionally, the SLF figure stood at N908.43 billion in July and N1.3 trillion in August this year.

CBN loaned 2 mortgage banks N38bn to help more Nigerians own houses

Legit.ng reported that in 2022 the Central Bank of Nigeria, (CBN) disbursed loans and advances of N37.6 billion to mortgage banks, according to the apex bank's audited financial statement.

The Federal Mortgage Bank of Nigeria, FMBN and the Nigerian Mortgage Refinance Company, NMRC are two of the mortgage banks that have benefited from loans from the CBN.

Recall that 43 mortgage banks authorised by the Central Bank of Nigeria (CBN) to help Nigerians become landlords were published by the Nigerian Deposit Insurance Corporation (NDIC).

Source: Legit.ng

Authors:
Pascal Oparada avatar

Pascal Oparada (Business editor) Pascal Oparada is a Mass Communications Graduate from Yaba College of Technology with over 10 years of experience in journalism. He has worked in reputable media organizations such as Daily Independent, TheNiche newspaper, and the Nigerian Xpress. He is a 2018 PwC Media Excellence Award winner. Email:pascal.oparada@corp.legit.ng