A famous giant rating agency, Fitch Ratings has stated that Nigerian banks are still experiencing shortage of dollar and other foreign currencies despite the Central Bank of Nigeria’s recent attempt to boost liquidity in the banking system.
The Organization explains that the decision by the CBN Monetary Policy Committee to cut the Cash Reserve Requirements on public and private sector deposits from 31 to 25 % would not add dollar liquidity to the nation’s banking system because it releases no additional foreign currency.
On Thursday the agency released a statement. According to it, substantial government-related foreign currency deposits are exempted from the CRR and have already been withdrawn from the banking system following the implementation of the Treasury Single Account policy last week.
Fitch Ratings explained that the policy decision should provide some additional local currency liquidity into the banking system but around N1.3trillion ($6.5billion) of deposits were sucked out of the banks in September.
Solena Gloaguen, director of Fitch’s financial institutions said: “Lower CRR will not offset the tighter foreign currency liquidity at Nigeria’s banks. A currency split of public-sector deposits is not disclosed but in our opinion, FC deposits are substantial, held up by oil-related deposits.The centralising of public-sector and government-related FC deposits at the TSA has made it increasingly difficult for commercial banks to meet customer demand for FC.Foreign currency availability was already strained in 2015 due to falling oil revenues, CBN action to defend naira depreciation and heightened negative investor sentiment towards emerging markets.”
Fitch also noted that viability ratings assigned to Nigeria’s banks, all in the ‘b’ category, already reflect a wide range of weaknesses, including the increasingly strained FC liquidity position.
The statement concluded: “Key financial metrics reported by Nigerian banks are likely to continue to weaken in the closing months of 2015.”
No comments:
Post a Comment