Nigeria says deposits in its banks safe

Nigeria’s central bank said all its lenders are safe, aiming to quell fears after it ousted the management of Skye Bank earlier this week for failing to meet capital and liquidity thresholds.

“The Central Bank of Nigeria hereby reassures the banking and general public that their deposits remain safe,” Isaac Okorafor, a spokesman for the Abuja-based regulator, said. 

“There is, therefore, no need for panic withdrawals from any bank.”

Plunging oil prices since mid-2014 have hammered Nigeria, traditionally Africa’s biggest crude producer, and sent the economy to the brink of recession.

Banks, which give about 30% of their loans to oil and gas businesses, are struggling as their avenues to make money are choked off by the slowdown and rising bad debts.

The Nigerian banking index is down 19% in the past year.

The shares of Skye, Nigeria’s eighth-biggest lender by assets, fell 9.5% on Monday shortly before the central bank and the company issued separate statements announcing that the chief executive officer, chairman and 10 other directors resigned and were replaced by a new management team, led by CEO Timothy Oguntayo.

Skye’s market value has dropped 86% in the past five years to $47m (€42.5m). Its shares have lost 40% this year, making it the worst performer among the nation’s banks.

The Nigerian stock market will re-open today after being closed for a three-day public holiday.

“The infusion of a new board and management for Skye Bank is a proactive regulatory action meant to ensure that the bank does not continue to fail in its relevant prudential ratios,” the central bank’s Mr Okorafor said.

“Neither Skye Bank nor any other bank in the industry is in distress,” he said. 

The steps became unavoidable after Skye Bank’s liquidity and non-performing loan ratios both breached required thresholds, the central bank said.

The bank’s failure to meet minimum adequacy ratios resulted in the “bank’s permanent presence” at the regulator’s lending window designed to provide cash for lenders struggling to borrow from other sources, it said.



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