CBN Deducts Customers Deposits From Access Bank, GTBank, 12 Other Banks

The Central Bank of Nigeria (CBN) deducted N118 billion from Access Bank, GTBank, Zenith Bank and 11 other Nigerian banks. The debit was for Cash Reserve Ratio (CRR) compliance - the N118 billion is an amount deducted from customers deposits with banks which the lenders are expected to leave retained with the CBN.

The CBN has continued to withdraw the amount despite complains that it is affecting the availability of liquidity in the banking industry. It was learnt that liquidity is now below N100 billion according to Nairametrics. The CRR was hiked by 5% to 27.5%  by the CBN Monetary Policy Committee (MPC) in January.

It was reported that the CBN made the debit in order to prevent banks from coming to the forex market with much cash, as large demand for forex could put pressure on the CBN. The huge deduction is leaving the banks cash-strapped - the latest N118 billion deduction was made on July 3, 2020.

The following are the banks:

    Access Bank Plc: N3 billion
    Guaranty Trust Bank Plc: N15 billion
    First Bank of Nigeria Ltd: N12.4 billion
    Ecobank Nigeria: N7 billion
    Sterling Bank Plc: N5 billion
    Fidelity Bank Plc: N11 billion
    Union Bank of Nigeria Plc: N12.5 billion
    First City Monument Bank Ltd: N10 billion
    CitiBank Nigeria Ltd: N10.2 billion
    Stanbic IBTC Bank: N15 billion
    Zenith Bank Plc: N7 billion
    Wema Bank Plc: N3 billion
    Titan Trust Bank: N2.5 billion
    Rand Merchant Bank Nigeria Ltd: N4 billion

A source who was quoted by Nairametrics had complained that, “These are huge amounts that are leaving the banking sector. It’s a squeeze on the banks. A bank like First Bank, for instance, has about N1.4 trillion in CRR with the Central Bank. And there is Zenith Bank with equally as much as N1.5 trillion. These are monies that banks can potentially put in loans at 52% at 30%, or even put in money market instruments at maybe 10%.

"So, for a shareholder of these banks, this CRR debits are impairing the banks’ ability to increase their earnings because now are not able to use the funds that are legitimately theirs to create money for their shareholders. And the question is that under what framework is the Central Bank choosing to take people’s money?”