13 February 2013

Nigeria: CBN Plans Stricter Control of Depositors' Fund

Lagos — The Central Bank of Nigeria (CBN) has said should a bank fail now, particularly among the big banks, it would deal a devastating blow to the economy. It has therefore resolved to ensure no bank fails again.

The CBN also indicated it is further tightening conditions on how the banking sector players invest depositors' money.

The CBN governor Mallam Sanusi Lamido Sanusi gave the indications at the 4th annual investors' forum organised by Renaissance Capital (RenCap) in Lagos.

"If anything happens to First Bank, FCMB and Stanbic for instance, what would happen to our banking system?" he asked.

"First Bank alone, for example accounts for about 14 to 15 per cent of total assets. So you've got banks that are systematically important and are too big to fail and you have to put in control and restrictions," he noted.

He also said there would be stricter controls on depositors fund so banks don't toil with depositors funds. "We are making it difficult for people to take deposit and trade with it," he said.

"How did Oceanic Bank, Intercontinental Bank go under? It was by taking depositors funds and taking risks that they should not take. A structure would have been provided that says you can't do these things under one roof, you have to separate the roof and make sure you put in controls."

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