CBN fines 12 banks N499 billion over CBN’s loan directive breach

The Central Bank of Nigeria (CBN) has fined twelve Nigerian banks for breaching the regulator’s directive on lending to the real sector of the economy. The CBN fined the banks N499.1 billion, with the funds debited from their Cash Reserve Requirement (CRR) with the CBN.

Nairametrics had reported that the CBN directed banks to maintain a minimum Loan Deposit Ratio (LDR) of 60% by September 30, 2019. The LDR was reviewed upwards from 58.5% to 60% with the banks informed to maintain the LDR till September ending. The LDR has now been increased to 65%. All DMBs are to now attain a minimum LDR of 65% by December 31, 2019.

The banks had been warned by CBN Governor, Godwin Emefiele, of a penalty if they failed to attain the LDR by ending of September 2019. The CBN Director, Banking Supervision, Ahmad Abdullahi, had also stated in July that, “Failure to meet the above minimum LDR by the specified date shall result in levy or additional Cash Reserve Requirement equal to 50 per cent of the lending shortfall of the target.”

List of banks affected: The following banks couldn’t maintain the LDR and they were fined accordingly:

  • Citibank (N100,743,055, 321);
  • First Bank of Nigeria (N74,668,880,480);
  • FBNQuest Merchant Bank (N2, 697,456,144);
  • First City Monument Bank(FCMB) (N14, 371,064, 742);
  • Guaranty Trust Bank (GTBank) (N25, 147, 933, 628);
  • Jaiz Bank (N7, 525, 165,552);
  • Keystone Bank (N4, 162, 938, 879);
  • Rand Merchant Bank (N2, 823,177,399);
  • Standard Chartered Bank (N30,027,137,984);
  • SunTrust Bank (N1,703,205,427);
  • United Bank for Africa (UBA) (N99,676,181,916); and
  • Zenith Bank (N135,629,337,625).

Note: In July, Emefiele had blamed the inability of banks to lend to the private sector on the latter’s choice of investing in risk-free securities rather than lending to the real sector of the economy. Although this directive to encourage Small and Medium Enterprises (SMEs), retail, mortgage and consumer lending places banks at higher risk, it will be a major boost for Nigeria’s real estate sector.

Also, home buyers with good jobs may easily secure mortgages as more banks will consider this a better lending option since the loans will be secured against the property.


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