Silicon Valley: No Nigerian bank has direct exposure
There is no direct investment by Nigerian banks in Silicon Valley Bank (SBV) that could result in a loss of investment, the Central Bank of Nigeria has said.
The apex bank spoke amid uncertainty over the takeover of the Silicon Valley Bank by the U.S. government after its clients, including venture capitalists and tech startups, withdrew funds from their accounts, leading to the eventual crash of the bank.
The collapse has raised concerns about the potential impact on other banks in the world.
The CBN Governor, Godwin Emefiele, while responding to questions at the end of the monetary policy committee meeting held in Abuja Tuesday allayed the fear of many concerned Nigerians.
According to him, Nigerian banks are healthy and remain insulated against such risks having met all the ‘prudential guidelines’ it set for the financial system.
Guidelines
According to him, Nigeria is one of the few countries in the world with a cash reserve deposit requirement.
“This has been there even before I started banking that when you deposit your money in a bank, a certain percentage of that deposit is serialised by the Central Bank of Nigeria to ensure that when there is a kind of liquidity crisis, that money is available to that bank for them to use to solve that liquidity problem so that depositors do not lose their money.
“We also have liquidity ratio… (a) specified liquid asset against total deposit of banks either held in cash in bank vault… or treasury bills, OMO bills and different other liquid instruments and in Nigeria our ratio is minimum of 30 per cent, banks keep above that,” he said.
The CBN governor noted that the liquidity ratio is about 43 per cent, the cash reserve about 32.5 per cent, while the loan deposit ratio is about 52.47 per cent,
He also explained that despite maintaining these guidelines, the banks remain profitable.
According to him, the ROI has remained relatively strong even though when banks convert these to dollars, they seem weaker but at the same time, the banks have continued to make a profit and pay good dividends to their shareholders.
“Nigeria, again is one of those countries in the world where even after a bank has declared profit and paid taxes, a certain percentage of its profit must be set aside to build retained earnings and capital.
“If you are a small bank, it’s going to be 25 per cent. One-quarter of whatever profit you make is set aside and built into what we call the statutory reserve fund whether to improve the capital of that bank. If you are a big bank, it then reduces to 15 per cent,” he said.
Support PREMIUM TIMES’ journalism of integrity and credibility
Good journalism costs a lot of money. Yet only good journalism can ensure the possibility of a good society, an accountable democracy, and a transparent government.
For continued free access to the best investigative journalism in the country we ask you to consider making a modest support to this noble endeavour.
By contributing to PREMIUM TIMES, you are helping to sustain a journalism of relevance and ensuring it remains free and available to all.
Donate
TEXT AD: Call Willie – +2348098788999
There is no direct investment by Nigerian banks in Silicon Valley Bank (SBV) that could result in a loss of investment, the Central Bank of Nigeria has said.
The apex bank spoke amid uncertainty over the takeover of the Silicon Valley Bank by the U.S. government after its clients, including venture capitalists and tech startups, withdrew funds from their accounts, leading to the eventual crash of the bank.
The collapse has raised concerns about the potential impact on other banks in the world.
The CBN Governor, Godwin Emefiele, while responding to questions at the end of the monetary policy committee meeting held in Abuja Tuesday allayed the fear of many concerned Nigerians.
According to him, Nigerian banks are healthy and remain insulated against such risks having met all the ‘prudential guidelines’ it set for the financial system.
Guidelines
According to him, Nigeria is one of the few countries in the world with a cash reserve deposit requirement.
“This has been there even before I started banking that when you deposit your money in a bank, a certain percentage of that deposit is serialised by the Central Bank of Nigeria to ensure that when there is a kind of liquidity crisis, that money is available to that bank for them to use to solve that liquidity problem so that depositors do not lose their money.
“We also have liquidity ratio… (a) specified liquid asset against total deposit of banks either held in cash in bank vault… or treasury bills, OMO bills and different other liquid instruments and in Nigeria our ratio is minimum of 30 per cent, banks keep above that,” he said.
The CBN governor noted that the liquidity ratio is about 43 per cent, the cash reserve about 32.5 per cent, while the loan deposit ratio is about 52.47 per cent,
He also explained that despite maintaining these guidelines, the banks remain profitable.
According to him, the ROI has remained relatively strong even though when banks convert these to dollars, they seem weaker but at the same time, the banks have continued to make a profit and pay good dividends to their shareholders.
“Nigeria, again is one of those countries in the world where even after a bank has declared profit and paid taxes, a certain percentage of its profit must be set aside to build retained earnings and capital.
“If you are a small bank, it’s going to be 25 per cent. One-quarter of whatever profit you make is set aside and built into what we call the statutory reserve fund whether to improve the capital of that bank. If you are a big bank, it then reduces to 15 per cent,” he said.
Support PREMIUM TIMES’ journalism of integrity and credibility
Good journalism costs a lot of money. Yet only good journalism can ensure the possibility of a good society, an accountable democracy, and a transparent government.
For continued free access to the best investigative journalism in the country we ask you to consider making a modest support to this noble endeavour.
By contributing to PREMIUM TIMES, you are helping to sustain a journalism of relevance and ensuring it remains free and available to all.
Donate
TEXT AD: Call Willie – +2348098788999
Denial of responsibility! Techno Blender is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – [email protected]. The content will be deleted within 24 hours.