Citigroup among Banks Hit With $1.4bn CBN Penalty

Citigroup among Banks Hit With $1.4bn CBN Penalty

Image result wey dey for Citigroup among Banks Hit With $1.4bn CBN Penalty

Citigroup Inc. and Zenith Bank Plc got the stiffest penalties of a dozen lenders sanctioned by Central Bank of Nigeria, CBN, for failing to meet a target to provide more credit.

A combined sanction of N500 billion ($1.4 billion) was imposed on the 12 banks, according to a circular by the apex bank.

Other banks penalized include; United Bank for Africa, First Bank, Standard Chartered Nigeria, GTBank and FCMB Group Plc.     Of the six biggest banks, only Access Bank Plc met the minimum threshold by the end of June.

According to Head of securities trading at Cordros Securities in Lagos, Christian Orajekwe the development is a negative signal to the market because it compels banks to risk assets in an economy where you rarely find viable businesses given the macroeconomic conditions.

“This could lead to some credit creation and new jobs in the short term, but in the long term there will be concerns about the performance of those loans. It may not be sustainable,” he said.

The sanctions come three months after the central bank gave lenders until September 30 to use 60 per cent of their deposits for loans, or hand half of the shortfall over to the central bank without earning any interest. The measures are among a raft of rules aimed at forcing banks to extend more credit to help spur economic growth in Africa’s largest oil producer.

The amounts have already been debited, CBN Director, Banking Supervision, and Ahmad Abdullahi, said.

“The efforts are aimed at supporting the real economy by extending loans mainly to farmers, small- and medium-sized businesses and consumers”, he said.

The steps should not be seen as a fine because the funds moving from the cash-reserve requirements will fluctuate depending on how far a lender falls short of the loan-to-deposit thresholds, and refunded once the target is hit, Zenith Bank Chief Executive Officer Ebenezer Onyeagwu said.

Banks will continue to work on meeting the ratio after doing everything they could to increase lending, Akinsowon Dawodu, the CEO of Citigroup’s Nigerian unit, said.

Online Editor

Leave a Reply

Your email address will not be published. Required fields are marked *