The Central Bank of Nigeria (CBN) has stated that it will not hesitate to withdraw the license of any bank found guilty of having errant shareholders.
Its Governor, Godwin Emefiele, made this known to newsmen during the 290th Monetary Policy Committee (MPC) meeting which held in Abuja, recently.
Emefiele whilst revealing that the apex bank has put in place some prudential guidelines to insulate Nigerian banks from any shock, added that even when banks have been taken over by the CBN, it has made necessary steps to ensure depositors do not lose their money.
“What we saw in the aftermath of the SVB programme in the U.S is that the government came out to tell all depositors of SVB or the other banks that they will be paid all their monies notwithstanding the fact that what is secured or guaranteed is $250,000. This is something even in Nigeria that we have been doing on our own either as a result of certain prudential guidelines by the CBN or as a result of collaboration between the CBN and the banks. We have made sure that even banks are taken over by the CBN that the shareholders may lose their investments but no depositor as far as I know since 2008 has lost his or her deposit in the Nigerian banking industry today”, he said.
According to Emefiele, the reason is because the CBN from its own standpoint has insisted that shareholders seem to be less important than depositors.
“In fact we have gotten to a realm where we are beginning to see that banks are owned by depositors, not by shareholders because if you look at the balance sheet of an average 5-year old bank today, the size of depositors funds is at least close to between 7-10 times that of shareholders’ funds and that is why we come out very strongly when we find shareholders misbehaving in banks, we do not spare them because we will continue to repeat that the banking license is a privilege and not a right”, Emefiele said.
The CBN governor further added that due to the fact that a banking license is the property of the apex bank, it will not hesitate to withdraw any bank’s license once it finds out that the bank’s shareholders are misbehaving.
“This is a policy that the CBN has held on to even before I became the CBN Governor and I know that even now and after my tenure, whoever will be the CBN governor will insist that shareholders cannot continue to have the kind of rights they think they have to run a bank anyhow and make depositors lose their deposits. We will rather dispense with the shareholders and make sure that depositors do not lose their deposit”, he said
He thereafter revealed that the apex bank is holding about N14 trillion in cash reserves deposits from banks, stating that this is good liquidity that is meant to actually act as insulation just in case of problems.
“Also on Loan-to-Deposit Ratio (LDR), the banks today are on 52 per cent which means they are not over-trading but are diversifying their portfolios to ensure that they have ample liquidity or zeal risk investments on securities where they make money but at the same time depositors’ funds remain protected”, Emefiele said.