‘Banking industry resilient’ — CBN denies report of low capital adequacy in banks

The Central Bank of Nigeria (CBN) says commercial banks did not fail the capital adequacy ratio (CAR) stress test for international authorisation. 

CAR, also known as capital to risk-weighted assets ratio, measures a bank’s financial strength by using its capital and assets.

The CAR is calculated by dividing a bank’s capital by its risk-weighted assets.

Commercial banks, according to the regulator, are required to maintain a minimum regulatory CAR of 10 percent and 15 percent on an ongoing basis.

In a statement on Monday, signed by Sidi Hakama, CBN’s acting director of corporate communications, the bank said reports in some media outlets suggested that some licensed commercial banks in the country had failed its CAR for international authorisation.

“We wish to clarify that the Nigerian banking industry remains resilient as key financial soundness indicators were within the regulatory thresholds as captured in the CBN’s most recent Economic Report of 2023,” the statement reads.

“Furthermore, the CBN is engaging with various critical stakeholders to sustain the level of confidence in the Nigerian financial sector.

“We, therefore, appeal to Nigerians to disregard the media reports listing banks as failing the Capital Adequacy Ratio (CAR) stress test for international authorisation as the report did not emanate from the Central Bank of Nigeria (CBN).”

Meanwhile, the apex bank, on Monday, directed banks to suspend the charges on cash deposits above N500,000 until April 2024.

The development means that financial institutions across the country will now accept cash deposits above the threshold without processing fees.