The Central Bank of Nigeria (CBN) has warned recapitalised banks in the country that stronger liquidity garnered through re-capitalisation must be backed by sound corporate governance.
The apex bank emphasised that banks must also have effective risk management systems as well as responsible lending to ensure the stability of the financial system.
The CBN Deputy Governor, Financial System Stability Directorate, Abdullahi, gave the warning while highlighting the need for banks to translate the gains of the ongoing recapitalisation programme into improved lending and stronger economic growth.
He said bank boards and management teams must uphold integrity, accountability, and transparency while strengthening internal controls and avoiding excessive risk-taking.
According to him, risk management should go beyond traditional credit risks to cover market, liquidity, and operational risks, as well as emerging threats such as cybersecurity, third-party dependencies, and climate-related financial risks.
“The CBN will continue to focus on governance, asset quality, liquidity, and large exposures while strengthening risk-based supervision, macroprudential surveillance, and stress testing,” he said.
Abdullahi said the banking sector reforms were part of broader efforts to restore stability and confidence in Nigeria’s financial system.
He recalled that the reform programme commenced amid significant challenges in the foreign exchange market, elevated liquidity, high inflation, and uncertainty affecting businesses and investors.
The CBN official said the reforms had subsequently contributed to improved conditions in the foreign exchange market, noting that the average gap between the official and parallel market exchange rates declined from 68.2 per cent between January and May 2023 to less than two per cent.
He said the stronger capital position of banks should now enable them to provide financing that better matched the cash flows and investment horizons of businesses.
Leave a Reply
Leave a Reply
