LOOMING CRISIS: 19 BANKS WILL BE MOST HIT

According to the liquidity stress report by the Central Bank of Nigeria as contained in the June 2016 Financial Stability report, 19 banks may be in serious trouble if there is at least 5 day run on them.

According to the CBN, within one day run, that is  rush by customers to withdraw deposits, the Nigerian banking liquidity ratio will drop to 30.1% from 43%.

Worse, if such a run is cumulative for 30 days, the liquidity ratio will plummet to 5.3%.

The report says that should there be 5day and 30 day runs, the industry will record N2.2tr and N2.4tr shortfall respectively.

What's more, it said not less than 19 banks will record liquidity ratio s below the threshold of 30% following 5 day cumulative run.

Naturally, it named none of the banks so as not to prematurely trigger runs on individual banks that could still weather the looming crisis with customers confidence intact.

But it did rate credit risk as top of today's potential stress in banks and adds that the large banks were fairly more resilient and should be able to hold on even in the event of 200% rise in non performing loans.

Interestingly, 158% growth in these loans was recorded in the six months to June and may continue to mount in the second half of 2016.

However, in spite of the looming crisis, one new commercial bank joined the fold by May this year. United Mortgage ltd got the official nod to transform into Providus Commercial bank with regional license.

As a matter of fact, Nigeria's tough times did not deter 159 new Bureau De Change, 18 microfinance banks and three finance companies from debuting officially within the six months to June.

It is possible that as the crisis looms larger, the CBN may be tempted to raise minimum issued share capital or encourage a new round of mergers and acquisitions to increase resilience.

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