CBN
DESIGNATES 8 BANKS “TOO BIG TO FAIL”
First Bank of Nigeria Limited, Guaranty Trust Bank Plc
(GTBank), Zenith Bank Plc, United Bank for Africa Plc (UBA), Access Bank Plc,
Skye Bank Plc, Ecobank Nigeria and Diamond Bank Plc have been designated by the
Central Bank of Nigeria (CBN), as “too big to fail”, owing to the fact that
their failure could pose a systemic risk to the banking industry and the larger
economy.
The
eight banks alone account for 75 per cent of the banking sector in terms of
earnings, profitability assets, customer deposits and branch networks.
The
CBN, it was learnt, has therefore adopted a more robust regulatory regime to
monitor and scrutinize the eight banks, in order to ensure that they are
healthy.
The
central bank has also asked the eight banks to increase their capital base in
order to give them a buffer against internal and exogenous shocks.
Confirming
this development, Deputy Governor (Operations), CBN, Mr. Tunde Lemo, described
the financial institutions as systemically important because of their size.
Lemo
pointed out that any bank that accounts for five per cent of the banking system
is systemically important.
“What
that means is that we have to take a closer look at them. It doesn’t mean that
they are weak, it is just that we have to focus more attention on them because,
God forbid, if something happens to any of them, it may affect the entire
system,” Lemo said.
Asked
about the capital base that the respective banks are expected to have, the CBN
deputy governor said: “It is not that they were asked to raise their capital
base, it is just that when an institution is designated as systemically
important, it is required to have more capital.”
For Zenith Bank, its recently released results for nine months
ending September 30, 2013 showed that its profit after tax stood at N64 billion
with loans and advances of N1.1 trillion. The bank also reported gross earnings
of N255 billion at the end of September 2013, up by 11 per cent from the N229
billion recorded in the corresponding period in 2012.
Zenith
Bank’s total market capitalization on the Nigerian Stock Exchange (NSE) stood
at N675.024 billion yesterday.
Also, GTBank’s profit after tax stood at N69.24 billion at
the end of September 2013, as against N63.734 billion earned in the same period
in 2012. GTBank’s total assets also stood at N1.875 trillion, compared to the
N1.73 trillion as at December 2012. Its share price on the NSE closed at N25.99
per share yesterday, giving it a market capitalization of N764.916 billion.
In
the same vein, UBA’s unaudited results for the nine months ending September 30,
2013 also revealed that its profit after tax climbed to N37.37 billion. With a
market capitalization of N257.255 billion on the NSE, its share price closed at
N7.80 per share.
For Access Bank, its recently released unaudited nine-month
results showed gross earnings of N154 billion at the end of September 2013. Its
profit before tax also stood at N35 billion. Access Bank’s market capitalization
on the NSE was N213.269 billion yesterday, while its shares closed at N9.32 per
share.
Skye
Bank Plc’s gross earnings rose to N102 billion at the end of September 2013,
while its profit after tax stood at N11.650 billion.
Diamond
Bank also posted a profit before tax of N25.6 billion, while its total assets
stood at N1.377 trillion at the end of September 2013.
First
Bank of Nigeria Limited is yet to release its third quarter results because of
its holding company structure.[Thisday]
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