Author Topic: CAPITAL MARKET EXPOSURE WON’T SHAKE NIGERIAN BANKS – SOLUDO  (Read 1092 times)

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  Capital market exposure won’t shake Nigerian banks – Soludo
By Yemi Kolapo


The Central Bank of Nigeria has said that banks cannot be badly affected by their exposure to the Nigerian capital market.

CBN Governor, Prof. Chukwuma Soludo

The Governor of the Central Bank of Nigeria, Prof. Chukwuma Soludo, said that most of the banks had capital far in excess of the N25bn they required to operate conveniently and could write off whatever bad loans they were exposed to as a result of the decline in the market and still stay unruffled.

He also assured that the country’s external reserves were safe and were not affected by the current crisis.

Soludo, who spoke while briefing media executives in Lagos on Friday, noted that the 24 banks currently operating in the country were all sound and safe, adding that since they were in the “business of money,” it was not possible to cover their lapses for too long.

“You cannot tell lies for long about the state of a bank. If money, which is the commodity they trade in, is not there, it is not there. You can’t manufacture it,” he said.

According to the CBN boss, the chief executives of banks were compelled to include all their exposures to the capital market while filing their returns. “Right now, we are sure that the banks’ fundamentals show that they need no bail out whatsoever. Governments of other countries have only been bailing out in the event of bankruptcy or insolvency,” he said.

While affirming that the banks have, to a large extent, not been affected by the global turmoil, he said that while the world was experiencing credit crunch, Nigeria was experiencing credit growth.

He disclosed that between January and September 2008, credit to private sector in Nigeria stood at N2.2tn, which was far in excess of the year’s target. Soludo said if the apex bank had not taken preemptive measures by embarking on the banking sector consolidation three years ago, Nigerian banks would have been wiped off today with the extent of the current global financial crisis.

The professor of economics said with oil prices going down, there would be a challenge on the fiscal side, adding that a larger chunk of the resultant deficit would be borrowed from the public, which were the banks.

“The banks will give the credit to oil the economy. The banking sector is the one that will drive everything else,” he said.

He, therefore, said that the apex bank would do everything in its power to make sure that the banks remained solid, saying that “we are ready to give whatever it takes to make sure that none of our banks fails.”

On foreign reserves, Soludo said, “We are constantly in touch with all the institutions that have our resources. Once we have any doubts, we move out before they tell us stories, Foreign reserves are safe and sound.”

He added that the good thing about the current crisis was that it had not metamorphosed into a currency crisis, saying that if the dollar had crumbled in the wake of the crisis, the consequences would have been grave for everyone.

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