• The Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, recently stated that there was no direct exposure to Silicon Valley Bank in Nigerian banks‘ bond portfolios.
• The CBN has stringent guidelines such as a non-performing loans ratio of 4.2% and a capital adequacy ratio of 13.7%, which the governor believes makes for a „very safe“ banking system.
• According to Emefiele, depositors‘ funds are given priority over shareholders, and since 2003 no Nigerian depositor has lost money due to a failed bank.
Banking Crisis: Nigerian Banks Not Directly Exposed to SVB
The Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, recently reviewed the bond portfolios of Nigerian banks and found that none had any direct exposure to Silicon Valley Bank (SVB). He added that CBN’s prudential guidelines help create a “very safe” banking system in the country.
Priority Given To Depositors
Emefiele went on to explain how CBN’s guidelines ensure only healthy banks are allowed to operate in Nigeria. These include having an average non-performing loan (NPL) ratio of 4.2%, capital adequacy ratio at 13.7%, liquidity ratios, and loan-to-deposit ratios at 43% and 52% respectively. He also mentioned how depositors are given priority over shareholders and since 2003 no Nigerian depositor has lost money due to a failed bank situation.
Central Bank Guidelines
Apart from NPLs, capital adequacy ratio, liquidity ratios, and loan-to-deposit ratios; other regulations enforced by CBN include minimum capital requirement for all banks operating in Nigeria as well as regular monitoring by their risk management division for compliance with these measures and soundness indicators before granting licenses or renewing existing ones for operators in the sector.
Strict Enforcement Of Regulations
In addition to these measures employed by CBN, they also have strict enforcement policies against defaulting financial institutions, with sanctions ranging from fines or suspension/revocation of licenses depending on severity levels associated with each case reported or discovered through audits conducted by their risk management division regularly throughout the year on all players within the sector including deposit money banks (DMBs) & Payment Service Providers (PSPs).
The review conducted by Governor Godwin Emefiele clearly shows that Nigerian financial institutions were not directly exposed to Silicon Valley Bank – this is due to strict regulations imposed by Central Bank Of Nigeria which creates an overall ‚very safe‘ banking system within the country where depositors funds are prioritized over shareholders‘.