Lenders are struggling to contend with non-performing loans equal to 12.5 per cent of total credit. While these have improved from almost 15 per cent in 2017, many small- to medium-sized banks are battling to raise capital.
the new requirements ,YOU NEWS gathered would be stricter in terms of what funding qualified as capital and would also require lenders to create “capital conservation” and “counter-cyclical” buffers.
The central bank said it would “apply a leverage ratio to supplement existing capital ratios” for lenders as well as “additional loss-absorbency requirements for domestic-systemically important banks.”
The regulator is aligning itself with a global accord known as Basel III three years after a contraction in Nigeria’s economy spurred authorities to delay the implementation of tougher capital rules. It also comes after policymakers in 2013 spurned some requirements drawn up by the Basel Committee on Banking Supervision.
While the average capital-adequacy ratio for the industry rose to 12.1 per cent in June from 10.2 per cent at the end of 2017, some banks said the transition shaved as much as 200 basis points off their capital bases.
Access Bank Plc is in the process of taking over Diamond Bank Plc.
The Monetary Policy Committee of the CBN said at its meeting in September 2018 that it was concerned with “the rising level of non-performing loans in the banking system, traced mainly to the oil sector” and urged the CBN to closely monitor and address the situation.