CBN Designates Eight Banks ‘Too Big to Fail’

120212F2.Tunde-Lemo.jpg - 120212F2.Tunde-Lemo.jpg

Caption: Deputy Governor (Operations), CBN, Mr. Tunde Lemo

•  FBN, Zenith, GTB, UBA, Access, Diamond, Skye, Ecobank

The Central Bank of Nigeria (CBN) has designated 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 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.

Owing to their size and importance, THISDAY learnt that the CBN has adopted a more robust regulatory regime to monitor and scrutinise the eight banks, in order to ensure that they are healthy.
In furtherance of the objective, the central bank has asked the eight banks to increase their capital base in order to give them a buffer against internal and exogenous shocks.

The Deputy Governor (Operations), CBN, Mr. Tunde Lemo, who confirmed the development, 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.

When quizzed on 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.”


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s