Banks’ Deposit With CBN Drop By 45% To N160.7

Banks’ Deposit With CBN Drop By 45% To N160.7

Banks deposit with the Central Bank of Nigeria (CBN) dropped last week by 45 per cent to N160.77 billion as against N296.41 billion that was deposited with the apex bank the previous week as they borrowed N112.45 billion to cover their financial shortfalls, data on the CBN website have shown.

Deposits with the apex bank had been high on Monday and Friday, as banks deposited N43.2 billion and N42.35 billion respectively. Deposits between Tuesday and Thursday stood at N26.85 billion, N25.16 billion and N22.71 billion.

The CBN Standing Lending Facility Window data revealed that borrowing had dropped slightly from N113.69 billion which deposit money banks borrowed in the preceding week.

Commercial banks use the CBN’s SLF to support their liquidity shortfalls and meet trading obligations on short-term basis. Banks had borrowed N24.88 billion, N27.93 billion, 19.24 billion, 19.93 billion, and N20.47 billion between Monday and Friday last week.

As OMO sales during the week totaled N477.92 billion higher than N369.41 billion which was recorded the previous week. Since the beginning of the year, bank had drawn N767.64 billion through the SLF window having drawn N245.48 billion in the first week, N296.02 billion in the second week, N113.69 billion in the previous week and N112.45 billion in the last week.

The CBN Standing Lending Facility window data revealed that the DMBs borrowed N2.305 trillion from the regulator to cover their cash shortfall positions between December 1 and 22, 2017.

This represents a 52 per cent increase over the N1.515 trillion the nation’s lenders borrowed from the apex bank to cover their positions between November 1 and 22, 2017. The DMBs borrowed N1.019 trillion, N671 billion and N614 billion through the CBN’s SLF window during the first, second and third week of December, respectively.

Some analysts attributed the trend to liquidity squeeze and banks’ demand for funds to participate in the special foreign exchange auctions conducted by the regulator. In November, the commercial banks borrowed N2.77 trillion with an average amount of N154 billion.

The highest and lowest amounts the lenders borrowed from the central bank in November were N260 billion and N108 billion, respectively. Economic and financial experts said that the CBN’s lending to banks had increased in recent times on the back of liquidity issues in the economy.

Banks with liquidity challenges are often seen more on the CBN SLF window than others. Meanwhile, market activity remained low in the secondary market for the Nigerian Treasury Bills (NTBs) with little activity witnessed on the short end of the curve.

Traders said discount rates declined marginally by an average of about five basis points across most of the maturities traded in the two-way-quote market.

Read More at: https://leadership.ng/2018/01/29/banks-deposit-cbn-drop-n160-7bn/