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IMF: Rewane, others advise CBN on banking sector risk containment

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Wsj
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IMF: Rewane, others advise CBN on banking sector risk containment

Unread postby Wsj » Mon Mar 12, 2018 10:36 am

The Managing Director, Financial Derivatives Company Limited, Mr. Bismarck Rewane, and other local economic experts have joined the International Monetary Fund to advise the Central Bank of Nigeria “to contain rising banking sector risks.”

The IMF had last week in a report released after its Article IV Consultation visit to Nigeria advised the CBN to carry out an asset quality review to identify any potential capital need.

While welcoming the CBN’s commitment to help increase capital buffers by stopping dividend payments by weak banks, the IMF also stressed that rising banking sector risks should be contained through enhanced risk‑based banking supervision, strict enforcement of prudential requirements, and a revamped resolution framework.



“I agree with the IMF that there is a need to adopt a unified exchange risk, it is important. However, there is a need to reduce the policy rate to boost growth. Growth is important to us now,” Rewane said.

The FDC boss said the IMF was privy to the banks’ books and therefore the advice on the need to enforce prudential guidelines, carry asset review and revamp resolution framework must be examined.

The Managing Director, Cowry Asset Management Limited, Mr. Johnson Chukwu, said there was a need for the CBN to take action on a number of banks whose situation required a definitive action.

“There are a number of banks whose situations are being allowed to linger. They create uncertainty. The CBN must evolve a definitive time-bound resolution strategy that will make it possible for it to supervise an orderly exit of some weak entities if it becomes imperative,” Chuwkwu said while commenting on the need for a revamped resolution framework recommended by the IMF for the CBN.

The Managing Director, Afrinvest Securities, Mr. Ayodeji Ebo, said the CBN needed to compel banks to train its personnel in order to have a deep understanding of sectors with significant loan portfolio.

He added, “The CBN needs to fortify its bank examination team to identify potential risks in banks’ books before they crystalise.”



credit: punch


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