Stressed Banks In Merger Talks As Account Holders Speculate

By Emmanuel Aziken

Lack of clarity about the identity of the seven banks that failed the Central Bank of Nigeria’s CBN’s stress test is leading the banking public into using everyday disappointments into making assumptions.

The CBN and the National Deposit Insurance Corporation, NDIC have, however, reassured the public that the report of the stress test as recently revealed in the CBN’s 2018 financial stability report should not turn into a panic.

The stress report had shown that seven of the nation’s 24 banks were not adequately funded in a 30-day period if subjected to economic stress. The number of underfunded banks increased to nine in a 31-90 day bucket.

However, the stress level of the industry was more than covered by the fact that for all banks that there was an excess of N4.8 trillion assets over liabilities.

A bank stress test helps bank managers and regulators understand a bank’s financial strength. The test determines under different scenarios if a bank has sufficient capital to survive when put under the pressure.

The CBN test showed that seven of the 24 banks are not adequately covered to withstand the risk.

However, the CBN has not disclosed the identity of the seven banks.

It has now emerged that some of the affected banks may well have started making preparations to cover one another through a merger.

Daily Sun has reported of efforts by two new generation banks had commenced merger talks well before the release of the financial stability report. The identity of the two banks was not given in the report.

“It’s a smart move actually. Mergers and acquisitions will naturally come up soon because the Central Bank of Nigeria (CBN) is working out modalities for the banks to recapitalize,” a source told the newspaper.

“Obviously, there is economic crisis in the country and this is affecting the banks. It may lead to the merger of at least seven commercial banks because they really are flying against the wind,” the source said.

Meanwhile, the lack of identity of the banks that failed the stress test has raised apprehension among some account holders who are now using everyday banking disappointments to second guess the banks that are at risk.

Account holders it was disclosed are now using such disappointments at banking channels such as ATMs, online transfer portals and POS to make guesses of banks at risk.

Send Us A Press Statement Advertise With Us Contact Us

 And For More Nigerian News Visit GWG.NG