Bad debts: CBN plans tougher bank capital rules

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disclosure by forcing lenders to provide for existing losses as well as those that might occur in the future.

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.

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.

Worried about the declining health of Skye Bank, the Central Bank of Nigeria sacked its board of directors in 2016 and constituted a new board, saying the moves had become unavoidable in view of the persistent failure of the bank to meet minimum thresholds in critical prudential and adequacy ratios.

In September this year, the apex bank revoked the operating licence of Skye Bank and created a bridge bank, Polaris, to take over its assets and liabilities.

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.

In November, several members of the MPC again voiced concerns over the share of the nation’s oil and gas industry in the large volume of NPLs in banks


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