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TSA, forex fuelled sudden undercapitalization of 7 big banks—Report

Dubai-based research driven International  Investment bank, Arqaam Capital, has indicated that seven Nigerian banks are undercapitalised to the tune of N1tn ($3.2bn). This is as analysts have fingered the implementation of Treasury Single Account (TSA) as the major culprit for the ugly development.

The Dubai report revealed further that two banks (names with held) may go down before the end of the year.

The investment bank said the Nigeria’s banking industry “is experiencing a full-blown financial crisis” as failed fiscal and monetary policies had led to a credit crunch at a time excess liquidity was moved away from banks due to TSA and forex instability.

The stress test identified the undercapitalised banks (names with held).

Bloomberg report which corroborated the international analysts working with the financial institution and brokerage, Jaap Meijer and Tarek Sleiman, said capital adequacy ratios in Nigerian banks were set to worsen because of the depreciation of the naira and huge non-performing loans.

“Our acid test reveals seven undercapitalised banks” with a deficit of as much as N1tn ($3.2bn) in the financial system,” Meijer and Sleiman said.

But all of the named banks hurriedly rejected the report, saying they are strong.

However, some of the affected banks were recently fingered by some federal agencies including the Nigerian Ports Authority (NPA) as with holding their funds which have made the agency to be weak in driving certain financial activities.

It would be recalled that the apex bank intervened in the matter recently and brokered a segmented repayment plans between the banks and the NPA to avoid some of them going down if the money running into billions of dollars was paid once in full.

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