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Anxiety as CBN plans impact assessment test on banks in Q1 2017

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The Central Bank of Nigeria (CBN) has given an indication that it will early next year carry out an impact assessment test on banks.It was not clear if it considered the recent series of foreign and local reports on the strength of some bank before announcing that it will conduct stress test on banks to determine their true stability.

But the Director, Banking Supervision, Central Bank of Nigeria, Mrs. Agnes Tokunbo-Martins who dropped the hint however, urged banks and other organisations who require risk management to review their framework regularly to be on the know of their  strength.

This is the Nigeria Deposit Insurance Corporation (NDIC) has said that 15 Primary Mortgage Banks (PMBs) have defaulted in paying their deposit insurance premium to the corporation.

The NDIC Managing Director/CEO, Umaru Ibrahim, disclosed this at the 2016 sensitisation workshop for PMBs’ operators held in Lagos.

He revealed that the corporation’s records showed that 15 out of 42 PMBs are yet to meet their premium payment obligations to the corporation. He urged the affected operators to promptly pay their premium to the corporation in line with regulatory guidelines.

Martins said this at the Risk Managers Association of Nigeria (RIMAN) round table in Lagos, noting that “I must say we do have so many risks in front of us and this is the time that risk managers really need to be on their toes. There are all sorts of risks that have come up; ranging from currency mismatched, interest rates risks in the banking books. If these risks are involving on a daily basis, then the skills required to manage them, even to identify them, and manage them are changing.

Martins made it clear that the central bank very soon would be conducting an impact assessment and we expect that the banks already are doing that on their own.

 “Risk management framework can’t be static. If we say that the risk change on a daily basis, the framework can’t be static. Even the appetite can’t be static, the mitigate need to change. The risk management framework needs to be reviewed constantly.”

 “Risk management in Nigeria banks is no longer at the rudimentary stage; it is becoming more and more sophisticated. I think is much more appreciate than it used to be, some banks that have had their fingers burnt know why risk management is something you have in place just because the regulator says it should be there. It is not down on so many banks that it is something we really need.”

On the impact assessment on banks, Martins made it clear that the central bank very soon would be conducting an impact assessment and we expect that the banks already are doing that on their own.

Business Hilights recalls that the CBN Governor, Mr. Godwin Emefiele had last week admitted that banks are currently facing different risks, but said the risks are not peculiar to the economy and surmountable.

Emefiele said “As a result of the current challenges being faced in the global economy, all agents in the financial system are facing tremendous risks. Normally, in any economy, when there’s a slowdown or recession, naturally, financial institutions particularly banks would face certain risks: risks of NPLs rising and different other risks.

 “And what that does is that it imposes on the regulator a greater challenge to ensure that it strengthens its prudential guidelines to ensure that the banks and particularly depositors are protected.


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