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‘No Cause For Alarm In Banks’

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Lamido Sanusi

Being address by Mallam Lamido Sanusi, Governor of the Central Bank of Nigeria, on developments in the banking system in Nigeria
As we are all aware, the world economy has been hit by the repercussion of the financial meltdown that started with the sub-prime mortgage crisis in the United States of America and spread to Europe and other parts of the world. This crisis has led to the collapse of many banks and other financial institutions, and even rendered an entire nation bankrupt.
In Nigeria, the banking system appears to have weathered the storm due to a number of factors. Among these are the facts that our financial system is not strongly integrated into the international financial system, as well as the relatively simple nature of financial products and strong capitalisation and liquidity of Nigerian banks.
However, there are many who have been aware for a while now that whereas the system in general is likely to absorb and survive the effects of crisis, the effects vary from bank to bank. A few Nigerian banks, mainly due to huge concentrations in their exposure to certain sectors (capital market and oil and gas being the prominent ones ) but due to a general weakness in risk management and corporate governance, have continued to display signs of failure.
As far as October last year, some of the banks showed serious liquidity strain and had to be given financial support by the Central Bank in the form of an “Expanded Discount Window” (EDW), where the CBN extended credit facilities to these banks on the basis of collateral in the form of Commercial Paper and Bankers’ acceptances, sometimes of un doubtful value
As at June 4, 2009, when I assumed office as governor of the CBN, the total amount outstanding at the Expanded Discount Window was N256.571 billion, most of which was owed by the five banks.
A review of the activity in the EDW showed that four banks had been almost permanently locked in as borrowers and were clearly, unable to repay their obligations. A fifth bank had been a very frequent borrower when its profile ordinarily should have placed it among the net placers of funds in the market. Whereas the five banks were by no means the only· ones to have benefited from the EDW, the persistence and frequency of their demand pointed to a deeper problem and the CBN identified them as probable source of financial instability, most likely suffering from deeper problems due to non­performing loans.
The impact of the situation of these banks was being felt by the market in different negative ways. Because of this strain in their balance sheets, the banks pushed up the interest rate paid to private sector deposits and their competitors had to follow suit. They also contributed to the destabilisation of the interbank market as many of their competitors were unwilling to take an unsecured risk on them. It was primarily because of these banks, or at least some of them, that the CBN took the step of guaranteeing the inter-bank market when it stopped granting new lines under the EDW. Without that guarantee, almost four banks would not have been able to borrow in the inter-bank and would probably have collapsed.
As you are aware, we guaranteed the inter-bank market to give us the time to conduct thorough diagnostic of the’ banks and ensure that appropriate remedial action is taken. At least, four of the banks in question have since the guarantee came into force either remained heavy users of funds at the EDW or drawn heavily from other banks under cover of the CBN guarantee to wind-down at this window. In all events, it is clear that they do not have the ability to meet their obligations to depositors and creditors as they are in a grave situation.
In view of the aforementioned circumstances, I instructed the Director of Banking Supervision of the CBN to carry out a Special Examination of the following five banks: Afribank Plc Finbank PIc, Intercontinental Bank Plc, Oceanic Bank Plc and Union Bank Plc.
The examination was conducted by a joint team of CBN and NDIC officials. The major findings on the five banks included:
Excessively high level of non­performing loans in the five banks which was attributable to poor corporate governance practices, lax credit administration processes and the absence or non-adherence to the bank’s credit risk management practices. Thus the percentage of non-performing loans to total loans ranged from 19 per cent to 48 per cent. The five banks will therefore need to make additional provision of N539.09 billion.
The total loan portfolio of these five banks was N2,801.92 billion.
Margin loans amounted to N456.28 billion and exposure to Oil and Gas was N487.02 billion.Aggregate non­performing loans stood at N 1,143 billion representing 40.81 per cent.
From 1 and 2 above, it is evident that the five banks accounted for a proportionate component of the total exposure to Capital Market and Oil and Gas, thus reflecting heavy concentration to high risk areas relative to other banks in the industry. The huge provisioning requirements have led to significant capital impairment. Consequently, all the banks are undercapitalised for their current levels of operations and are required to increase their provisions for loan losses, which impacted negatively on their capital. Indeed one is technically insolvent with a Capital Adequacy Ratio of (1.01 per cent). Thus, a minimum capital injection of N204.94 billion will be required in the five banks to meet the minimum capital adequacy ratio of 10 per cent.
5. The five banks were either perennial net-takers of funds in the inter-bank market or enjoyed liquidity support from the CBN for long periods of time, a clear evidence of illiquidity. In other words, these banks were unable to meet their maturing obligations as they fall due without resorting to the CBN or the inter-bank market. As a matter of fact, the outstanding balance on the EDW of the five banks amounted to N 127.85 billion by end of July 2009, representing 89.81 per cent of the total industry exposure to the CBN on its discount window while their net guaranteed inter-bank takings stood at N253.30 billion as at August 02, 2009. Their Liquidity Ratios ranged from 17..65 per cent to 24 per cent as at May 31, 2009. (Regulatory minimum is 25 per cent).
It is important to note that at least three of the banks are systemically important (accounting for more than 5 per cent of Assets and Deposits in the Banking System) and together, the five banks account for 39.93 per cent of loans, 29.99 per cent of deposits, and 31.47 per cent of total assets as at May 31, 2009.
Given the extent of the asset quality problem leading to liquidity stresses, and the variety of stress points on the banks’ balance sheets, failure to act to secure the financial health of these banks will clearly place the system at risk. The Central Bank has a responsibility to act to protect all depositors and creditors and ensure that no one loses money due to bank failure. The bank also needs to move decisively to remove this principal cause of financial instability and restore confidence in the banking system.
Consequently, having reviewed all the reports of the examiners and the comments of the Directors and Deputy Governors, 1 am satisfied that these 5 institutions are in a grave situation and that their managements have acted in a manner detrimental to the interest of their depositors and creditors. Therefore, in exercise of my powers as contained in Sections 33 and 35 of the Banks and Other Financial Institutions Act 1991, as amended, and after securing the consent of the Board of Directors of the CBN, I hereby remove the Managing Directors and the Executive Directors of the following banks from office with effect from Friday, August 14, 2009.
1. Afribank Plc
2. Intercontinental Bank Plc
3. Union Bank of Nigeria Plc
4. Oceanic International Bank-Plc
5. Finbank Plc
These persons forthwith cease to be directors and officers of their respective banks.
The Board of the Central Bank of Nigeria has also appointed the following as the MD/CEOs of the affected banks:
1. Mr John Aboh – MD/CEO Oceanic International Bank Plc.
2. Mr Mahmud L. Alabi – MD/CEO Finbank Plc
3. Mr Nebolisa Arah – MD/CEO Afribank Plc
4. Mrs. Suzanne Iroche – MD/CEO Finbank Plc.
5. Mrs. Funke Osibodu – MD/CEO Union Bank Plc.
Each of the above will head a management team that will include executive directors and Chief Financial Officers to be appointed by the CBN. This team is tasked with continuing the business of the banks as a going concern. I, therefore, appeal to the Boards of the affected banks, in their own of interest, to cooperate with the newly appointed executive management.
We are conscious of the fact that changing management alone will not resolve this problem. Consequently, the CBN is injecting a total of about N400 billion into these five banks with immediate effect in form of Tier 2 Capital to be repaid from proceeds of capitalisation in the near future. This injection is sufficient to resolve and stabilise all the institutions and enable them continue normal business. The injection of fresh capital by the CBN is temporary measure as government does not intend to hold the shares for long and shall divest its holdings as soon as new investors recapitalise these banks.
Let me also advise all debtors of Nigerian banks, that the CBN and all government agencies are united in our commitment to support the recovery efforts of the banks. Debtors who do not pay shall have their names published in national newspapers” in due course and we will solicit the support of law enforcement agencies in recovery.
Let me reassure especially the customers of the affected banks and all the banks in general that there is no cause for alarm. They should continue to transact their normal business in the banks where their accounts are domiciled as this exercise is meant to further strengthen the banking industry and recapitalise the affected banks.
I should also state at this point that the scope of the Special III Examination was widened to cover all 24 banks. So far, we have Id concluded the audit of 10 banks at including these five, the others being Diamond Bank, First Bank, United Bank for Africa, Guaranty a Trust Bank and Sterling Bank. We have also commenced the next s. batch of 11 banks and hope to conclude them by end of August. i5 All in all, we expect to conclude the al audit in mid-September. The Central d, Bank is requiring all banks “to make appropriate provisioning for non-performing loans and disclose them.
We hope that by the end of this quarter, all banks would have ;e cleaned up their Balance Sheets. On 4, the basis of the information available to us so far, we are confident that the banking system is safe and sound and we have dealt with the major sources of systemic risk.
I will conclude by restating that, to going forward, the CBN will not waiver in its desire to ensure that public confidence in the Nigerian of banking system is maintained through appropriate disclosures le and the reinvigoration of its policy of zero tolerance on all professional and unethical conducts.
We will not allow any bank to fail. However, we will also ensure that officers of banks and debtors who contribute to bank failures are brought to book to the full extent of the law and that all proceeds of infraction are confiscated where legally feasible.
Thank you.

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FIRS Clarifies New Tax Laws, Debunks Levy Misconceptions

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The Federal Inland Revenue Service has said that Nigeria’s newly enacted tax laws are designed to strengthen economic competitiveness, attract investments, and improve long-term fiscal stability.
The agency also clarified that the much-debated four per cent development levy on imported goods is not a new or additional tax burden, but a streamlined consolidation of several existing levies.
According a statement released Wednesday, one of the most misunderstood elements of the new tax framework is the four per cent development levy with the agency explaining that the levy replaces a range of fragmented charges — such as the Tertiary Education Tax, NITDA Levy, NASENI Levy and Police Trust Fund Levy — that businesses previously paid separately.
This consolidation, it said, reduces compliance costs, eliminates unpredictability and ends the era of multiple agency-driven levies. The law also exempts small businesses and non-resident companies, offering protection to firms most vulnerable to economic shocks.
Another major clarification relates to Free Trade Zones. Earlier commentary had suggested that the government was rolling back the incentives that have attracted export-oriented investors for decades. However, the reforms maintain the tax-exempt status of FTZ enterprises and introduce clearer guidelines to preserve the purpose of the zones.
“Under the new rules, FTZ companies can sell up to 25 per cent of their output into the domestic market without losing tax exemptions. A three-year transition period has also been provided to allow firms to adjust smoothly.
“Government officials say the reforms aim to curb abuses where companies used FTZ licences to evade domestic taxes while competing within the Nigerian market”, it said.
With the new measures, Nigeria aligns with global FTZ models in places like the UAE and Malaysia, where the zones function primarily as export hubs for logistics, manufacturing and technology.
The introduction of a 15 per cent minimum Effective Tax Rate for large multinational and domestic companies has also been met with public concern. But the FIRS notes that this policy aligns with a global tax agreement endorsed by over 140 countries under the OECD/G20 framework.
Without this adoption, Nigeria risked losing revenue to other countries through the “Top-Up Tax” mechanism, where the home country of a multinational collects the difference when a host country charges below 15 per cent. By localising the rule, Nigeria ensures that tax revenue from multinational operations remains within its borders.
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CBN Revises Cash Withdrawal Rules January 2026, Ends Special Authorisation

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The Central Bank of Nigeria (CBN) has revised its cash withdrawal rules, discontinuing the special authorisation previously permitting individuals to withdraw N5 million and corporates N10 million once monthly, with effect from January 2026.

In a circular released Tuesday, December 2, 2025, and signed by the Director, Financial Policy & Regulation Department, FIRS, Dr. Rita I. Sike, the apex bank explained that previous cash policies had been introduced over the years in response to evolving circumstances.

However, with time, the need has arisen to streamline these provisions to reflect present-day realities.

The statement said the new set of cash-related policies is designed to reduce the cost of cash management, strengthen security, and curb money laundering risks associated with the economy’s heavy reliance on physical currency.

“These policies, issued over the years in response to evolving circumstances in cash management, sought to reduce cash usage and encourage accelerated adoption of other payment options, particularly electronic payment channels.

“With the effluxion of time, the need has arisen to streamline the provisions of these policies to reflect present-day realities,”

“Effective January 1, 2026, individuals will be allowed to withdraw up to N500,000 weekly across all channels, while corporate entities will be limited to N5 million”, it said.

According to the statement, withdrawals above these thresholds would attract excess withdrawal fees of three percent for individuals and five percent for corporates, with the charges shared between the CBN and the financial institutions.

Daily withdrawals from Automated Teller Machines (ATMs) would be capped at N100,000 per customer, subject to a maximum of N500,000 weekly stating that these transactions would count toward the cumulative weekly withdrawal limit.
The special authorisation previously permitting individuals to withdraw N5 million and corporates N10 million once monthly has been discontinued.

The CBN also confirmed that all currency denominations may now be loaded in ATMs, while the over-the-counter encashment limit for third-party cheques remains at N100,000. Such withdrawals will also form part of the weekly withdrawal limit.

Deposit Money Banks are required to submit monthly reports on cash withdrawals above the specified limits, as well as on cash deposits, to the relevant supervisory departments.

They must also create separate accounts to warehouse processing charges collected on excess withdrawals.

Exemptions and superseding provisions
Revenue-generating accounts of federal, state, and local governments, along with accounts of microfinance banks and primary mortgage banks with commercial and non-interest banks, are exempted from the new withdrawal limits and excess withdrawal fees.

However, exemptions previously granted to embassies, diplomatic missions, and aid-donor agencies have been withdrawn.

The CBN clarified that the circular is without prejudice to the provisions of certain earlier directives but supersedes others, as detailed in its appendices.

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Shippers Council Vows Commitment To Security At Nigerian Ports

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The Nigerian Shippers Council (NSC)has restated its commitment towards ensuring security at Nigerian seaports.
Executive Secretary/Chief Executive Officer of the Council, Dr Pius Akuta, said this in Port Harcourt, while declaring open a one day workshop organized by the Nigerian Shippers Council in collaboration with the Nigerian police( Marin Division).
Theme for the workshop was ‘Facilitating Port Efficiency; The strategic Role of Maritime police “
Akuta who was represented by the Director, Regulatory Services, Nigerian Shippers Council, Mrs Margeret Ogbonnah, said the workshop was to seek areas of collaboration with security agencies at the Ports with a view to facilitating trade
Akuta said the theme of the workshop reflects the desire of the council and the Nigerian police to build capacity of police officers for better understanding and administration of their statutory roles in the Maritime environment.
He said Nigerian seaports has constantly been reputed as one of the Port with the longest cargo dwell in the world, adding,”This is so, because while it takes only six hours to clear a containerized cargo in Singapore Port, seven days in Lome Port, it takes an average of 21 days or more in Nigerian Ports” stressing that this situation which has affected the global perception index on Ease of Doing Business in Nigerian seaports must be addressed.
Akuta said NSC which is the economic regulator of the Ports has the responsibility of ensuring that efficiency is established in the Ports inorder to attract patronages.
“Pursuant to its regulatory mandate, the NSC has been collaborating with several agencies to ensure the facilitation of trade and ease of movement of cargo outside the Ports to avoid congestion”he said.
Also speaking the commissioner of police, Eastern Port Command, Port Harcourt, CP Tijani Fakai, said Maritime police has played some roles in facilitating Ports efficiency.
He listed some of the roles to include ensuring security and crime prevention at the Ports, checking of illegal fishing activities at the Ports, checking of human trafficking and drug smuggling and prevention of fire incident at the Ports.
Represented by ACP, Rufina Ukadike, the CP said police at the Ports have also helped in the decongestion and prevention of unauthorized Anchorage.
He commended the Nigerian Shippers Council for the workshop and assured of continuous collaboration.
Speaking on the dynamics of cargo handling, Deputy Controller of customs, Muhydeen Ayinla Ayoola, said the launching of electronic tracking system and dissolution of controller General Taskforce has helped to ensure efficiency at the Ports.
Ayoola who represented the custom Area Controller Port Harcourt 1 Area command, however raised concerned over rising national security threat , which according to him has affected efficiency at the Ports.
John Bibor
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