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by Chukwu Ude
The banks named ‘Too Big To Fail’ are First Bank of Nigeria, Guarantee Trust Bank, Skye Bank, Access Bank, Diamond Bank, Zenith Bank, United Bank of Africa and Eco Bank.
The Director, Banking Supervision of the Central Bank of Nigeria, Mrs. Agnes Tokunbo-Martins said the CBN’s motive for designating 8 commercial banks as ‘too big to fail, it is because the banks are systemically important to the economy.
In terms of liquidity she said: “you’d have to have about 5% above the regulatory minimum which is 30%. She added that the average banks have about 50%, so their pronouncement does not place extra burdens on the said banks.
The implications of the designation for the banks is that banks are permitted to have 50% off their capital as subordinated debts or loans but if considered systemically important, they are required to have a capital that is 75% common equity.
The MD of Cowry Assets Management Limited, Johnson Chukwu, believes any bank could fail if they don’t manage their risk asset portfolio very well or if there’s a major fraud.
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