Fear is currently looming as eight commercial banks in Nigeria have reportedly failed to meet their Capital Adequacy Ratio (CAR), according to a recent stress test conducted by the Central Bank of Nigeria (CBN).
The banks identified in the CBN’s quarterly economic report include Access Bank Plc, Fidelity Bank Plc, First City Monument Bank Limited, First Bank of Nigeria Limited, Guaranty Trust Holding Company Plc, Union Bank of Nigeria Plc, United Bank for Africa Plc, and Zenith Bank Plc.
The stress test evaluated the banks’ financial strength to endure adverse economic conditions or shocks.
The revelation comes in the wake of the CBN’s contemplation of a new round of bank recapitalization, as reported weeks ago
Newspot recalls that in September 2021, CBN issued a guideline which mandated banks to maintain a prudential Capital Adequacy Ratio of 10 per cent for national and regional banks, while banks with international authorization were instructed to uphold a 15 per cent regulatory capital adequacy ratio.
However, the recent report indicates a decline in the banking system’s capital adequacy ratio, falling by 3.0 percentage points to 11.2 percent, notably below the 15.0 percent threshold set for banks with international authorization.
The development is not unconnected to CBN’s review of foreign exchange policies, which led to the devaluation of Naira since June 14 2023.
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