REVIEW OF THE NIGERIAN BANKING SYSTEM
Following the recapitalization exercise of the banking industry in Nigeria, the country is gradually becoming the financial hub of Africa by expanding its banking activities into other countries in Africa and recording accelerated branch expansion. Since the consolidation exercise, the Apex regulatory body in the banking industry, the CBN has introduced a number of measures to strengthen the supervisory and regulatory functions of the system. Some of which are:
Regulatory Requirements for Nigerian Banks:
The capital requirement:
1) Shareholder’s fund of a minimum of:
- N10 billion for Regional Bank
- N25 billion for a National Bank
- N50 billion for an International Bank
- N5 billion for a Non-Interest Bank with Regional license
- N10 billion for a Non-Interest Bank with National license
- N15 billion for a Merchant Bank
Also, other provisos include:
2) Minimum base ratio (Adjusted Capital to Risk-Weighted Assets) is 10% for
regional/national banks and 15% for international banks.
3) Tier 2 capital cannot exceed Tier 1 capital
The Liquidity Requirement:
1) Banks are obliged to hold at least 30% of their deposits as liquid assets (i.e. cash
and near cash items).
2) At least one-third of liquid assets must be held in treasury bills
3) Cash Reserve Ratio (CRR) is currently 12% of deposits
4) This is in addition to the 30% liquidity ratio.
The Prudential Regulation:
1) Loans are classified into (a) specialized and (b) non-specialized loans;
2) Interest Income on non-performing assets is recognized on cash basis and not
on accrual basis;
3) Provisions are expected to be made for the non-performing loans of the non-specialized
loans as follows:
|Interest and or payment outstanding for:||Classification||Provision|
|90 days but less than 180 days||Substandard||10%|
|180 days but less than 360 days||Doubtful||50%|
|360 days and above||Lost||100%|
(4) All banks operating in Nigeria are expected to make a contribution of 0.3% of their total assets as contained in the last audited account to fund AMCON for a period of 10 years starting December 2011 (This was subsequently increased in 2013).
- At the last MPC meeting on March 24 – 25, MPR was retained at 12 % , cash reserve ratio (CRR) on private sector deposits was increased to15 % and CRR on public sector deposits remained 75 %
- The Central Bank of Nigeria (CBN) issued guidance on the Regulatory Capital Measurement and Management in the Nigerian Banking System in relation to implementation of Basel II & III.
- Issuance of regulatory framework on the implementation of Agency Banking in Nigeria as a means of achieving its Financial Inclusion policy.
- CBN introduced additional guidelines to the current Nigeria Bankers Clearing House rules.
MISSION AND VISION STATEMENTS.
Skye bank’s mission and vision statements are: To provide innovative and convenient banking services by a dedicated team to the benefit of our stakeholders. To continuously challenge ourselves to provide limitless possibilities to our customers respectively. And to be a leading and first class commercial bank.
- Service Excellence
- Continuous Learning
The Strategic goals of Skye bank Plc for 2013 include:
- Re-positioning ‘the commercial business’ as a major area of focus
- Modest risk growth based on loan quality and optimal earning capacity
- Ensure operational and process efficiency
- Entrench a corporate culture of good governance
Growth strategy is largely organic, but will consider other opportunities that will ensure shareholder value.
MAJOR INITIATIVES FOR 2013
The proposed initiatives for year 2013 include:
- Grow and maintain market share in key business sectors
- Consolidate on our proven revenue collection strength to generate low cost deposits
- Modest branch expansion geared towards deepening our Retail and Commercial business
- Leverage on technology to enhance operational cost and efficiency
- Seek additional funding for optimal deployment to growth areas
- Deploy best in class ICT and innovation to create convenient channels for customers
- Continuous enhancement of work force capabilities to reinforce our brand