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Banks encouraged to start lending

Publish date: 08 July 2019
Issue Number: 831
Diary: IBA Legalbrief Africa
Category: Nigeria

Nigeria is giving its banks a choice: lend more money, or hand it over to the central bank and earn nothing on it. Banks should use at least 60% of their deposits for loans by the end of September, the central bank said and those that don’t will have their cash-reserve requirements increased, meaning they’ll be forced to park more money at the central bank. A report on the Fin24 site notes that Nigeria’s banks are some of the most reluctant lenders in major emerging markets, with an average loan-to-deposit ratio below 60%. That compares with 78% across Africa. Guaranty Trust Bank, the nation’s biggest lender by market value, fell 1.9% in last week's trading, contributing the most to the Nigerian Stock Exchange All Share Index’s decline. In a letter to banks, Ahmad Abdullahi, director of banking supervision, said the decision was taken 'to ramp up growth of the Nigerian economy through investment in the real sector'.

Full report on the Fin24 site