Banks are not on distress path and depositors’ funds are safe, the Central Bank of Nigeria (CBN) said yesterday.
According to the apex bank, the regular stress tests conducted on banks showed that the nation’s financial system is resilient and secure.
A statement by the CBN Acting Director, Corporate Communications Department, Hakama Sidi-Ali, clarified that the regular stress tests have not unveiled potential vulnerabilities.
The liquidity squeeze that recently hit the banks has sparked anxiety among customers, leading to panic withdrawal.
Banks have also been inundated with complaints about the failure of online banking system, which had affected daily transactions and eroded public confidence.
In recent weeks, some banks have suffered cyberattacks, leading to network disruptions and liquidity challenges. So intense was the impact that some bank branches were unable to dispense more than N20,000 in cash over the counter last week.
Thus, CBN had to intervene after the banks’ public embarrassment to dispel rumours about instability and reassure the public that there was no cause for alarm.
Sidi-Ali emphasised the CBN’s unwavering commitment to maintaining the stability and reliability of the Nigerian financial system.
She also acknowledged the crucial role of confidence in banking operations, assuring the public that all deposits in banks are secure.
Sidi-Ali said CBN would ensure that financial institutions adhere to regulations and best practices to safeguard the integrity of the financial system.
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To identify potential vulnerabilities and ensure the banks’ resilience, she said the CBN, after conducting regular stress testing, has implemented Early Warning Systems.
She explained that these measures allowed the bank to proactively detect and address emerging risks and provide timely solutions to foreseen issues.
Sidi-Ali said: “ The CBN recognises the crucial role that confidence plays in banking operations and wants to affirm that all deposits in Nigerian banks are secure.
“The CBN actively ensures that banks adhere to established regulations and best practices to maintain the integrity of our financial system.
“The CBN’s approach to Risk-Based Supervision ensures that it focuses its regulatory efforts on institutions that may pose the highest risk to the financial system.
“This targeted strategy allows it to maintain a robust oversight mechanism while promoting the overall health of the banking sector.”
She added: “The CBN has established Memoranda of Understanding with the various countries where Nigerian banks’ subsidiaries are located.
“This collaboration enhances regulatory coordination and ensures that our banks operate within a safe and sound framework in accordance with banking regulations, both domestically and internationally.
“The CBN remains dedicated to fostering a secure banking environment where depositors can be fully confident in the safety of their funds.
“It will continue to monitor and adapt strategies to safeguard the financial interests of all Nigerians and stakeholders in our financial system.”
Sidi-Ali said the CBN’s Risk-Based Supervision approach focused regulatory efforts on institutions that may pose the highest risk to the financial system, adding that the targeted strategy also promoted the overall health of the banking sector while maintaining a robust oversight mechanism.
She said the apex bank has established Memoranda of Understanding with foreign countries where Nigerian banks have subsidiaries.
Sidi-Ali said the collaboration is meant to enhance regulatory coordination and ensure that Nigerian banks operate within a safe and sound framework, both domestically and internationally.
She stressed: “The CBN reiterated its dedication to fostering a secure banking environment where depositors can have full confidence in the safety of their funds.
“The bank will continue to monitor and adapt its strategies to safeguard the financial interests of all Nigerians and stakeholders in the financial system.”