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Tag: Tokunbo Martins

  • CBN extends Basel Adoption deadline to October

    CBN extends Basel Adoption deadline to October

    Headline for banks to adopt the parallel run of Basel II/III has been extended to October from June, 2014, the Central Bank of Nigeria (CBN) has said.

    CBN Director, Banking Supervision, Mrs Tokunbo Martins who disclosed this at the weekend, said the initial challenges observed in the parallel run have necessitated for an extension, as it concerns requirements of reporting capital charge for credit, market and operational risks.

    The Basel Accord is a financial analysis principle expected to give Nigerian banks’ financials better credibility.

    She said in a circular to banks and discount houses that the lenders have been directed to continue the parallel run for an additional period of three months while the full adoption will commence on October 1, 2014.

    Martins said banks are required to use this period to re-assess their current capital levels with a view of complying at full adoption, with the minimum capital requirements.

    She explained that the policies specify approaches for quantifying the risk weighted assets for credit risk, market risk and operational risk for the purpose of determining regulatory capital.

    According to her, the computations are consistent with the requirements of Pillar I of Basel II which is expected to ensure that banks have sufficient high quality capital to support their risk taking activities. The lenders are also expected to establish effective risk management systems commensurate with their level of operations.

    She said all banks and banking institutions are expected to adopt the basic approaches for the computation of capital requirements for credit risk, market risk and operational risk.

    “Within the first two years of the adoption of these approaches under Pillar I; it is hoped that an effective rating system would have developed in Nigeria. Banks and banking groups are projected to have gathered more reliable data and gained more experience that would prepare them to consider the adoption of more sophisticated approaches,” she said.

    The CBN Director said the adoption of the Standardised Approach for Operational Risk and other sophisticated approaches will however be subject to the approval of the CBN. “The guidance notes are applicable to all banks and banking groups licenced to operate in Nigeria and should be applied on a solo as well as a consolidated basis. The minimum capital requirement is retained at 10 per cent and 15 per cent respectively for local and internationally active banks,” she said.

    She said that in line with Basel II Pillar two, banks are reminded of the importance of comprehensive risk management policies and processes that effectively identify, measure, monitor and control their risk exposures in addition to having appropriate board and senior management oversight.

     

  • CBN stops AMCON debtors from taking loans

    CBN stops AMCON debtors from taking loans

    The Central Bank of Nigeria (CBN) yesterday banned debtors with delinquent facility taken over by the Asset Management Corporation of Nigeria (AMCON) from taking fresh loans.

    CBN Director, Banking Supervision, Mrs Tokunbo Martins, said in a letter to banks, Development Finance Institutions and AMCON, that any fresh loans to bad debtors must be approved by the apex bank.

    She said, the CBN has ordered that no institution, shall without its prior written approval, grant a facility to a potential borrower who is in default of any existing facility to the tune of N500 million and above in the case of deposit money banks; and N250 million in the case of development banks and banks in liquidation.

    She said the prohibition threshold may be reviewed by the CBN from time to time with the aim of inculcating responsible and appropriate credit culture in borrowers.

    The policy, which takes immediate effect, applies, in case of defaulting corporate obligors, to their directors and or related interests.

    The CBN director said that any institution that contravenes the directive shall be slammed with the existing regulatory sanctions that may apply.

    Martins said the regulator had also noted with concern, the impunity with which some borrowers default on their loans in some institutions and yet are availed further credit facilities by other institutions under the same, or sometimes different identity.

    She said such practice could have the effect of triggering serial defaults and a buildup of non-performing loans which could negatively impact liquidity in the financial sector and ultimately hamper its stability.

    She explained that henceforth,  all institutions shall ensure that all returns on credit facilities granted, together with their performance status are rendered on Credit Risk Management System (CRMS) and reported to two credit bureaux.

    Martins advised lenders to always perform credit checks on a potential borrower on CRMS and from at least two credit bureaux, as part of credit appraisal process.

     

     

    She explained that where an institution fails to report a facility and or its status on the CRMS or to at least two credit bureaux, as required, it shall be considered as concealment and misrepresentation of a material fact and the institution shall be penalised in accordance with the relevant provisions of the Banks and Other Financial Institutions Act (BOFIA). Also, the Chief Financial Officer, Chief Financial Officer, Chief Compliance Officer or their equivalents shall be liable to sanctions in line with the relevant provisions of the BOFIA.

     

  • CBN advises banks, discount houses on account rendition

    CBN advises banks, discount houses on account rendition

    The Central Bank of Nigeria (CBN) has advised banks and discount houses on how to render their accounts.

    CBN Director, Banking Supervision, Mrs Tokunbo Martins, made this known at the weekend.

    In a circular, she said following the ‘Go-Live’ of the FinA Regulatory Reporting Application last December, all banks and discount houses had been required to submit daily, monthly, quarterly and semi-annual returns via the e-FASS and FinA Applications.

    E-FASS is software that helps banks to transmit their daily transactions to the CBN.

    She explained to enable reporting institutions become familiar with the new application (FinA), the deadline for submission of returns was not strictly enforced, regretting that some institutions did not even render their returns through FinA.

    Martins said it has become necessary to remind all banks and discount houses about the timelines for the rendition of statutory returns through eFASS and FinA, should, henceforth, be strictly enforced, adding that daily returns should be submitted on or before 10.00 a.m. of the following day.

    However, monthly, quarterly and semi-annual returns would be submitted on or before the fifth day after the month end.

    Where the fifth day is on a weekend or public holiday, returns should be submitted the previous day.

    She said the directive takes immediate effect, adding that all reporting institutions were requested to note the above timelines as any future breach shall be promptly met with the applicable sanctions.

  • CBN advises banks, discount houses on account rendition

    CBN advises banks, discount houses on account rendition

    The Central Bank of Nigeria (CBN) has advised banks and discount houses on how to render their accounts.

    CBN Director, Banking Supervision, Mrs Tokunbo Martins, made this known at the weekend.

    In a circular, she said following the ‘Go-Live’ of the FinA Regulatory Reporting Application last December, all banks and discount houses had been required to submit daily, monthly, quarterly and semi-annual returns via the e-FASS and FinA Applications.

    E-FASS is software that helps banks to transmit their daily transactions to the CBN.

    She explained to enable reporting institutions become familiar with the new application (FinA), the deadline for submission of returns was not strictly enforced, regretting that some institutions did not even render their returns through FinA.

    Martins said it has become necessary to remind all banks and discount houses about the timelines for the rendition of statutory returns through eFASS and FinA, should, henceforth, be strictly enforced, adding that daily returns should be submitted on or before 10.00 a.m. of the following day.

    However, monthly, quarterly and semi-annual returns would be submitted on or before the fifth day after the month end.

    Where the fifth day is on a weekend or public holiday, returns should be submitted the previous day.

    She said the directive takes immediate effect, adding that all reporting institutions were requested to note the above timelines as any future breach shall be promptly met with the applicable sanctions.