CBN Report: 21 Banks Borrow N4.06trn from Apex Bank

The figure, according to the report, was by far higher than N560.8 billion borrowed in the first quarter (January to March) this year.

The funds came through the Standing Lending Facility (SLF), which is an overnight CBN credit available on banking days between 2 pm and 3.30 pm, with settlement done on same day value.

Funds were sourced mainly from time, savings and foreign currency deposits, as well as accretion to unclassified assets. The funds were used, largely, to extend credit to the private sector and payment of claims on demand deposit.

The CBN attributed the huge borrowing figure by banks to foreign exchange illiquidity in the system, which it said, hindered the smooth running of the foreign exchange inter-bank market and this led the bank to float a special foreign exchange auction.

The apex bank said the settlement of these transactions drained liquidity in the money market. Consequently, inter-bank money market rates spiked and the trend in standing facilities reversed as there was more patronage at the Standing Lending Facilities (SLF) than the Standing Deposit Facility (SDF).

The regulator said provisional data indicated that total value of money market assets outstanding at the end of the second quarter of 2016 stood at N10.46 trillion, showing an increase of 6.7 per cent, compared with the level in the first quarter.

The development reflected the 8.09 per cent and 2.73 per cent growth in Federal Government of Nigeria bonds and treasury bills, respectively.

The report, posted on the CBN’s website, said developments at the CBN standing facilities window in the review quarter indicated higher patronage at the SDF window, during the first two months of the review quarter.

The trend, however, reversed with the settlement of a large volume of foreign exchange purchased at the special auction conducted on June 20.

“Total request for Standing Lending Facility (inclusive of Intraday lending facilities converted to overnight repo) during the review period amounted to N4.06 trillion, with N1.46 billion in interest earned, compared with SLF of N560.80 billion and interest earned of N0.28 billion in the preceding quarter,” it said.

This amounted to N3.50 trillion and N1.18 billion increase in SLF and interest earned, respectively, from the levels in the first quarter of this year. It said the total deposit at the SDF window during the review period was N6.01 trillion with a daily average of N100.22 billion, compared with N6.61 trillion in the first quarter of this year.

The report said the cost incurred on SDF in the review quarter stood at N1.74 billion, compared with N1.08 billion, in the preceding quarter.

It said the commencement of the new foreign exchange policy on June 20 influenced the direction of the financial market thereafter.

CBN data also showed that the total assets and liabilities of the commercial banks stood at N31.23 trillion at the end of the preceding quarter of 2016, representing an increase of 9.6 per cent over the level at the end of the preceding quarter.

The funds, it said, were sourced, mainly, from time, savings and foreign currency deposits, foreign liabilities and unclassified liabilities. The funds were used, mainly, to increase claims on private sector, acquire foreign and unclassified assets.