Adetona Adedeji, acting director of the banking supervision department at CBN, disclosed this in a statement yesterday.
The regulator directed banks to trim all existing loans with foreign currency collaterals to 90 days or attract a 150 percent capital adequacy ratio computation as part of the bank’s risk.
Capital adequacy ratio is calculated by dividing a bank’s capital by its risk-weighted assets.
“The Central Bank of Nigeria has observed the prevailing situation where bank customers use foreign currency (FCY) as collaterals for Naira loans,” the circular reads.
“Consequently, the current practice of using foreign currency-denominated collaterals for Naira loans is hereby prohibited except where the foreign currency collateral is Eurobonds issued by the federal government of Nigeria; or guarantees of foreign banks, including standby letters of credit
“In this regard, all loans currently secured with dollar-denominated collaterals other than as mentioned above should be wound down within 90 days, failing which such exposures shall be risk-weighted 150 per cent for Capital Adequacy Ratio computation, in addition to other regulatory sanctions.”
The CBN said it is on the mission to ensure that the there is adequate foreign exchange in the market even as the naira is being strengthened.
Also, yesterday the apex bank issued a circular to Bureau De Change operators (BDCs), informing them of the sale of $10,000 to each BDC at a rate of N1,101/$1.
The circular made available to the media directed each BDC to sell the dollars to eligible customers at a rate not exceeding 1.5 per cent above the purchase price.
It suggests that the BDCs are not expected to sell above N1,117/$1, which is below the N1,251.05/$1 recorded at the end of last week, data from the Nigerian Autonomous Foreign Exchange Market (NAFEM) has indicated.
“We write to inform you of the sale of $10,000 by the Central Bank of Nigeria (CBN) to BDCs at the rate of N1101/$1.
“The BDCs are in turn to sell to eligible end users at a spread of NOT MORE THAN 1.5 percent above the purchase price,” the circular reads.
This is the third attempt by the CBN to sell FX to BDCS after a prolonged period of suspension by the central bank in 2021. The ban was lifted earlier in the year following the revocation of licences of over 4173 BDC operators in February.
The first attempt was in February, with the apex bank selling $20,000 to each BDCS at the rate of N1,301/$. By the second attempt, the bank reduced the allocation by 50 per cent and sold FX at a rate of N1,251/$1. In less than three months, the CBN has influenced an appreciation of naira by 18.17 per cent against the US dollar.
