“Nigeria is one of the few countries in the world where banks have to keep a specified percentage of monies raised with the CBN. Banks also have to keep a certain level of liquidity and maintain a capital adequacy ratio. In our laws, after tax, 23% of your profits must be kept in
a statutory reserve fund to boost your capital adequacy ratio.
After the 2008 financial crises, banks in Nigeria came together to form AMCON to which banks in Nigeria contribute as Insurance against crises”- Godwin Emefiele at Africa Central Bankers' Conference in Jo'burg.
After the 2008 financial crises, banks in Nigeria came together to form AMCON to which banks in Nigeria contribute as Insurance against crises”- Godwin Emefiele at Africa Central Bankers' Conference in Jo'burg.
Interesting that the response of the CBN Governor to a framework for managing a bank run and insolvency is to mention AMCON that has loan impairment of #5trn on their balance sheet.
Important to note that the Deposit Insurance Fund (DIF) and the Orderly Liquidation Authority
Important to note that the Deposit Insurance Fund (DIF) and the Orderly Liquidation Authority
(OLA) that the FDIC set up under the Consumer Financial Protection Bureau (CFPB) to prevent Banks & Other Financial Institutions in the US who are insolvent from going into chapter 7 bankruptcy, is the primary reason a Lehman brothers style crises did not start from last weekend.
AMCON is not the answer to a bank run in Nigeria. It has served its purpose, and the right thing to do other than amending the BOFI act to prevent a repeat of systemic risk from universal banking model, is to review the ALM of AMCON and unwind it.
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