Banks’ borrowings from the Central Bank of Nigeria’s (CBN) Standing Lending Facility (SLF) surged by 458.2% year-on-year to N57.5 trillion in the first half of 2024, up from N10.25 trillion in the same period of 2023.
Additionally, data from the CBN showed that banks’ deposits in the apex bank’s Standing Deposit Facility (SDF) increased by 62% year-on-year, reaching N7.94 trillion from N2.99 trillion in the first half of 2023.
Banks utilize the SLF window for accessing liquidity to support their operations, while the SDF window allows them to deposit excess liquidity overnight with the CBN and earn interest.
The CBN data also revealed that banks and discount houses had an opening balance of N309.97 billion as of June 28, 2024, which is a 73.3% decline compared to N1.16 trillion on June 30, 2023.
This trend coincides with the CBN’s tightening of monetary policy and the banks’ ongoing recapitalization efforts.
Analysts have predicted more strategic maneuvers as banks disclose new information regarding their capital raise plans. According to CardinalStone Research’s 2024 mid-year Economic Outlook for Nigeria, the banking sector’s recapitalization plan has not yet resulted in mergers and acquisitions that could drive investment interest, particularly in Tier 2 and Tier 3 banks.
CardinalStone analysts noted: “Most banks are still considering the options suggested by the CBN, with FCMB open to selling some of its subsidiaries. The recapitalization program, set to conclude in 2026, allows room for inorganic corporate actions that could enhance investment potential in the sector. In the meantime, strategic moves have been observed, with Fidelity’s rights and public offer prices below market value causing a bearish reaction, while AccessCORP’s decision to set its rights price above market value sparked a bullish response. We anticipate further strategic positioning as banks continue to reveal their capital raise plans.”
