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In a letter to all banks, the Central Bank of Nigeria (CBN) approved several prudential guidance and directives for immediate implementation by the banks upon assessment of the impact of currency devaluation on banks’ balance sheets.
In a letter to all banks, the Central Bank of Nigeria (CBN) approved several prudential guidance and directives for immediate implementation by the banks upon assessment of the impact of currency devaluation on banks’ balance sheets.
The revaluation of foreign currency assets and liabilities has expectedly resulted in outsized gains/losses across the banks. In the letter, the CBN urged banks to exercise prudence in utilizing revaluation gains by setting aside these sums as a counter-cyclical buffer to cushion any further fluctuations in the currency. The CBN also granted forbearance to banks who inadvertently breach the single obligor limit on existing facilities due to the currency movement as well as banks that exceed the Net Open Position prudential limits.
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The Central Bank of Nigeria is the central bank and apex monetary authority of Nigeria established by the CBN Act of 1958 and commenced operations on 1 July 1959.[3]The major regulatory objectives of the bank as stated in the CBN Act are to: maintain the external reserves of the country, promote monetary stability and a sound financial environment, and act as a banker of last resort and financial adviser to the federal government
