The Primary Bank of Nigeria (CBN) has warned banks that stronger assets buffers must be matched by tighter exposure administration, sound corporate governance and cybersecurity as financial institutions experience rising geopolitical, technological and climate-associated risks.
Deputy Governor, Corporate Services at the CBN, Dr Muhammad Sani Abdullahi, gave the warning in his keynote tackle at the 38th Seminar for Support Correspondents and Firm Editors.
Together with the recapitalization consider now over, Abdullahi said investment was just the starting aspect for building a reliable banking structure, stressing that banks must increase controls, recognize risks premature and lend based on feasible projects.
“Cash, yet, is a starting detail. Boards and administration must maintain sound controls, recognise risks initial and lend on the strength of workable projects,” he said.
He said geopolitical uncertainty, climate-relevant risks, cyber threats and quick technological transform could transmit shocks across borders by manner of financial, trade and technology channels, affecting investment flows, swap rates and external buffers. “Resilience so requires institutions to await emerging risks, absorb shocks, modify and recover,” he said.
The deputy governor said corporate governance must underpin the banking sector’s resilience, alongside boards and administration expected to demonstrate integrity, accountability and transparency, polish internal controls and protect against excessive danger-taking.
“Their decisions must watch the interests of depositors, investors and other stakeholders,” he said, adding that banks’ exposure management must continue beyond credit uncertainty to trade, liquidity and effective risks, as well as cybersecurity, third-party dependencies and climate-relevant financial risks.
Abdullahi said the CBN would go on to focus on governance, resource feature, liquidity and huge exposures, during the time that expecting banks to protect patron information, state trustworthy payment services and recover speedily from disruptions. “A stronger balance sheet must be matched by stronger command of hazard,” he said.
On internet-based banking, Abdullahi said banks must continuously support in cybersecurity, statistics protection, disaster recovery and organization continuity. “Innovation brings opportunities, but community trust depends on customers being able to transact securely and availability their resources reliably, including when systems come under pressure,” he said.
He furthered that the CBN’s supervisory strategy would persist to emphasise hazard-based supervision, macroprudential surveillance and enhanced stress testing, alongside financial sector organization, consumer protection, fintech principle and responsible innovation.
Abdullahi furthermore said the result of stronger bank balance sheets should be reflected in productive lending and improved financial services across the economy. “We should measure recapitalisation by the level of banking services and economical lending it supports, as well as by the quantity of assets raised,” he said.
He stressed the pursue for the benefits to broaden to rural communities, women and young entrepreneurs, adding that consumer protection and financial inclusion were integral to financial resilience. “Resilienter bank balance sheets should swap into wider connection and improved approve,” Abdullahi said.
He moreover urged businesses to strengthen corporate transparency, governance and sustainability, noting that these increasingly inform credit assessment, during the time that bigger financing capacity could assist investment in technology, energy, transportation, power, agriculture and manufacturing.
Source: CBN: Bank Capital Must Match Stronger Risk Management
