The Main Bank of Nigeria (CBN) has warned banks against rising cybersecurity, liquidity and substantial exposure risks, saying the N4.65 trillion raised by manner of the sector’s recapitalization must be matched by stronger uncertainty management and corporate governance.
The apex bank too called on financial institutions to deploy the recent cash into effective sectors, notably compact businesses, manufacturing and infrastructure, to support Nigeria’s ambition of building a $1 trillion economy by 2030.
Deputy Governor, Corporate Services, CBN, Dr Muhammad Sani Abdullahi, giving the warning at the 38th Seminar for Support Correspondents and Firm Editors organized by the Sponsor Correspondents Connect of Nigeria (FICAN), said the completion of the recapitalization exercise had given banks stronger balance sheets, but warned that increased finance could display institutions to fresh risks if not supported by powerful controls.
“Investment, nevertheless, is a starting aspect. Abdullahi said the hazard administration framework of banks must additionally include promote, liquidity and working risks, cybersecurity, third party dependencies and climate associated financial risks.
He said the CBN would persist to deploy exposure based supervision, macroprudential surveillance and enhanced stress testing to recognize vulnerabilities ahead of they threaten financial stability.
On lending, the CBN deputy governor said the success of the recapitalization exercise should not be judged by the sum of investment raised alone, but by how effectively banks utilize their stronger balance sheets to support the correct economy.
“The wider economy should see the benefit over time. He nonetheless, warned bank boards and oversight against excessive danger taking, stressing that sound corporate governance remained fundamental to banking stability.
He additionally urged banks to strengthen their monitoring of huge exposures, saying concentration of risks could undermine particular institutions and produce wider financial stability concerns, saying the exposure environment had become further complicated, together with geopolitical uncertainty, climate linked risks, cyber threats and speedy technological changes able of transmitting shocks across financial markets.
Boards and instruction must safeguard sound controls, acknowledge risks before enduring and lend on the strength of feasible projects,” he said adding that the CBN would remit proposal attention to governance, resource characteristic, liquidity and huge exposures as it strengthens supervision of the banking sector.
The deputy governor too warned banks to phase up investment in cybersecurity and information protection as extra transactions shift to digital platforms. “As additional financial services travel to electronic channels, banks must use continuously in cybersecurity, figures protection, disaster recovery and firm continuity,” he said.
According to him, customers must be able to transact securely and availability their resources even when banking systems come under pressure. Agriculture, manufacturing, services and infrastructure contact for endorse suited to their cash flows and investment horizons,” he stated calling on banks to increase financing for compact businesses and households, saying stronger bank balance sheets should render into wider admission to credit.
Abdullahi noted that Nigeria’s $1 trillion economy aim would necessitate banks qualified of mobilizing and allocating assets on a much larger scale. “Stronger assets buffers should let banks to support extended term infrastructure, assist industrial expansion, facilitate worldwide address and compete additional effectively in territorial and universal markets.”
He listed technology, energy, transportation, power, agriculture and manufacturing between sectors that should acquire from increased financing, adding that the benefits of the recapitalization must moreover extend to rural communities, women and young entrepreneurs.
The CBN Deputy Governor furthered that the stronger assets base would furnish banks together with larger capacity to absorb losses, support investment and assist the economy during periods of stress.
Source: CBN Warns Banks Against Rising Cyber, Liquidity Risks
