Customers form long queues at banks’ ATM points

Customers preparing for Christmas and New Year festivities, findings showed, were busy withdrawing cash from the ATMs to buy food items, dresses, decorations and other things needed to make the Yuletide an exciting experience.

The economic recession ravaging the country may not mar the Christmas and New Year experiences of most Nigerians if long queues seen at the ATM points are anything to go by.

“I need to prepare for the Christmas; I have come to withdraw some cash for my wife to get some dresses for the children and us,” a businessman, who identified himself as Kunle Benson, told our correspondent at a Skye Bank Plc ATM gallery in Ikeja.

Similar stories were told by bank customers who spoke to our correspondent at the ATM centres in Iyana Ipaja, Ikotun-Egbe, Ogba, Magodo and Ojodu in Lagos.

“I have been very busy but it is high time I bought things we need for the Yuletide. I have come to get some cash to buy food items we will need for the Yuletide,” a trader, Mrs. Shola Ologunjaye, told our correspondent at a Guaranty Trust Bank Plc’s ATM gallery in Ojodu, Lagos.

Some customers told our correspondent they were surprised about the long queues seen at most ATM centres, saying it was too early to start seeing such queues.

A customer, who identified himself simply as Johnson, said he had driven from Ogba to Ojodu in search of ATM galleries with short queues.

“I never knew I could get to this point and still did not get an ATM with a shorter queue. I wonder where the people are from. People are queuing up to get cash everywhere,” he said

An ATM officer in one of the commercial banks, who spoke to our correspondent under the condition of anonymity, said the situation was made worse by most Nigerians withdrawing cash to travel to their home towns for the Yuletide.

On why the biting economic recession did not stop the long queues emerging at the ATM galleries, a professor of Economics at the University of Uyo, Leo Ukpong, said the impact of the recession would be felt after the Yuletide, pointing out that most bank customers were withdrawing cash from the savings they had made for the Christmas and New Year celebrations.

The don said, “People have savings and people will normally save towards the Christmas. We will feel the impact after the Christmas and the New Year,”

 However, Ukpong said the ATM queues were also being compounded by poor cash management by the CBN.

He said, “It is not only in Lagos we are having the long queues. I have seen them in Uyo as well. I asked why and they said that the CBN would normally print new notes to replace the old and dirty notes. But recently, they have not been doing much. Somehow, there is a shortage of notes for the ATMs. People are now withdrawing cash to travel and do other things to prepare for the Yuletide. The danger is that this can cause panic in the system. The CBN’s cash management system needs to do something.”

An economic analyst, Mr. Haruna Okunade, said the recession was affecting many Nigerians and that not everyone would experience Yuletide in the manner they used to do.

CBN conducts stress tests on nation’s banks

The Central Bank of Nigeria (CBN) is currently conducting stress tests to assess the strength of the nation’s banks. However, this does not affect depositors as the tests are routine, according to stakeholders.

Sources in the banks, yesterday,  revealed that, 'The CBN is conducting liquidity ratio and capital adequacy tests to determine how strong the banks are.”

The sources disclosed that “examiners have been sent to all the banks to conduct the tests and the outcome will be made public in a matter of weeks.'

The outcome of the tests would could charge the CBN to take a number of measures, including a takeover of the weak banks or a change of the management.

Although there was no official confirmation from the CBN, a source, who neither denied nor confirmed the tests, revealed: “Usually such tests are done to get certain information about a bank.”

The Chief Executive, First Registrars, Mr. Bayo Olugbemi, said there would be no need for a takeover of any bank. To him, “the best the CBN could do is to intervene. This is what they did in the case of Skye Bank; they didn’t take over. They removed the former executives so that new hands can come in. No bank died and no depositor lost his funds.”

Olugbemi advised that “People should give them (CBN) the benefit of the doubt; if they say there is no problem then there is no problem. But there is still a need for them to carry out a check, to nip the issue in the bud in case there is any problem.”

The registrar added: “Liquidity ratio and capital adequacy test is a routine check and one of the responsibilities of CBN, apart from the fact that they inspect the banks on yearly basis, together with the NDIC (Nigerian Deposit Insurance Corporation). I believe what CBN is saying is that there is no bank that has liquidity issues, because they are the ones in charge.”

Also commenting, the Deputy Managing Director, Afrinvest Capital, Mr. Victor Ndukauba, noted that due to systemic exposure, “the CBN can’t just come out to say there’s an issue with one or two banks, to avoid causing panic or a run on the banks by depositors.

“CBN examinations are routine and they happen fairly often, so I wouldn’t say it is out of the ordinary. I know one of such examiners and he has a schedule that is very unpredictable. It’s a random stress check that can happen even without the examiners themselves knowing where they’re headed or when they’re headed. It’s been a common practice in the last four to five years.”

If a test shows negative, Ndukauba said that such a bank could fall back on inter-bank assistance through overnight lending on very low interest rate or fall back on its deposits with the CBN. He added that the CBN “may not be able to support the banks because chances are they may not even have the capacity to meet all those deposit obligations should they actually crystallise at once.”

According to him, what may impair a bank’s adequacy in the light of recent events in the economy is when its assets are not denominated in United States dollar but it grants loan in dollar to a borrower, which is captured in its books in naira. “There is a transmission gain in value on the basis of that loan made out. So if it has about $100 million in loans to foreign currency borrowers that it had been booking at N200 per dollar, which was the former interbank rate and therefore reflecting a N20 billion exposure, by a devaluation of say 15 or 20 per cent, automatically, the value of that loan goes up by the same margin.

“If the borrower is in a business that earns revenue in naira, there is already a dislocation of maybe 40 to 50 per cent because that business needs almost two times of the same amount in naira in order to meet up with the same obligation, where the dollar is not readily available. This can create some stress because when you’re calculating your capital adequacy ratio, your enumerator had changed and inflated by a 40 to 50 per cent factor, whereas your capital was always in naira but your denominator had expanded. That automatically lowers your capital adequacy ratio. That is one of the potential risks.”