Banks Freeze While Cash Burns: Top 5 Lenders Locked N51.5 Trillion in CBN Reserves!
A new report by Renaissance Capital Africa has revealed that Nigeria’s top five banks — Access Holdings, Zenith Bank, First Holdco, UBA, and GTCO — had a combined ₦51.5 trillion trapped in non-interest-yielding reserves with the Central Bank of Nigeria (CBN) between 2020 and 2024.
This massive sum, held as Cash Reserve Ratio (CRR), highlights a growing tension between regulatory policy and banks’ operational flexibility.
What’s the CRR All About?
The Cash Reserve Ratio is the portion of customer deposits that banks must hold with the CBN — earning no interest and inaccessible for lending or investment. It’s meant to curb inflation and manage liquidity, but the recent jump in CRR has sparked major concern.
• Jan 2020: CRR raised from 22.5% → 27.5%
• Sept 2022: Increased again to 32.5%
• ⚠️ 2024: A steep leap to 45% for DMBs and 14% for merchant banks
• Currently: Some banks are forced to hold up to 50% of their deposits with CBN!
Breakdown of CRR Deposits (2020–2024):
️ Bank CRR Deposit
Access Holdings ₦13.03 trillion
Zenith Bank ₦12.76 trillion
First Holdco ₦9.68 trillion
UBA ₦9.43 trillion
GTCO ₦6.64 trillion
That’s a combined ₦51.54 trillion of idle capital.
⚠️ Analysts Warn: “Cash is King — But Not in CBN’s Vault”
Renaissance Capital notes a contradiction in policy:
“While recapitalisation is meant to strengthen banks’ capacity to lend, the 50% CRR severely restricts liquidity — undermining the intent.”
With only 20% of customer deposits effectively available for lending (after CRR and liquidity ratio deductions), banks face a tight credit environment, stalling growth, investment, and dividend payouts.
Shareholders & Experts React
• Shareholders are frustrated. Funds locked in the CBN don’t support growth or returns.
• Boniface Okezie (PSAN):
“If these funds were accessible, banks could pay better dividends and fund more expansion. Even a 3% interest from CBN would help!”
InvestingPort Insight:
✅ Policy tension is real — recapitalisation without liquidity relief creates a chokehold.
Net interest income is being squeezed, with banks resorting to commercial papers to stay afloat.
⚠️ Investors should watch how regulatory changes unfold — liquidity policies can significantly affect stock performance, dividends, and loan growth.
Let’s Discuss:
Is the CBN helping or hurting with this policy mix? Should there be a balance between control and operational freedom? What does this mean for the banking sector outlook?
#CRRWatch #BankingSector #InvestingPortInsights #LiquidityMatters #NigerianBanks ️
A new report by Renaissance Capital Africa has revealed that Nigeria’s top five banks — Access Holdings, Zenith Bank, First Holdco, UBA, and GTCO — had a combined ₦51.5 trillion trapped in non-interest-yielding reserves with the Central Bank of Nigeria (CBN) between 2020 and 2024.
This massive sum, held as Cash Reserve Ratio (CRR), highlights a growing tension between regulatory policy and banks’ operational flexibility.
What’s the CRR All About?
The Cash Reserve Ratio is the portion of customer deposits that banks must hold with the CBN — earning no interest and inaccessible for lending or investment. It’s meant to curb inflation and manage liquidity, but the recent jump in CRR has sparked major concern.
• Jan 2020: CRR raised from 22.5% → 27.5%
• Sept 2022: Increased again to 32.5%
• ⚠️ 2024: A steep leap to 45% for DMBs and 14% for merchant banks
• Currently: Some banks are forced to hold up to 50% of their deposits with CBN!
Breakdown of CRR Deposits (2020–2024):
️ Bank CRR Deposit
Access Holdings ₦13.03 trillion
Zenith Bank ₦12.76 trillion
First Holdco ₦9.68 trillion
UBA ₦9.43 trillion
GTCO ₦6.64 trillion
That’s a combined ₦51.54 trillion of idle capital.
⚠️ Analysts Warn: “Cash is King — But Not in CBN’s Vault”
Renaissance Capital notes a contradiction in policy:
“While recapitalisation is meant to strengthen banks’ capacity to lend, the 50% CRR severely restricts liquidity — undermining the intent.”
With only 20% of customer deposits effectively available for lending (after CRR and liquidity ratio deductions), banks face a tight credit environment, stalling growth, investment, and dividend payouts.
Shareholders & Experts React
• Shareholders are frustrated. Funds locked in the CBN don’t support growth or returns.
• Boniface Okezie (PSAN):
“If these funds were accessible, banks could pay better dividends and fund more expansion. Even a 3% interest from CBN would help!”
InvestingPort Insight:
✅ Policy tension is real — recapitalisation without liquidity relief creates a chokehold.
Net interest income is being squeezed, with banks resorting to commercial papers to stay afloat.
⚠️ Investors should watch how regulatory changes unfold — liquidity policies can significantly affect stock performance, dividends, and loan growth.
Let’s Discuss:
Is the CBN helping or hurting with this policy mix? Should there be a balance between control and operational freedom? What does this mean for the banking sector outlook?
#CRRWatch #BankingSector #InvestingPortInsights #LiquidityMatters #NigerianBanks ️