The Central Bank of Nigeria (CBN) has said it will carry out loan reclassification and periodic stress tests on banks to determine the soundness of the financial sector. CBN Director, Research Department, Michael Adebiyi, who broke the news yesterday said the move would enable it to ascertain the liquidity position of the financial system and gauge the banking sector’s systemic health.
Speaking at the Chartered Institute of Bankers of Nigeria (CIBN) mid-year review of the economic outlook 2022, in Lagos, he said the apex bank will institute mandatory provisioning for the banks to ensure the risk of a significant deterioration in the quality of restructured loans is addressed.
Adebiyi said the move was necessary following the resurgence of the COVID-19 pandemic, and the Russia-Ukraine crisis, which require the CBN to be thoughtful and guarded against negative fallout that may arise in the second half of the year.
