According to reports, the Governor of the Central Bank of Nigeria (CBN), Professor Chukwuma Soludo, has vowed to the Nigerian Senate that no bank will be allowed to fold up as a result of the financial crisis’s rocking the global financial institutions.
‘No Nigerian bank will be allowed to fail. We have opened our windows to be the lender of last resort. That is part of our functions as a Central Bank, to be able to extend any credit that they want, and we can actually extend credit up to 360 days now to them and with lenders of last resort. No Nigerian bank will be allowed to fail,’ the governor said.
He also added that the CBN was ready to take any necessary step to save the banks in the event of distress – including taking over toxic assets in the banks’ balance sheets.
The CBN governor reassured the Senate of the CBN’s commitment but admitted that it would take a while for confidence in the financial system to be restored after the stormy season. ‘There are other measures that could potentially be taken. We have said it to our banks and I want to say this to this distinguished Senate today (yesterday) that we have allowed our banks to restructure some of their exposure to the Capital Market up to end of next year. We have taken steps to safeguard Nigeria’s foreign reserves and the Securities and Exchange Commission (SEC) has also reduced transaction cost on the exchange and arrangements to appoint market makers and also it instituted circuit breakers on the Nigeria Stock Exchange, of +5/-1 [share prices cannot rise above 5 per cent or fall below 1 per cent in a day].’ He explained.
