CAPITAL MARKET
FAAC, OMO, bond payments to boost market liquidity
Following expected inflows from Federation Account Allocated Committee’s (FAAC) disbursements, N157.27 billion OMO maturities and N49.89 billion from bond coupon payments, analysts have predicted improved financial system liquidity this week. According to analysts at Cordros Capital, these inflows should limit the impact of outflows for CBN’s primary market and foreign exchange (forex) auctions. Due to the strong outflow recorded last week, pressures mounted at the money market space as open buyback and the overnight lending rate increased. The overnight rate expanded by 658 basis points as against the previous week. The liquidity squeeze was driven by Cash Reserves Ratio (CRR) debits on banks for failing to meet the Central Bank’s 65 per cent Loan- to-Deposit Ratio (LDR). The Sun
BANKING
Polaris Bank supports private school owners with credit line
Polaris Bank is impacting Nigeria’s education sector with a significant funding boost through its bundled loan solution called ‘Polaris Education Loan’ as it sets aside a dedicated Credit Line to Support private school owners. The Polaris Education Loan offers both new and existing private primary, secondary, and tertiary institutions customers of the bank, access to loans of up to N100 million to meet their various funding needs. This solution forms part of the lender’s effort to support Nigeria’s vital educational sector by ensuring that schools meet their goals and growth aspirations. The Sun
Agusto report: CBN’s standardized CRR shook banks’ profitability in 2020
Nigeria’s foremost research house and rating institution, Agusto & Co Limited has disclosed that Central Bank of Nigeria’s (CBN) standardized Cash Reserve Requirement (CRR) of 27.5 per cent had a massive impact on the profitability of merchant and commercial banks in 2020. This is even as the institution stated that the banking industry’s restricted cash reserves exceeded N9.5 trillion and translated to an effective CRR of 37 per cent as at the end of 2020. According to its flagship 2021 Banking Industry Report, the research house and rating institution stated that the Nigerian banking industry was better prepared in 2020 as it leveraged lessons from the 2016/2017 economic recession, adding that the CBN’s proactive measures in the form of forbearance, enabled banks to provide temporary and time-limited restructuring of facilities granted to households and businesses severely affected by COVID-19. The Sun
ECONOMY
Nigeria entitled to $3.35bn in new IMF rights allocation
The Managing Director of the International Monetary Fund, Ms Kristalina Georgieva, has said that the organisation begun allocating Special Drawing Rights of about $650bn on Monday. This was contained in a press statement on the IMF website on Monday. She was quoted in the statement, as saying, “The largest allocation of Special Drawing Rights in history – about $650bn – comes into effect today. “The allocation is a significant shot in the arm for the world and, if used wisely, a unique opportunity to combat this unprecedented crisis.” She added that the allocation would provide extra liquidity to the global economy. Punch
Oil price jumps to $68 after days of losses
The international oil benchmark, Brent crude, jumped on Monday, snapping a seven-day losing streak that was crude’s worst since 2019, as the dollar pulled back and traders bet the recent selling was overdone. Brent, against which Nigeria’s crude oil is priced, rose by $3.58 to $68.76 per barrel as of 8:05pm Nigerian time on Monday, after posting its worst week since October 2020. “News of zero new cases in China has certainly provided a tailwind as it gives added light at the end of the COVID tunnel and a breath of fresh air to the demand landscape,” analysts at Blue Line Futures were quoted by CNBC as saying. “Additionally, the US dollar has retreated from recent highs, underpinning the commodity landscape broadly,” they added. West Texas Intermediate crude futures, the US oil benchmark, gained $3.50, or 5.6 per cent, to settle at $65.64 per barrel. Punch
A former Senior Technical Adviser, Upstream and Gas, at the Ministry of Petroleum, Gbite Adeniji, has said that the Petroleum Industry Act (PIA), which was signed by President Muhammadu Buhari last week, would cut wastages in the oil and gas industry. Speaking on Arise Television, THISDAY’s broadcast arm, Adeniji, who was an adviser when Dr. Ibe Kachikwu was petroleum minister, said that the new law is not only a petroleum sector reform document, but an economic bill that could remarkably impact the country. He explained that the Act will open the petroleum sector up to a new wave of opportunities, stressing that the country now has a basis for deregulating the downstream. This Day