The Governor of Central Bank of Nigeria, CBN,Godwin Emefiele, has said that the intervention of the apex in First Bank six years ago was responsible for the commercial bank’s meteoric growth in the nation’s banking sector
He said when the CBN intervened, First Bank’s shares were going for N2 per share,adding that the bank’s shares has now catapulted to N11 after the intervention.
He expressed excitement that Nigerians are showing interest in the shares of First Bank which has a direct link to the apex bank’s intervention.
He disclosed these at the end of bimonthly Monetary Policy Committee (MPC) meeting in Abuja, where he also described First Bank as a domestically important bank in Nigeria.
He said if anything happens to the bank that means something is wrong with Nigeria’s banking system.
He said First Bank is a domestically important bank,adding that it is too big and strategic for one individual to own outright.
Emefiele then stated that “First Bank is so big that one person cannot own it”. With regards to who then hold the highest shares of the bank, the CBN governor said CBN will “take SEC’s position as a regulator of the capital market on who is the majority shareholder in the bank”.
At the end of the MPC meeting, the committee retained all parameters constant where the MPR was held at 11.5% the asymmetric corridor of +100/-700 basis points around the MPR; the CRR at 27.5% and also retained the Liquidity Ratio at 30%.
Mr. Godwin Emefiele, said that the committee noted the moderation in the manufacturing, and non-manufacturing Purchasing Managers’ Indices (PMI), which, remained below the 50 index points in February 2021, but improved to 48.70 index points apiece, compared with 44.9 and 43.3 index points, respectively, in January 2021, adding ‘the GDP growth in the fourth quarter of 2020 and expected recovery in Q1 2021, were signposted by this observed improvement in the PMIs’.
He also said the committee noted with concerns the continued uptick in inflationary pressure for the eighteenth-consecutive month, as headline inflation (year-on-year) continued on an upward trend, to 17.33 per cent at end-February 2021 from 16.47 per cent in January 2021.
Emefiele said the persisting uptick in food inflation, however, was the major driving factor to the uptick in headline inflation.
“This was due to the worsening security situation in many parts of the country, particularly, the food producing areas, where farmers face frequent attacks by herdsmen and bandits in their farms.
“While the bank is intervening significantly in the agricultural sector, the rising insecurity in some food producing areas, is limiting
the expected outcomes in terms of supply to the market, thus contributing to
the rise in food prices.
“The committee further noted that the key drivers of the increase in core inflation included, the hike in the price of Premium Motor Spirit (PMS), upward adjustment in electricity tariffs and the depreciation of the
domestic currency (naira). The committee observed that broad money supply (M3) grew marginally by 0.30 per cent in February 2021, following a substantial growth of 13.54 per cent in December 2020.
“This was driven largely by the contraction in Net Foreign Assets (NFA). The Committee also noted that Net Domestic Assets (NDA) grew by 3.02 per cent in February 2021, from 2.22 per cent in December 2020” he said.
He added that in its consideration of whether to tighten, hold or loosen, the committee felt that with inflation at a 3-year high and price stability being the bank’s core mandate, a contractionary policy stance may be required to tame the rising trend.
He said the committee nevertheless feels that tightening will hike the cost of capital and hamper investments required to create employment and continue to boost recovery.
He added:”On the other hand, MPC thinks that whereas loosening would lower rate and improve access to credit which will drive investment, reduce unemployment and stimulate aggregate demand, it feels that loosening will create excess liquidity, which will intensify demand pressure on the foreign exchange market, thereby leading to further depreciation in the currency.
“It, therefore, feels that a hold position which encourages Management to continue to use its various intervention mechanisms to deploy liquidity into employment generation and output stimulating sectors of the economy would be desirable as this would help consolidate the country’s recovery process”.
