LAGOS — The nation’s banks would be losing about N2 trillion deposits to the Central Bank of Nigeria, CBN, with the implementation of the Treasury Single Account, TSA, as ordered last week by President Muhammadu Buhari. States are also gearing up to adopt the policy.
CBN Governor, Mr Godwin Emefiele
CBN Governor, Mr Godwin Emefiele
The report on accounts of banks with CBN shows that as at beginning of this current quarter, banks’ total public sector deposits was N1.3 trillion but additional net flows from Federation Accounts Allocation Committee, FACC, as at end of last month (about N240 billion) as well as expected inflows by end of this month may push the figure close to N2.2 trillion by the time the pull out begins next month.
According to the directive from the Presidency, the implementation of the TSA by all ministries, departments and agencies (MDAs) is to enable compliance of MDAs with the provisions of the constitution. This is also in line with the Presidency’s directives to the National Economic Council, NEC, to ensure full compliance of MDAs to relevant laws on accounting, allocation and disbursement of public funds.
Bankers had pressurized the former government of Goodluck Jonathan, which had initiated the policy in December 2014, to soft pedal on the implementation which was originally scheduled for February 2015, on the reasons of a likely negative impact on the economy.
Last weekend, bank treasurers told Vanguard that the implementation would adversely affect liquidity in the banking system and end up putting pressure on interest rates and availability of credit to the economy.
In a statement, weekend, Afrinvest Group, a Lagos-based financial investment house, said: “Whilst the directive issued came as the first official statement by the Presidency on the TSA, the Nigerian National Petroleum Corporation, NNPC, had earlier began withdrawing its funds from banks for retirement into CBN.
“This had an impact on liquidity level in the banking system, resulting in a surge in money market rates during the period as banks scrambled for funds to cover their liquidity positions.
“With the TSA implementation now extended to all federal MDAs, the Nigerian banking industry, on an aggregate basis, would be affected in terms of deposits and funding cost structure.”
In relation to this FBN Capital, an investment arm of FirstBank of Nigeria Plc, stated in its money market reports last weekend that the NNPC withdrew about N400 billion from the banks last month pushing Open Buy Back, OBB, and overnight interest rates to a record high of 50 per cent. It, however, stated that this pressure was corrected when FACC inflow came to the banks within the same period.
In the implementation of the TSA there will be no FACC inflow to correct or compensate for the outflows.
- See more at: http://www.vanguardngr.com/2015/08/treasury-single-account-bank-deposits-loss-may-hit-n2trn/#sthash.38bjYYCF.dpuf

Wait

With this order from the presidency and many other monetary policies by the CBN, I foresee some banks merging in order to stay in business. Job cuts are also imminent!
Also, if the government is honest with this process of obtaining accountability, more revenue would be saved from leakeages and funds not used by the various MDAs.

May their loss be our gain.... Amen

So the government should continue to suffer leakage so that the banks will be satisfied? Let them look for better ways of getting their money, after all, it's not like they were treating their marketing staff well.

Let the right thing be done from now on

I pity bank marketers, now they would have to print money to meet target

Some Banks will not survive TSA.

Only In Nigeria that banks depend on government's deposits to maintain liquidity. Now is the time for them to think outside the box, support small businesses and cut operational costs, if they want to remain in business.

This government has Clearly shown, she is for the masses and not for a select few.

Sai Buhari!

When my sai buhari issues an order even the blind the deaf and dumb listen hehe am loving this new administration

Nice one.. Change in the air.. The air is even feeling tha change..

Hhhnnmmm......Ok
Today is my birthday (Thank you God)

All money in CBN will end up in commercial banks through salaries and payments to contractor and suppliers.

What will happen is simple, money will move from public sector account to retail banking in other words your services will determine how much fund you trap from monies paid out from CBN no more lazy banking where PSG bankers will bribe the permsect and dfa to corner the entire money to their banks.

Good development as money will still be in the system just that no more lazy and corrupt banking

Hhhnnmmm......Ok
Today is my birthday (Thank you God)