Single Acct: Buhari’s policy will cause liquidity problems – Bank chief

FORMER Managing Director of Transnational Corporation, Mr Manz Denga, has warned that the directive by President Muhammadu Buhari to all government Ministries, Departments and Agencies (MDAs) to open Single Treasury Account (STA) with the Central Bank of Nigeria (CBN) is capable of shooting up inter-bank rates and causing ‘systemic backlash or collapse.”
In an interview with Saturday Vanguard in Abuja, Mr Denga,  who served variously as the regional managing director UBA, East Africa, managing director,  UBA Uganda, Cameroun and  Kenya as well as chief executive officer,  Heirs Holdings Capital, noted that the policy, if not well implemented may push some banks to a precarious situation.
Consequently, he urged the CBN to “put aside bailout plans for the vulnerable banks, including direct market intervention.”
According to Denga, who is now chairman, AfriBusiness ExpertEase (AfBEE),  Johannesburg, the new policy means that “over 1000 bank accounts of MDAs presently with the various banks” would be closed.
He acknowledged that the new policy was necessitated by the need to check “the total abuse of the funds for personal gain by banks and government officials” but warned that the immediate consequence of the policy would be “illiquidity in the system that would increase the cost of funds and lending rate. Inter-bank rates that have been up to 50 percent in the last few days may hit the roof, as borrowing rates would also triple.’’
He continued: “Traditionally, pooling is used to get higher returns on interest rates, reduce borrowing costs, and build confidence to lenders. Pooling also gives a total position picture on the funds owned line of the balance sheet.


For the full story, check the full story in the Vanguard newspaper.














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