Don’t panic, CBN governor says, as bank shake-out looms – Reuters

LAGOS, July 29 (Reuters) – Breaking the central bankers’ taboo on use of the ‘p-word’, Nigeria’s Godwin Emefiele is urging people not to panic about the banking system, saying he is on top of any trouble resulting from the worst crisis in Africa’s biggest economy for decades.

For now, depositors and investors are generally giving the Central Bank of Nigeria Governor the benefit of the doubt after he shored up mid-tier lender Skye Bank this month with a loan and replaced its management when its capital fell below levels required by regulators.

But pressure is building, with loan books – nearly half of them in dollars – hammered by a shrinking economy, a plunging currency and acute foreign exchange shortages, all a consequence of the slump in the oil price for Africa’s top crude producer.

Non-performing loans are expected to jump to 12.5 percent of total loans this year, up from the central bank’s target level of 5 percent at the end of last year, as lenders suffer a hangover from an oil sector credit boom that ended abruptly in 2015, according to Agusto & Co, Nigeria’s main rating agency.