Business
Banks awash with excess cash amidst poverty
•As banking system liquidity surges 17% to N5.5trn
By Elizabeth Adegbesan
Amidst prevalent poverty in the country, Nigeria’s financial sector experienced a major injection of cash as the average net liquidity in the banking system surged to N5.53 trillion in May 2026.
This represents a 17.16 per cent increase from the N4.72 trillion recorded previous month of April 2026.
According to the Central Bank of Nigeria, CBN, Monthly Economic Report for May 2026, the sharp rise in liquidity was driven largely by inflows from maturing CBN bills, bond coupons and disbursements by the Federation Account Allocation Committee (FAAC).
The financial environment was also shaped by Cash Reserve Ratio (CRR) maintenance and foreign exchange activities, helping to keep short-term interest rates stable.
To counteract the excess cash, CBN aggressively stepped up its Open Market Operations (OMO). The apex bank offered N3.6 trillion in CBN bills, but investor appetite went completely wild, hitting an extraordinary N14.4 trillion in subscriptions during the period.
The regulator ultimately allotted N12.54 trillion, with stop rates ranging between 19.97 and 21.90 per cent.
CBN noted: “The higher-than-expected subscription reflected liquidity surfeit and attractive returns.
“Overall, the liquidity operations of the Bank resulted in net withdrawal from the banking system.”
Simultaneously, the Federal Government successfully advanced its domestic financing programme via Nigerian Treasury Bills (NTBs) and Federal Government of Nigeria (FGN) bonds.
The report showed that NTB subscriptions reached N4.4 trillion in May 2026 against an initial offer of N1.35 trillion, with the 364-day tenor continuing to attract the bulk of investor interest.
The debt market showed similar resilience for longer-term instruments.
The government issued 10- and 20-year FGN bonds, drawing N0.80 trillion in subscriptions against a N0.60 trillion offer. Stop rates for these instruments tightly consolidated between 17.00 and 17.04 per cent.
CBN observed that the oversubscription of the bonds reflected attractive returns in government securities and sustained investor confidence.
