Banks withdraw N942bn from CBN facility as liquidity shifts

Nigerian banks withdrew N941.85 billion from the Central Bank of Nigeria’s Standing Deposit Facility in one day, pushing total placements below N4tn amid sharp swings in banking system liquidity.

Data from the apex bank showed that SDF deposits fell to N3.76 trillion on October 7, 2026, from N4.70 trillion the previous day.

The N942bn decline represents a 20 per cent drop in funds parked overnight with the CBN and the biggest one-day reduction since the end of September.

Banks had placed N4.86tn with the CBN on 5 October, before reducing the balance to N4.70tn a day later.

The latest withdrawal brings SDF placements to their lowest level since 30 September, when banks reduced deposits from N6.28tn to N4.55tn.

The SDF allows banks to place excess funds with the CBN overnight without collateral. It is also one of the monetary authority’s tools for managing liquidity in the banking system.

The latest movement in SDF balances comes weeks after the CBN’s Monetary Policy Committee reduced the Monetary Policy Rate by 350 basis points to 23 per cent.

The 22 September decision was the first major change in the benchmark rate in the latest policy cycle and was accompanied by the retention of key reserve requirements.

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The CRR for commercial banks remained at 45 per cent, while merchant banks continued to operate with a 16 per cent requirement.

The CBN also retained the 75 per cent CRR on non-Treasury Single Account public-sector deposits.

The MPC simultaneously adjusted the asymmetric corridor around the MPR to +50 basis points and -300 basis points.

The reduction in SDF placements indicates that banks are holding less money overnight with the apex bank than they did during the September liquidity build-up.

However, the CBN data does not indicate how the N941.85bn reduction was redeployed across the banking system.

The sharp daily movements suggest that liquidity conditions remain fluid, with banks adjusting their overnight positions in response to funding requirements, market opportunities and prevailing monetary-policy conditions.

The decline also comes as Nigeria’s financial markets enter the final quarter of 2026, with banks and investors responding to the lower policy rate and evolving liquidity conditions.