Banks’ excess cash at CBN hits N6.08tn

Nigerian banks increased the funds they deposited with the Central Bank of Nigeria to more than N6tn after the apex bank repaid N2.41tn in matured Open Market Operations securities.

Data from the CBN’s daily banking system liquidity reports show that banks’ net placements at the Standing Deposit Facility rose from about N3.86tn on 13 October to N6.08tn on 16 October, 2026.

The increase of N2.22tn, or 57.65 per cent, came after the CBN repaid N2.408tn in OMO securities on 13 October. No new OMO sales were recorded during the four-day period.

The development suggests that banks placed much of the liquidity available to them with the CBN instead of moving the funds into other short-term investments or lending them to customers.

The SDF allows banks to deposit excess cash with the apex bank and earn interest. It is also one of the CBN’s tools for managing the amount of money circulating in the banking system.

Banks’ deposits at the CBN rose sharply on 14 October, reaching N6.065tn from about N3.86tn a day earlier.

The amount edged down to N6.044tn on 15 October before climbing to N6.083tn on 16 October, the highest level recorded during the four days.

This means banks maintained deposits above N6tn for three consecutive days after the initial increase.

The figures indicate that the release of funds through the OMO repayment coincided with a substantial rise in banks’ deposits at the CBN. However, the data do not establish that every naira repaid through the securities transaction was subsequently placed in the SDF.

Government securities sales absorbed only a small portion of the liquidity released during the period.

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The CBN recorded N269.06bn in primary market securities sales on 15 October, matching the amount allotted at the Treasury bill auction held on 14 October.

Investors had submitted bids worth about N1.032tn at the auction, but the Debt Management Office accepted only N269.06bn, rejecting roughly 74 per cent of subscriptions.

The government also recorded N109.96bn in primary-market repayments during the four days. After accounting for these transactions, net liquidity absorption through primary market securities stood at N159.10bn.

With OMO repayments at N2.408tn and no new OMO sales recorded, the combined transactions resulted in a net liquidity release of about N2.25tn.

The figures suggest that T-bill sales did little to offset the cash released through maturing OMO securities. Strong demand at the auction did not translate into an equivalent withdrawal of funds because most bids were not accepted.

Despite the substantial increase in SDF placements, banks’ opening balances changed only slightly during the period.

Opening balances rose from N195.08bn on 13 October to N234.89bn the following day, before falling to N198.32bn on 16 October.

The reports also showed no borrowing through the CBN’s Standing Lending Facility during the period. The facility allows banks to obtain short-term funds from the apex bank.

The combination of high SDF placements and no reported SLF borrowing indicates that banks were depositing surplus funds rather than seeking short-term financing from the CBN.