The Central Bank of Nigeria has commenced a risk-based examination or management of loan portofios of Deposit Money Banks to check inherent risks in their operations, investigation has revealed.

Our correspondent gathered from a reliable source on Tuesday that the test, which was ongoing, was scheduled to hold for six weeks, and was in line with the bank’s risk-based supervision regime.

The source, who preferred not to be mentioned said, “The essence of the examination is basically to check the books and transactions of the banks. It is centred on their risk management. All the 15 banks will be examined and it is an on-site examination.”

Another senior official in one of the banks confirmed the development, saying some officials from the Banking Supervision Department of the CBN had arrived at his bank to check its books.

He, however, said the move was not to remove any bank managing director, adding, “This is not a stress test, it is different from what we saw a couple of years back. This is one of the many examinations the CBN runs on an annual basis.”

When contacted, the Director, Corporate Communications, CBN, Mr. Ugo Okoroafor, said the bank, in doing its job as a regulator, performed different kinds of tests on banks.

He said, “That is one of the jobs of the CBN; we do routine examinations on the banks on an annual basis. Some of the things our banking supervision department check are the balance sheets of the banks, risk management and corporate governance in the banks.

“We have also concluded our stress teat with the International Monetary Fund and the banks have been found to be sound. So, there is no problem with the banks; all the banks are healthy.”

The routine examination is conducted twice a year by the CBN in collaboration with the Nigeria Deposit Insurance Corporation.

Other types of tests include special or target exams, which are meant for specific purposes, and maiden examination, which is conducted six months after a new bank has been established.

The Governor, CBN, Mr. Lamido Sanusi, had said that the bank had abandoned its core responsibility of examining the banks with the consolidation of the banking sector from 2005 to 2009.

Sanusi said, “It is sad for me to admit that since consolidation in 2005, the CBN did not conduct a single routine examination of the 14 banks allocated to it under the sharing arrangement with NDIC.”

Source: Punch (written by Ademola Alawiye)