Banks Park N6.28tn With CBN as Liquidity Surplus Builds
Nigerian banks increased their placements with the Central Bank of Nigeria’s Standing Deposit Facility to N6.28 trillion on September 29, reflecting the significant amount of liquidity currently available within the banking system.
CBN financial-market data showed that banks’ deposits at the facility increased to approximately N6.278 trillion, up from N6.014 trillion recorded a day earlier.
The latest balance represents an increase of about N264 billion in one day and approximately N379 billion compared with the N5.899 trillion recorded on September 25.
The build-up in excess liquidity occurred as the CBN conducted another major Open Market Operations auction aimed at absorbing funds from the financial system.
The apex bank offered N2.5 trillion in fresh OMO securities on Tuesday, September 29.
The auction came on the same day that approximately N2.433 trillion in existing OMO instruments matured and became due for repayment.
The fresh offer was therefore only about N66.8 billion higher than the amount returning to investors.
The new OMO instruments comprised N500 billion in 147-day bills, N1 trillion in 182-day bills and another N1 trillion in 266-day bills.
The securities are scheduled to mature between February and June 2027, extending the CBN’s liquidity-management operations into the second quarter of next year.
The large Standing Deposit Facility balance indicates that banks currently have substantial funds available that they are not deploying immediately into loans or other assets.
The development is particularly notable because the CBN recently reduced its benchmark interest rate to 23%, its lowest level in 31 months.
The September rate cut was accompanied by a recalibration of the Standing Facilities Corridor as the central bank attempts to improve the transmission of monetary policy to actual market rates.
Demand for CBN securities has remained exceptionally strong.
Four OMO auctions conducted earlier in September generated approximately N20.58 trillion in bids against only N3.9 trillion offered, with the CBN eventually allotting about N12.823 trillion.
September’s subscription level was also higher than the N18.72 trillion recorded in August.
The CBN’s decision to broaden access to OMO securities to individuals, companies and non-bank financial institutions through deposit money banks has contributed to the wider investor base.
Despite the heavy demand, accepted rates on longer-tenor OMO instruments have declined. Rates fell from approximately 18.99% at the beginning of September to 17.29% at the September 24 auction.
The current liquidity conditions present both an opportunity and a policy challenge.
Large amounts of idle liquidity could eventually find their way into government securities, private-sector lending, equities or other financial assets. At the same time, excessive liquidity can create pressure on inflation or the foreign-exchange market if it moves rapidly into consumption or dollar assets.
The CBN is therefore attempting to balance monetary easing with liquidity management as it moves into the final quarter of 2026.
