Nigerian banks have increased the amount of cash parked with the Central Bank of Nigeria to N6.28tn, highlighting the high level of liquidity sitting within the banking system. This significant buildup in idle funds came as the CBN conducted another major Open Market Operations auction, offering N2.5tn in fresh securities. The auction comprised N500bn in 147-day bills, N1tn in 182-day bills, and N1tn in 266-day bills.
The latest figure of N6.278tn on 29 September, 2026, represents an increase of about N264bn in one day and approximately N379bn compared with the N5.899tn recorded on 25 September. The CBN's financial market data showed that banks' placements at the Standing Deposit Facility rose significantly over the short period. This development suggests that banks have enough funds available for placement with the central bank.
The fresh N2.5tn offer was slightly higher than the amount returning to investors, with a difference of about N66.8bn. The securities will mature between February and June 2027, with the 266-day instrument extending the CBN's liquidity management operations into the second quarter of next year. This move is part of the CBN's efforts to manage liquidity in the financial system.
According to financial analyst and economist, Nonso Iheoma, "The rising SDF balance suggests that banks have enough funds available for placement with the central bank, even as the CBN provides additional instruments for investors to deploy liquidity." The high SDF balance comes amid strong investor demand for CBN's OMO instruments.
Four OMO auctions conducted earlier in September generated approximately N20.58tn in bids against a combined offer of N3.9tn. The CBN allotted about N12.823tn from those auctions. This significant demand for OMO securities reflects the strong appetite for investment opportunities in the financial market.
Despite the strong demand, accepted rates on longer-tenor OMO instruments declined from about 18.99 per cent at the beginning of September to 17.29 per cent at the 24 September auction. This decline in rates may be attributed to the increased supply of securities and the widened access to OMO securities to individuals, companies, and non-bank financial institutions.
Over the same period, banks' opening balances fluctuated, reaching N131.82bn on 29 September from N277.74bn on 28 September. The CBN's liquidity management operations are crucial in maintaining stability in the financial system, and the recent developments in the banking sector reflect the ongoing efforts to manage liquidity effectively.
Key points
- Nigerian banks' deposits with the Central Bank of Nigeria rise to N6.28tn.
- The CBN conducts major Open Market Operations auctions to manage liquidity.
- Strong investor demand for CBN's OMO instruments reflects appetite for investment opportunities.
