Banks’ borrowings from the apex bank, Central Bank of Nigeria's (CBN) Standing Lending Facility (SLF) has skyrocketed by 458.2 percent to N57.5 trillion in the first half of 2024 from N10.25 trillion in the corresponding period of 2023.

CBN's data disclosed that banks’ deposits in the central bank's Standing Deposit Facility (SDF) rose by 62 percent to N7.94 trillion during the same period from N2.99 trillion in the first half of 2023.

The SLF is used by banks to have access to liquidity for their operations, while the SDF is an overnight deposit facility that helps banks to lodge excess liquidity with the central bank and earn interest.

The development is coming at a time the CBN is tightening monetary policy and also when banks are executing their recapitalization programe.

Analysts have however projected more tactical positioning as banks give new information on their capital raise plans.

In their 2024 mid-year Economic Outlook for Nigeria, analysts at CardinalStone Research stated: “The announced banking sector recapitalisation plan is yet to birth mergers and acquisitions, which would have prompted a tactical dash to the shares of targets (possibly Tier 2 and Tier 3).

“For most banks, all the options suggested by the CBN remain under consideration, with FCMB open to selling some of its subsidiaries.

“With the timeline for completion of the program set in 2026, we still see legroom for inorganic corporate actions capable of driving investment upside in the space.

“In the interim, tactical plays have greeted the organic approaches to recapitalisation communicated by most banks, with Fidelity’s announcement of rights and public offer prices that are below the market close price on the announcement day driving bearish reaction while AccessCORP’s decision to fix its rights price at above market interpreted as some leading indicator of where the share price should be, leading to bullish reaction.

“We see legroom for more tactical positioning as banks provide new information on their raise plans.

“We also see latitude for Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI) inflows into the banking sector, given the limited depth of the domestic market and materially cheap valuations vs Europe Middle East and Africa (EMEA) and global peers.”