Banks’ excess cash at CBN hits N6.08tn

Banks sharply increased the cash they placed with the Central Bank of Nigeria between 13 and 16 October 2026. Their net deposits at the Standing Deposit Facility rose from about N3.86tn to N6.08tn. This matters because it shows that much of the newly available banking liquidity remained at the CBN rather than moving into lending or other short-term investments.

The largest change came on 14 October, when deposits reached N6.065tn. They slipped slightly to N6.044tn on 15 October, then rose to N6.083tn on 16 October. The increase followed the CBN’s repayment of N2.408tn in matured Open Market Operations securities on 13 October.

Banks therefore held more than N6tn at the CBN for three consecutive days. The figures suggest that surplus cash was substantial, but they do not prove that every naira repaid through the OMO transaction entered the SDF.

Banks placed more than N6tn with the CBN’s Standing Deposit Facility during the period. Their deposits rose from about N3.86tn on 13 October to N6.08tn on 16 October 2026. The increase was N2.22tn, equal to 57.65 per cent. This scale shows that a very large amount of banking liquidity was temporarily parked with the central bank.

The move happened after the CBN repaid N2.408tn in matured OMO securities on 13 October. Deposits reached N6.065tn on 14 October, dipped to N6.044tn on 15 October, and climbed to N6.083tn on 16 October. No new OMO sales were recorded during those four days.

The increase was slightly smaller than the OMO repayment, so the figures do not establish a direct one-for-one link. Still, the timing suggests that the repayment coincided with a substantial rise in banks’ excess deposits at the CBN.

The Standing Deposit Facility, or SDF, is a CBN facility where banks deposit excess cash and earn interest. It gives banks a place to hold surplus funds while also helping the central bank manage the amount of money circulating through the banking system. In this episode, high SDF deposits signalled that banks had considerable cash available.

For example, banks’ deposits rose from about N3.86tn on 13 October to N6.08tn on 16 October. The rise followed the CBN’s repayment of N2.408tn in matured OMO securities. Rather than shifting all that liquidity into customer loans or other short-term investments, banks placed much of it with the CBN.

Using the SDF can provide a return and a secure temporary home for cash. The data do not prove every repaid naira went into the facility. They do show that banks kept more than N6tn there for three straight days, while reporting no borrowing through the Standing Lending Facility.

Open Market Operations securities are instruments used in transactions between the CBN and banks. When the CBN repaid N2.408tn in matured OMO securities, it returned money previously tied up in those instruments. Because no new OMO sales were recorded during the four-day period, the repayment was not offset by another OMO withdrawal of cash.

The effect appeared in banks’ balances at the SDF. Deposits rose from about N3.86tn on 13 October to N6.065tn on 14 October, then reached N6.083tn on 16 October. The article links the timing of the repayment with the increase, but does not show that every naira returned was placed in the SDF.

Primary-market securities absorbed N159.10bn net after sales and repayments. Combining that absorption with the OMO repayment produced a net liquidity release of about N2.25tn. The released funds could therefore remain as bank liquidity, including deposits at the CBN.

Treasury bill sales absorb liquidity when investors pay for government securities. During this period, however, the auction removed only a small portion of the money released by the CBN’s OMO repayment. The limited absorption mattered because the CBN had returned N2.408tn and recorded no new OMO sales.

Investors submitted bids worth about N1.032tn at the Treasury bill auction held on 14 October. The Debt Management Office accepted only N269.06bn, which was allotted on 15 October. Roughly 74 per cent of subscriptions were rejected. Government repayments of N109.96bn also occurred during the four days.

After counting the sales and repayments, net liquidity absorption through primary-market securities was only N159.10bn. That was much smaller than the OMO repayment. As a result, T-bill sales did little to offset the cash release, helping explain why SDF deposits rose above N6tn.

The combination points to banks having excess liquidity. They placed more than N6tn with the CBN through the Standing Deposit Facility, while reports showed no borrowing through the Standing Lending Facility. In simple terms, banks were depositing surplus funds rather than seeking short-term financing from the central bank.

The pattern followed the repayment of N2.408tn in matured OMO securities. SDF deposits rose from about N3.86tn on 13 October to N6.065tn on 14 October, then remained above N6tn through 16 October. At the same time, opening balances moved only modestly, from N195.08bn to N234.89bn before falling to N198.32bn.

This suggests banks had cash available beyond their immediate funding needs. It does not show exactly how every bank used the released money, or why each bank chose the SDF. It does show no reported sign of pressure for CBN borrowing during those four days.

Central banks manage money in the banking system through several linked tools. Securities sales take cash from banks or investors, while repayments of maturing securities return cash. Deposit facilities give banks a place to park excess funds, and lending facilities let banks obtain short-term funds when their cash is insufficient.

The Nigerian example shows the mechanism. The CBN repaid N2.408tn in matured OMO securities and recorded no new OMO sales. Primary-market securities absorbed only N159.10bn net, so the combined transactions released about N2.25tn. Banks then placed more than N6tn in the SDF, while none borrowed through the SLF.

These tools influence whether liquidity remains with the central bank, moves into securities, or supports other banking activity. In this case, high SDF deposits indicated surplus cash after the release. The data do not establish how much reached lending or other investments, so the broader economic effect cannot be measured from these figures alone.