Whilst this may depress savings in an economy, it may also improve its resilience to shocks, as the interest rate on mortgage-backed loans is normally lower than for other forms of consumer credit. Another issue that may be acting toward increasing the risks in the economy is the propensity of market participants to take on risks which they do not fully understand.
Consequently, all the banks are undercapitalized for their current levels of operations and are required to increase their provisions for loan losses, which impacted negatively on their capital. Indeed one is technically insolvent with a Capital Adequacy Ratio of (1.01%). Thus, a minimum capital injection of N204,94 billion will be required in the 5 banks to meet the minimum capital adequacy ratio of 10%.