Nigerian commercial banks flooded the Central Bank of Nigeria with excess cash on Christmas Eve, depositing a massive N3.7 trillion into the apex bank’s Standing Deposit Facility. The surge, recorded on December 24, underscored one of the strongest liquidity build-ups seen in recent months.
Data from the CBN covering December 22 to 24 showed that banks sharply increased idle fund placements despite earlier liquidity mop-ups. The move came just two days after the central bank absorbed N1.7 trillion through Open Market Operations, signalling that cash levels in the system remain stubbornly high.
CBN records show that deposits in the Standing Deposit Facility jumped from N2.47 trillion on December 23 to N3.67 trillion on December 24. That represents an increase of about N1.2 trillion within a single day. Banks’ opening balances at the CBN also rose from N163 billion to N223 billion, reinforcing evidence of abundant liquidity heading into the festive period.
The development followed weeks of aggressive monetary operations. Since November, the CBN has raised over N11.2 trillion through OMO bills and repaid nearly the same amount, yet excess liquidity persists. On December 23 alone, the apex bank processed OMO repayments worth N1.14 trillion, part of a broader issuance and repayment cycle estimated at more than N22 trillion in eight weeks.
Analysts say the spike reflects a cautious banking sector. With tight monetary conditions and elevated risks, banks appear reluctant to expand lending and are instead parking funds in the SDF, which offers an overnight return of about 22.5 percent. OMO stop rates in recent auctions ranged between 19 and 22 percent, making the SDF an attractive and low-risk alternative.
Market watchers also note signs that the CBN is easing back from heavy short-term debt issuance. By relying more on the SDF to absorb liquidity, the central bank can tighten conditions without incurring additional interest costs, which reportedly approached N2 trillion during November and December auctions.
As 2025 draws to a close, economists expect liquidity management to remain in focus. Some anticipate renewed OMO activity in early 2026 as the CBN seeks to rein in inflation, stabilise foreign exchange markets and respond to government financing pressures.
The Christmas Eve deposit highlights a banking sector in wait-and-see mode and a monetary authority adjusting tactics as excess cash continues to test policy controls.
