TheNewsGuru

Tag: CBN

CBN

  • BDC operators back CBN’s directive on non-export domiciliary accounts

    BDC operators back CBN’s directive on non-export domiciliary accounts

    The Association of Bureau De Change Operators of Nigeria (ABCON) has commended the Central Bank of Nigeria (CBN) for its recent directive to cease the use of non-oil export domiciliary accounts for Naira loans.

    Its president, Dr Aminu Gwadabe, in a statement on Thursday in Lagos, said the stoppage would add to dollar liquidity in the market and also help in the accretion of the nation’s buffers.

    Gwadabe expressed surprise that some companies and manufacturers with huge billions of dollar balances in their non-oil export domiciliary accounts sourced foreign exchange needs in the official window and used the same for Naira loans.

    “We therefore advise for the review of the guidelines on holding currencies on non-oil export accounts to a maximum of 48 hours, to borrow from the South African policy on the operations of non-oil exports domiciliary account proceeds.

    “The CBN should also not make applicants of huge billions of dollars holding on their non-export oil proceeds Dom accounts eligible for fx request at both the NAFEM and NAFEX window.

    “In the same vein, we urge the CBN to upgrade its policies and circulars to legislation regarding the impending BDCs new reforms.

    “This is to give comfort and guarantees to would be investors in the transformation of the BDC industry’s sub sector and allowing only the existing stakeholders the grand father’s right for merger and acquisition to meet the expected reviewed financial requirements as suggested by ABCON.

    “We also want to pledge our continuing support to the CBN’s proactive and effective policies to address our volatility headwinds,” Gwadabe said.

    He said that being a self-regulatory body, ABCON and its members had resolved to continually engage all stakeholders and players in the retail end market.

    The engagement, he noted, was to deepen, liberalise, democratise and centralise the retail end segments of the market for price discovery, market efficiency, transparency, accretion of buffers and healthy balance of payments.

    “We express our profound gratitude to the management of the CBN for its reconsideration and reinstatement of our sub sector as third leg of the market to counter hoarding and speculation with faster results than expected.

    “The BDCs, though unfortunately perceived sometimes as crude but effective, will always remain the potent transmission mechanism tool of achieving the apex bank’s mandate of price stability and liquidity in the market.

    “We therefore urge the CBN to continue to drive and expand its thought mechanism to maintain the feat so far achieved in more than 15 years; as we have not only achieved the convergence of both rates, but market calmness and confidence of the public and foreign investors.

    “We also call for the separation of the ownership and operational structure of FMDQ,” Gwadabe added.

  • Stop using forex as collateral for Naira loans, CBN warns bank customers

    Stop using forex as collateral for Naira loans, CBN warns bank customers

    The Central Bank of Nigeria (CBN) has warned bank customers to desist from using foreign currency as collateral for Naira loans.

    Acting Director, Banking Supervision Department of the CBN, Adetona Adedeji, gave the warning in a statement on Monday, in Abuja.

    Adedeji said that the current practice of using foreign currency-denominated collaterals for Naira loans would only be allowed in the case of Eurobonds issued by the Federal Government.

    He said that guarantees of foreign banks, including standby letters of credit would also be allowed

    “In this regard, all loans currently secured with dollar -denominated collaterals other than as mentioned above should be wound down within 90 days.

    “Failing which such exposures shall be risk-weighted 150 per cent for Capital Adequacy Ratio computation in addition to other regulatory sanctions,” he said.

  • CBN approves sales of $10,000 to 1,588 BDC operators

    CBN approves sales of $10,000 to 1,588 BDC operators

    The Central Bank of Nigeria (CBN) has approved the sales of 10,000 dollars to 1,588 eligible Bureau De Change operators at the rate of N1,101 to the dollar.

    The Director, Trade and Exchange Department of the CBN, W.J Kanya said this in a letter addressed to the President, Association of Bureau De Change Operators (ABCON) on Monday in Abuja.

    According to the letter, the BDC operators are expected to sell the dollars to eligible end users at a spread of not more than 1.5 per cent above the purchase price.

    It directed all eligible BDCs to effect payment of the Naira deposit at CBN Naira deposit account from Monday.

    “All BDCs are strongly advised to continue to abide by the rules and conditions as stipulated in our earlier circulars,’’ it said.

    The ABCON President, Aminu Gwadabe had over the weekend, appealed to the apex bank to lower its applicable exchange rate below the N1, 251 to the dollar it had pegged for BDCs.

    Gwadabe complained that N1, 251 to the dollar had become too expensive for the BDCs.

    His complaint came on the heels of development in the foreign exchange market where the parallel market rate of N1,235 to the dollar became lower than the official rate of N1,252 to the dollar.

    He said that the BDCs were recording losses.

  • UPDATED: Court remands Emefiele in EFCC custody, co-defendant in Ikoyi prison

    UPDATED: Court remands Emefiele in EFCC custody, co-defendant in Ikoyi prison

    Justice Rahman Oshodi of the Ikeja Special Offences Court on Monday remanded the embattled former Central Bank of Nigeria (CBN) Governor, Mr Godwin Emefiele, for alleged abuse of office and $4.5 billion, N2.8 billion fraud

    Oshodi remanded Emefiele in the EFCC custody  while his co-defendant, Henry Isioma-Omoile, was remanded in Ikoyi Custodial Centre where he is currently held pending the determination of their bail application on April 11.

    The defendants counsel, Mr A. Labi-Lawal, had in his two bail application urged the court to grant the defendants bail on self recognition and on liberal terms pending the determination on the case.

    Labi-Lawal, in his 31 affidavits, said the first  defendant (Emefiele) had complied with the bail application which was given to him by Justice Muazu in his alleged fraud trial case going on in Abuja.

    He said the charges were bailable offences and not a capital offence.

    “Though the first defendant was granted administrative bail by the prosecuting authority.

    “He is seeking for bail based on self recognition and he is ready to attend the court.

    “The court should also take into consideration, the status of the first defendant as he was the former CBN governor of the country,” he said.

    The defence counsel said his client  had religiously presented himself before Justice Muazu in Abuja to answer the allegations before him.

    According to him, the first defendant was not at flight risk, as he was the first person to arrive in court.

    He also prayed the court to release Emefiele to lawyer, pending the determination of the bail.

    Emefiele and his co-defendant pleaded not guilty to the 26-count charge bordering on abuse of office, accepting gratification, accepting gifts through agents, corruption, and fraudulent property receipt.

    The defendants, however, pleaded not guilty, following their arraignment.

    The EFCC counsel, Mr Rotimi Oyedepo (SAN), did not oppose the bail application moved by the defence counsel.

    Oyedepo, however, urged the court to exercise its discretion judiciously in granting bail to the  defendants.

    The prosecution had asked the court for a trial date, following the plea of the defendants.

  • Tinubu reacts as CBN investigator, Jim Obazee concludes job

    Tinubu reacts as CBN investigator, Jim Obazee concludes job

    President Bola Ahmed Tinubu has lauded Mr Jim Obazee for his services as the Special Investigator of the Central Bank of Nigeria (CBN) and other related entities.

    The President commended Obazee, a former Chief Executive Officer of the Financial Reporting Council of Nigeria (FRC), for successfully concluding his assignment

    In a statement by Presidential spokesman Ajuri Ngelale on Friday in Abuja, Tinubu commended Obazee for the dedication and professionalism he exercised “in handling the complexities of this critical national assignment”.

    The President said the investigations had been formally closed and all appropriate law enforcement and regulatory agencies were already conducting follow-up actions.

    He added that with the submission of a final comprehensive report and the winding up of all apparatus used during the scope of the task the assignment terminated on March 31.

    The President thanked Obazee for answering the call to duty and wished him success in his future endeavours.

  • BREAKING! Eight months after, Obazee concludes audit on Emefiele’s CBN

    BREAKING! Eight months after, Obazee concludes audit on Emefiele’s CBN

    Eight months after ,Jim Obazee concludes audit work on Godwin Emefiele’s Central Bank of Nigeria, CBN

    President Bola Ahmed Tinubu has officially closed Jim Obazee’s investigation into operations of the Central Bank of Nigeria, CBN.

    Tinubu appointed Obazee as a special investigator to probe the CBN and other related entities.

    His appointment was contained in a letter dated July 28, 2023.

    Tinubu, on Friday, expressed gratitude to Obazee, who is also a former Chief Executive Officer of the Financial Reporting Council of Nigeria, FRC, for serving as the Special Investigator of the CBN and other associated institutions after his appointment on July 28, 2023.

    The President appreciated Obazee’s commitment and expertise in managing the intricacies of this vital national task.

    After completing the assignment and submitting a final detailed report, and wrapping up all equipment used within the project that ended on March 31, 2024, the investigation is officially closed.

    All relevant law enforcement and regulatory agencies are currently pursuing further action.

  • CBN told to ensure smooth recapitalisation process for banks

    CBN told to ensure smooth recapitalisation process for banks

    The Centre for the Promotion of Private Enterprise (CPPE) has advised the Central Bank of Nigeria (CBN) to minimise shocks and disruptions in the banking system and economy during the recapitalisation period.

    Dr Muda Yusuf, Founder, CPPE made the call on Monday in a statement in Lagos.

    CBN had on Thursday raised minimum capital requirement for commercial banks with regional, national and international licences to ₦50 billion, ₦200 billion and ₦500 billion respectively.

    CBN also raised the capital base of merchant banks with national licences to ₦50 billion while it increased that of non-interest banks with regional licences to ₦10 billion and ₦20 billion for those with national licences.

    Yusuf commended the CBN for giving a timeline of 24 months deadline to ensure smooth transition to the new capitalisation regime for banks.

    “The proposed recapitalisation of banks should be done in a manner that would minimize shocks and disruptions to the banking system and the economy at large.

    “We commend the CBN for giving a timeline of 24 months for banks to comply,” he said.

    He commended the CBN on the categorisation of the lenders with differential capital requirements to allow for inclusion and reduce the risk of dominance of the banking space by a few big banks.

    The CPPE boss urged the CBN to assure depositors of the safety of their funds in the banking system, irrespective of the current level of capitalisations of banks.

    According to him, it is important to sustain the confidence of the banking public about the soundness and stability of the Nigerian banking system, especially because of the perception and vulnerable risks of smaller banks.

    He also urged the apex bank to ensure minimum risk to shareholders and employees in the banking system across board.

    “It is also imperative to guide against elevated concentration risks and the deepening of oligopolistic structure in the banking system. There are also concerns around the large interest rate spreads in the Nigeria banking system.

    “Spread between deposits and lending rates are sometimes as high as 20 per cent, which is one of the highest globally. The tenure of funds in the banking system is extremely short.

    “Over 80 per cent of funds are of one year tenure or less, which explains the high level of assets and liability tenure mismatch in the banking system. Access to credit by small businesses remains a major inhibition to economic growth and economic inclusion.

    “Small businesses account for over 50 per cent of GDP, but get less than five per cent of credit in the banking system. Financing gap in the Nigeria SME space is about $32.2 billion (over N40 trillion), according to IFC estimates.

    “De-risking the credit space for small businesses should be accorded high priority in the new dispensation. This is essential to boost growth, create jobs and deepen economic inclusion.

    “The apex bank should caution all players in the banking sector against predatory and other anti-competitive practices in the industry on account of the recapitalisation policy,” he added.

    The CPPE boss who is an economist explained the implications of the capitalisation aimed at ensuring efficiency and stability of the financial system.

    According to Yusuf, the real issue is that inflation had weakened the value of money overtime which makes recapitalisation imperative and inevitable.

    “The essence is to ensure the safety of depositors’ fund, strengthen the stability of the financial system, deepen resilience of the banking system and reposition the bank to support growth,” Yusuf said.

    Accorsing to him, Nigerian banks are sound and healthy but that does not eliminate the need for regulatory authority to ensure that the soundness and stability are preserved and improved upon.

  • Another round of bank recapitalization – By Etim Etim

    Another round of bank recapitalization – By Etim Etim

    By ETIM ETIM

    Another round of bank recapitalization is here and for the next two years between April 1, 2024 and March 31, 2026, the nation’s 25 commercial and six merchant banks are expected to shore up their minimum share capital by as much as 100 per cent, in some categories. The CBN said all international banks should move their capital to a minimum of N500 billion; national banks up to a minimum of N200 billion; regional banks (N50 billion); merchant banks (N50 billion) and N20 billion for non-interest banks operating nationally and N10 billion for those operating regionally. To achieve this, the banks will adopt one or a combination of these three options: inject fresh equity capital through private placement, rights issue and/or offer for subscription; mergers and acquisition and/or upgrade or downgrade of license of authorization (meaning downgrade from international bank to national or regional or reverse). I can bet that the last option would be the least popular.

    This wave of recapitalization is a bit different from that of Charles Soludo implemented between July 2004 and December 31, 2005 in which all the banks were all forced to recapitalize to a minimum of N25 billion. It shrunk the industry from 89 to 24 banks. This time, the banks have different capital requirements, depending on their type of license. Other key differences between the two programs are: (i). Soludo’s came with a huge surprise as the operators had no inkling of the announcement before it was made, but Yemi Cardoso had in November given a hint of the review, thus preparing the banks for the Thursday announcement; (ii) Shareholders’ funds were included as part of the N25 billion share capital in the 2004, but excluded in the current review, indicating that retained earnings will not be counted as part of their share capital this time (iii) Soludo gave a shorter timeframe of 18 months, unlike Cardoso’s 24-month deadline.

    I was in the thick of the flurry of activities 20 years ago, going on roadshows across the country with colleagues to help raise money for the bank I was working for. It was fun and exciting.  Eventually, the bank merged with four others to form a brand-new institution known as Sterling Bank. This time around, I would be watching the drama from outside, having retired11 years ago. But I still take a lot of interest in the industry. I am particularly gratified to see Nigerian-owned banks spreading across Africa, helping businesses and households meet their financial needs. When Prof. Soludo announced the 2004 recapitalization program, there were just a handful subsidiaries of Nigerian-owned banks in other African countries, while only First Bank (London), Union Bank (London) and UBA (New York) had a presence outside the continent. The growth is emblematic of our preeminence in the continent. I believe in Nigeria and what our private-sector people can do.

    There will be very few or no mergers and acquisition this time because, as a CEO told me, ‘’we don’t have many candidates for that this time around’’. But watching from outside, I expect that Polaris, Union and Unity will receive a lot of overtures for mergers. The CBN has asked the banks to file their implementation plan, clearly indicating the preferred options for meeting the new capital requirements and the various activities and their timelines before end of April. Among the top five, Access Holdings, the parent company of Access Bank, appears the most prepared for this recapitalization, in spite of the recent devastating death of its CEO, Herbert Wigwe. Last Thursday – the day the CBN announced the new capital review – Access Holdings unveiled plans to raise $1.5 billion through issuance of various financial instruments such as ordinary shares, preference shares and others. It will also raise N365 billion through Rights Issue of Ordinary shares, the proceeds of which would combine with its existing N250 billion paid-up capital, to exceed the new regulatory limit.

    Access Holdings’ shareholders will meet in Lagos on Friday, April 19 to consider and approve these plans. In addition, they would also be asked to formally approve the appointment of Aigboje Aig-Imoukhuede, who was named chairman of the Board two weeks ago, as its non-executive director. Other lenders would be equally busy, Zenith most of all. While others would be engrossed in capital raising only, Zenith will combine that with transiting into a holding company structure – a task other comparator banks had completed over two years ago. It is going to be a herculean task juggling the two. The other three Tier One banks (GT, UBA and First Bank) are yet to announce their recapitalization plans and date for Annual General Meetings, but it is clear from their current position that they too would be going for upwards of N250 billion each in additional capital.  The capital market and institutional investors would be quite busy, but with inflation at over 30 per cent and disposal income severely depressed, ordinary Nigerians would be shut out completely.

    Leaning on its 2004 experience, the CBN expects that a highly capitalised banking industry should be in a position to not only withstand the prevailing macroeconomic challenges and headwinds, but also to enhance its resilience, solvency and ‘’capacity to continue to support the growth of the Nigerian economy’’.

  • CBN raises bank’s capital requirement to N200bn

    CBN raises bank’s capital requirement to N200bn

    The Central Bank of Nigeria (CBN), has increased the minimum capital requirement for Deposit Money Banks (DMBs) with national licences from N25 billion to N200 billion.

    The apex bank also increased capital requirement for banks with regional licences from N15 billion to N50 billion , and those with international licences from N100 billion to N500 billion.

    According to a statement issued by the Acting Director, Corporate Communications Department of the bank, Mrs Hakama Sidi-Ali, the new minimum capital for merchant banks will be N50 billion.

    Sidi-Ali also announced that the new requirements for non-interest banks with national and regional authorisations are N20 billion and N10 billion.

    The move is coming days after the Monetary Policy Committee (MPC) meeting.

    The CBN Governor, Yemi Cardoso had in the meeting , urged Nigerian banks to expedite action on the recapitalisation of their capital base in order to strengthen the financial system.

    Meanwhile, a circular signed by the Director, Financial Policy and Regulation Department, Mr Haruna Mustafa, said that all banks were required to meet the new minimum capital requirement within 24 months commencing from April 1 and terminating on March 31, 2026.

    According to Mustafa, the move is to enhance banks’ resilience, solvency, and capacity to continue supporting the growth of the Nigerian economy.

    Mustafa urged banks to consider injecting fresh equity capital through private placements, rights issues and offers for subscription to meet the new minimum capital requirements.

    He also suggested Mergers and Acquisitions (M&As); and upgrade or downgrade of licence authorisation.

    He said that the minimum capital shall comprise paid-up capital and share premium only.

    “The new capital requirement shall not be based on the shareholders’ fund.

    “Additional Tier 1 (AT1) Capital shall not be eligible for meeting the new requirement.

    ” Notwithstanding the capital increase, banks are to ensure strict compliance with the minimum capital adequacy ratio (CAR) requirement applicable to their licence authorisation.

    “In line with extant regulations, banks that breach the CAR requirement shall be required to inject fresh capital to regularise their position,” Mustafa said.

    He said that the minimum capital requirement for proposed banks shall be paid-up capital, adding that the new minimum capital requirement shall apply to all new applications for banking licences submitted after April 1.

    “The CBN will continue to process all pending applications for banking licences for which a capital deposit had been made and an Approval-in-Principle (AIP) had been granted.

    “However, the promoters of such proposed banks will make up the difference between the capital deposited with the CBN and the new capital requirement not later than March 31, 2026.,” he said

    He said that all banks were required to submit an implementation plan, clearly indicating the chosen options for meeting the new capital requirement and various activities involved with their timelines, nor later than April 30.

    He said that the CBN would monitor and ensure compliance with the new requirements within the specified time line.

  • MPC: Continuous increasing of MPR will not grow Nigeria’s economy – Ex-CBN director

    MPC: Continuous increasing of MPR will not grow Nigeria’s economy – Ex-CBN director

    Former Director of Research, Central Bank of Nigeria (CBN), Dr Titus Okunrounmu, says the continuous increasing of Monetary Policy Rate (MPR) by the bank’s Monetary Policy Committee (MPC) will not help the economy to grow.

    Okunrounmu said this to NAN on Wednesday in Ota.

    He spoke while reacting to CBN Gov. Olayemi Cardoso’s announcement of the increase of MPR from 22.75 per cent to 24.75 after its two-day Monetary  Policy Committee (MPC) Meeting on Tuesday in Abuja.

    MPR is a short-term, often overnight rate that banks charge one another to borrow funds.

    Cardoso had announced the rise in a communiqué he read on the 294th meeting of the MPC.

    Cardoso had also on Tuesday in Abuja, announced that the MPC adjusted the Asymmetric Corridor to +100/-300 basis points around the MPR and retained Cash Reserve Ratio at 45 per cent.

    The former CBN director said the MPC of the apex bank was looking at data available to make key decisions but it was not making the economy to grow because no one would be willing to borrow at higher interest rate.

    “The continuous raising of MPC is not helping the economy because everybody is crying and who wants to borrow at 25 per cent.

    “That is the question we should ask ourselves, apart from looking at the data, as lowering the rate would have helped the economy to grow.”

    He appealed to the Federal Government to  effectively use the funds borrowed from the CBN on capital projects as they were also borrowing at a higher interest rate.

    The former CBN director appealed to the government to redouble its efforts towards looking for alternative source  of generating power supply in the country.

    He said that with stable power supply, productive sector would be able to produce sufficient goods for both local consumption and for exported purpose.

    He said  this would in turn generate foreign exchange for the country and reduce pressure on currency.

    Okunrounmu said it would also drastically bring down inflation rate and stabilise the foreign exchange.