Forex Sanctions: Bank CEOs Meet In Lagos Today

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CBN readmits UBA to FX market
  • Banks speak on penalty, NNPC funds
  • Naira hits 402 per dollar

The Chief Executive Officers (CEOs) of banks will today meet in Lagos over sanctions imposed on nine lenders for failing to remit money owed to the Federal Government, New Telegraph has learnt.

Also, the Central Bank of Nigeria (CBN) will not be part of the meeting.This is contrary to reports that the bank CEOs met officials of the apex bank yesterday over sanctions imposed on nine lenders.

A source familiar with the issue told New Telegraph last night that the meeting, which will take place at the Chartered Institute of Bankers of Nigeria (CIBN’s) office in Lagos today, would also have bank treasurers in attendance.

The apex bank suspended two Tier 1 banks and 7 Tier 2 lenders last Tuesday for not remitting government dollars from the national treasury, following the crisis in Nigeria’s foreign exchange market where the CBN is said to be holding over $3 billion Letters of Credit from the lenders.

The banking watchdog alleged that the banks had failed to remit $2.1 billion, which was the government’s share of dividends from the state-owned gas company, Nigeria Liquefied Natural Gas Limited (NLNG).

The banks had earlier, at a meeting with the CBN last March, worked out a monthly remittance, which they had been complying with until last June when the dollar started drying up at the forex market, making them unable to honour their obligations with the apex bank.

Last year, President Muhammadu Buhari ordered a full implementation of the TSA, directing all Ministries, Departments and Agencies’ (MDAs) accounts merged into that single account in a bid to reduce corruption.

The CBN tightened restrictions on the flow of dollars to domestic lenders in March, forcing the banks to delay hard-currency loan and trade repayments and increasing their risk of default. The apex bank has readmitted UBA into the forex market.

The bank made the disclosure yesterday. “We are pleased to inform our valued customers, stakeholders and business partners as well as the general public that the CBN has re-admitted us into the Foreign Exchange Market following our remittance of all NNPC/NLNG dollar deposits.

“UBA wishes to thank you all for your continued support and patronage,” Charles Aigbe, the Divisional Head, Marketing and Corporate Relations, stated in a statement. However, most of the nine banks have denied that they withheld any government funds.

In its reaction, Keystone Bank Limited said, “We wish to assure you that Keystone has always made full disclosure of outstanding TSA Funds and had, at various times, diligently engaged the CBN and relevant stakeholders for resolutions to enable the bank fulfill the TSA obligations in the face of challenging market conditions.”

Keystone Bank, in a statement signed by the management, said it had engaged in efforts that were geared towards very timely resolution. “We wish to assure you that Keystone has always made full disclosure of outstanding TSA Funds and had, at various times, diligently engaged the CBN and relevant stakeholders for resolutions to enable the bank fulfill the TSA obligations in the face of challenging market conditions,” Keystone Bank stated.

It said the bank understood the importance of sourcing foreign exchange for its customers’ needs to support economic growth. The bank said that the development did not adversely affect customers’ existing transactions with it except that there would be constraints in establishing new letters of credit until the issue was resolved.

Also, Sterling Bank denied media reports of concealed funds belonging to any government agency with the bank. According to the statement, “The Bank unequivocally rejects the suggestion that it failed or neglected to disclose at any time, any sum held on behalf of its clients to the regulatory authorities as such balances were fully captured in the relevant regulatory returns.

“In actual fact, the bank affirms that it went beyond this basic requirement of disclosure and reporting to holding several meetings with the parties involved.” It, however, stressed that it was working with the said client and the banking regulator to resolve the situation in the shortest possible time.

Heritage Bank said that the CBN’s announcement of temporary suspension was a systemic challenge to the banking industry that cut across most banks. It said that the bank would continue to treat forex transfer, remittance from domiciliary accounts, establishment of non-valid for FX form Ms and establishment of Letter of Credit (LoC) on the bank’s offshore lines.

Similarly, another lender, First Bank, in a statement, said that the referenced NNPC dollar accounts were fully disclosed to the CBN. It said that accounts were being operated in line with the regulatory requirements.

The bank also said that tripartite documented discussions had been ongoing between the CBN, NNPC and the bank on the need for domestic retention of those balances.

It said that was as part of measures to ameliorate challenges posed by the lack of FX availability, and customers’ inability to source FX to fund their trade finance obligations to the bank.

The bank reassured its stakeholders that the issue was not a function of concealment or willful non compliance by the bank. “We are confident in our ability to meet and honour all our obligations as and when due and are currently in talks with the CBN and other relevant bodies and are positive of an amicable resolution soonest,” said the bank.

Also, Fidelity Bank said it had repaid over $288 million of those funds in line with the advised repayment schedule.“We will like to clarify that these deposits were duly reported to the CBN by Fidelity Bank in line with the extant TSA requirements contrary to the erroneous view in certain media reports that the funds were concealed from the regulators.

“At the commencement of the Treasury Single Account (TSA) in 2015, Fidelity bank advised NNPC and the regulators with a schedule of repayment for the NNPC/NLNG dividend dollar deposits.

“…Although the market condition remains quite challenging, we will continue to honour our obligations and operate with the highest level of corporate governance,” the bank said. The bank said in the interim that it was engaging with the other eight banks involved, stakeholders and the regulators to resolve the issue quickly and ensure its return to the FX market.

In its reaction, FCMB said it was working with the apex bank to resolve the issue, which was function of illiquidity in the currency markets and the weak economy rather than willful non-compliance. Financial analysts have expressed concern that the CBN’s action could create panic in the industry, scaring investors and leading to a run on banks. The CBN had, on Tuesday, barred the banks from the foreign exchange market.

The banks were the United Bank for Africa (UBA), $530 million and First Bank of Nigeria (FBN), $469 million. Others are Diamond Bank Plc., $287 million; Sterling Bank Plc, $269 million; Sky Bank Plc., $221 million; Fidelity Bank $209 million; Keystone Bank, $139 million; FCMB, $125 million and Heritage Bank, $85 million.

Meanwhile, investors yesterday dumped bank shares, while traders said the naira sank to a record low of N402 per dollar on the parallel market. The Nigerian currency exchanged at about N400 on yesterday afternoon, from N397 it closed on Tuesday; while it traded against the Pound Sterling and the Euro at N515 and N450 respectively.

At the Bureau de Change (BDC) segment of the market, the naira traded at N397, N513 and N443 against the dollar, Pound Sterling and the Euro respectively. At the interbank segment of the market, the naira appreciated against the dollar as it closed at N315.93 from N335.25 posted on Tuesday. Traders at the market said that the ban of nine banks from the sale of Forex by the CBN was already deepening the scarcity of Forex at the market.

A financial expert, Mr. Harrison Owoh, expressed the hope that the situation would improve as the CBN was handling the matter with all the seriousness it deserved. Owoh explained that the news of the ban of nine banks from Forex sales had stifled the flow of Forex at the market.


– New Telegraph

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1 Comment on Forex Sanctions: Bank CEOs Meet In Lagos Today

  1. I wonder what the meeting would change.. They should put head together and go and pay their debts so that our country will move forward

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