By Babajide Komolafe
This was one of the highlights of the Depository Corporation survey for February 2017 recently published by the Central Bank of Nigeria (CBN). Among other things, the survey revealed that total demand (current account) deposit of banks fell by 10.75 per cent to N8.6 trillion in February from N9.636 trillion in January. Similarly, currency outside the banks declined month-on-month (m-o-m) by 1.16 per cent to N1.61 trillion. Consequently, Narrow money supply declined m-o-m by 9.36 per cent (and 11.35 per cent year-to-date, y-t -d) to N10.21 trillion.
According to the report, broad money supply, M2, moderated month-on-month by 4.34 per cent to N22.37 trillion following a 0.46 per cent increase in Net Domestic Assets (NDA) to N13.82 trillion and an 11.21 per cent decline in Net Foreign Assets (NFA) to N8.55 trillion. The increase in NDA followed a 0.54 per cent m-o-m increase in Net domestic credit to N26.77 trillion which more than offset a 0.62 per cent increase in other liabilities (net) to N12.95 trillion.
Continue reading Banks lose N1trn current account deposits in February
According to a tweet from the CBN, and a statement from its spokesperson Isaac Okorafor, the CBN will sell forex to banks at N357/$1, while banks will sell to their customers at N360/$1 for invisibles (BTA, medicals, fees, etc).
All customers requesting forex for their personal and business travel allowances (PTA and BTA), tuition and medical fees, should buy at a rate not more than N360 to the dollar. “Banks are to post the new rates in their banking halls of their branches immediately,” he said.
This rate change only affects invisible transactions for retail users. The interbank rate, which trades at a band around the N307/$ mark still remains, however.
As a form of monitoring, Okorafor also mentioned that examiners will be sent out to ensure compliance and erring banks will be punished. This is coming on the back of complaints by Bureau de Change operators about the large profit margins that commercial banks are afforded by accessing FX at CBN rates.
This move by the CBN is expected to further push down the rates in the parallel market – where the exchange rate closed at about N390/$1 last week – especially if the CBN can maintain its interventions. This leads towards the exchange rate unification that Governor Emefiele hinted at in recent weeks. As at 20th February, the Naira was selling at about N522/$1 in the parallel market but has risen 38% within a month after the CBN pumped nearly $2.5 billion into the market.
A recent article from Thisday has revealed the major roles three Federal Government agencies played in the current financial troubled waters Skye Bank finds itself in.
The article written by Ijeoma Nworgugu explains in details how several bad decisions by the now resigned Board and Management team led to a major loss of value for a bank in one of the most remarkable financial stories of 2016.
The article blames the controversial role of the BPE, AMCON and CBN inadvertently played in the erosion of capital that is now likely to shareholders of Skye Bank their investments. Here is an excerpt
Continue reading A Tale Of How AMCON, CBN Helped Skye Bank Get Into Financial Trouble
The new board and management of Skye Bank Plc have been saddled with a huge task of turning the bank around following Central Bank’s revelation that the bank had failed to meet requirements of its regulatory prudential ratios.
The task is daunting considering how difficult it has been for the bank to raise money in the past two years. Things are however about to get even harder.
Ratings Agency, Standards & Poors has released its first rating report on Skye Bank since the CBN midwifed a board and management change at the bank. S&P downgraded the bank to ‘CCC-‘ from ‘CCC+’ citing an inherent risk of a default. Here is an excerpt of the report;
Continue reading From Bad To Worse: S&P Says Skye Bank Could “Default” In 6 Months
As the Central Bank of Nigeria (CBN) continues with its demand management policy in foreign exchange (forex) allocation to financial institutions, the returns on foreign exchange utilisation have shown that it sold a total of $2,177,999,996 to commercial and merchant banks as well as the Bank of Industry (BoI) between March 1st and May 31st 2016.
A breakdown of the weekly returns on forex utilisation compiled by THISDAY showed that while in March 2016, the banking sector regulator sold a total of $921,352,549 to banks, and $669,405,241 in April, the financial institutions were allocated a total of $587,242,206 in May. The report however showed a gradual decline in the monthly forex sale by the central bank.
Continue reading CBN sells $2.188bn to banks in three months
Nigeria’s Minister for Finance Kemi Adeosun was in London on Tuesday to pitch Nigeria’s plan to borrow money from foreign bond investors. We had opined here that she could use this medium to reveal what was in the offing as per the new “flexible exchange rate” policy.
As expected she spoke to investors and provided an update on the policy. According to Bloomberg, two analysts who were present at the meeting revealed that “Nigerian officials said they are still working out the details of a new currency policy and may make an announcement within the next month”.
To be more specific about how long this could take, one of the investors Kevin Daly, a money manager at Aberdeen Asset Management Plc, informed Bloomberg that it could be ”days or weeks,” . He also revealed that Nigerian authorities said they’re ”having discussions, including with local banks,” Daly said by phone from London.
Continue reading What Adeosun Told Bond Investors In London About The Flexible Exchange Rate Policy
Following massive impairments that have prompted several banks to issue profit warnings and the general downturn in the Nigerian economy, the FSDH Merchant Bank Limited (FMBL) has warned that 2016 will be a very challenging year for banking business in Nigeria.
The bank noted that the federal government’s pronouncement that it intended to run a fiscal deficit in excess of N2.2 trillion this year to revive the struggling economy to ensure a sustainable growth path remained one of the factors that would pose challenge to banks.
Speaking at the bank’s annual general meeting (AGM) held in Lagos, Chairman of FMBL, Osaro Isokpan, noted that the government’s expectation to raise funds in addition to the N900 billion it planned to borrow from the domestic market, has the implication of further toughening the banking environment.
Continue reading FSDH Foresees Difficult Year for Nigerian Banks | THISDAYLIVE
Shareholders of Wema Bank Plc have approved the bank’s bid to either acquire or merge with any financial/non-financial institution to expand its business. They also authorised the bank’s directors to raise additional capital in readiness to pursue the acquisition plan.
The shareholders gave the approval at the bank’s Annual General Meeting, AGM, in Lagos. Addressing shareholders at the meeting, the Chairman, Mr. Adeyinka Asekun, explained that the approval for the capital raising exercise would allow the bank to take advantage of any merger/acquisition opportunity that may arise in the course of the year. He explained that the bank would seek strategic partnerships with during the year, adding that it commenced relationship with key players in various business segments and the relationships are expected to add value to the bank in terms of brand equity and bottomline.
Continue reading Shareholders approve Wema Bank’s acquisition, merger bid – Vanguard News
Fidelity Bank Plc has disclosed that 80 per cent
of the net proceeds of the N30 billion bonds it
recently raised from the Nigerian Stock
Exchange (NSE) will be deployed to assist
export-oriented Micro-Small and Medium
Enterprises (MSMEs) in the country in order to
raise their level of competitiveness in the global
Continue reading Fidelity Bank to support export-oriented MSMEs
with N30bn bonds
Responding to questions, the governor said that
there were no plans to convert the $20 billion held
by Nigerians in domiciliary accounts.
“For the avoidance of doubt, the bank will continue
to allow domiciliary account holders unfettered
access to the funds in their accounts. I need to
seize this opportunity to explain that these funds
are not idle as have been wronged reported. Those
funds on the balance sheet are funding assets on
the other side of the balance sheet,” he said.
Continue reading No Plans To Convert $20Billion Dom Accounts to Naira- Emefiele- Vanguard.