The Nation Newspaper

Category: Money

  • CBN confirms Dikko as Unity Bank’s chair

    The Central Bank of Nigeria has confirmed the appointment of Alhaji Lamis Dikko as the Chairman of the Board of Directors of Unity Bank Plc.

    The approval was contained in a letter from the apex bank dated April 22, 2014, signed by the Director of Banking Supervision, Mrs. Tokunbo Martins.

    The letter also conveyed the approval of Mr. Thomas Etuh as the pioneer vice chairman of the Bank. Collectively, Dikko and Etuh will be bringing in over 40 years of collective experience to the Board of Unity Bank plc.

    The Board of Directors of the Bank had on March 27, 2014 forwarded the names of Alhaji Dikko and Mr. Etuh to the CBN, following the resignation of the former chairman, Alhaji Numan Barau Danbatta, OON. While awaiting the approval, Mr. Etuh had been serving as interim chairman.

    Alhaji Dikko is a seasoned banker who has extensive banking experience and a strong background in the financial services sector. He was also an intricate part in the consolidation process that led to the establishment of the Bank in 2006 and will bring to bear his many years of experience and wide contacts to the current re-organization and rejuvenation of Unity Bank.

    Lamis Dikko holds a B.Sc. Economics from Queen Mary’s College, University of London. He is an alumnus of the Harvard Business School for Management Development. He is currently Chairman of Infrastructure Bank and a Director of Legacy Pensions among others. To take up his new appointment, he had to relinquish hisw position as a Director at Enterprise Bank.

    He worked in Habib Nigeria Bank Ltd for more than fourteen years where he rose to the position of General Manager. He then moved to Intercity Bank Plc (one of the legacy banks of Unity Bank Plc) where he rose to become the Managing Director in 2001 until it merged with 8 other banks to form Unity Bank in 2005. At Unity Bank, he was first, Executive Director, Credit Risk Management and then Group Executive Director, (Central) before he left the Bank in 2010.

    Mr. Etuh was in 2011 appointed a Non-Executive Director of the Bank. He is widely exposed to corporate business leadership. He studied Management, Banking and Public Administration at the Ahmadu Bello University, Zaria; Abubakar Tafawa Balewa University, Bauchi and the University of Jos respectively.

     

  • Banks get November deadline on data security standards

    The Central Bank of Nigeria (CBN) yesterday extended banks’ compliance with the Payment Card Industry Data Security Standard (PCI DSS) till November 30.

    The PCI DSS is a proprietary information security standard for organisations that handle cardholder information for the major debit, credit, prepaid, e-purse, Automated Teller Machines, and Point of Sale (PoS) cards. The standard was created to increase controls around cardholder data to reduce credit card fraud via its exposure.

    In a circular to banks, switches and processors, signed by CBN Director, Banking Payment System, ‘Dipo Fatokun, said the circular supersedes the one of December 31, 2012. He said the need to extend the deadline followed requests by many banks seeking for more time to enable them complete the certification process.

    He said that to determine the readiness of various operators, the CBN engaged the services of three Qualified Security Assessors to conduct pre-certification assessment of the banks.

    The result, he said, showed that while many banks had complied with the certification, many are still at different stages of compliance.

    He said with this extension, banks, processors and switches are expected to comply before the end of the November 30 deadline.

    The validation of PCI DSS compliance is performed annually, either by an external Qualified Security Assessor (QSA) that creates a Report on Compliance (ROC) for organizations handling large volumes of transactions, or by Self-Assessment Questionnaire (SAQ) for companies handling smaller volumes.

    The CBN had earlier released card issuance and usage guidelines for the financial services sector. Fatokun said the power to issue the guideline was derived from Section 47 (3) of the CBN Act 2007, adding that all industry stakeholders who process, transmit, and or store cardholder information should ensure that their terminals, applications and processing infrastructure comply with the minimum requirements for the sector.

    He said all terminals, applications and processing infrastructure, should also comply with the standards specified by the various card schemes.

    Fatokun said only banks licenced by the CBN with clearing capacity shall issue payment cards to consumers and corporations, explaining that banks without clearing capacity can issue in conjunction with those with clearing capacity. Also, all banks should seek approval from the CBN for each card brand they wish to issue.

    The guidelines also stipulated that the cards issued can be ‘pay now’ such as debit and prepaid or ‘pay later’ such as credit.

     

     

     

    H

  • Diamond Bank targets 300 branches

    Diamond Bank Plc yesterday said it plans to grow its branch network from about 250 to 300 before year-end, its Managing Director, Alex Otti has said Otti, who spoke at the bank’s 23rd Annual General Meeting held in Lagos, said the lender will also use multiple delivery channels, like Automated Teller Machines (ATMs), Point of Sale (PoS), and web payment among others to meet customers’ demand.

    He said the bank will pay a N30 kobo dividend to its shareholders for the financial year-ended December 31, 2013. He said the bank’s investors had benefitted from capital appreciation, adding that the bank will keep doing better in the future.

    Otti said all financial services providers had to contend with more activist regulators in the Central Bank of Nigeria and Nigeria Deposit Insurance Corporation, which adopted hand-on approach. For commercial banks, Otti said the most notable policies were those that imposed additional cost on the banks or threatened their revenue streams. Some of these policies, he said, include the increase of Cash Reserve Ratio on public sector deposits from 12 per cent to 50 per cent effective August, which led to the withdrawal of over N800 billion from the banking system.

    He said the revised guide to bank charges led to the phasing out of Commission on Turnover from 2013 to 2016 among others. He said the bank took proactive positions against these policies.

    ity.

    Okezie said there is need for the bank to disclose the number of its directors, who are also top management in any of the bank’s subsidiaries. He said there is need for the bank to continue to cut its cost of operation to enhance profits.

     

  • Foreign exchange reserves record ‘marginal increase’ to $38b

    Foreign exchange reserves record ‘marginal increase’ to $38b

    The foreign exchange reserves last Tuesday, rose slightly to $38 billion, about $200 million higher than the $37.8 billion position it was in April 14, data obtained from the Central Bank of Nigeria (CBN) yesterday showed.

    The reserves had maintained steady decline in recent months after closing last year at $42.85 billion. The year-end figure represented a decrease of $0.98 billion or 2.23 per cent compared with $43.83 billion at end- December 2012. It further dipped to $38.79 billion as at March 12. The reserves were at $42.77 billion on February 3, and dropped to $39.72 billion on March 3. Analysts said the reserves declined as imports of fuel and foods soared.

    But the CBN said the decrease in the reserves level was driven largely by the increased funding of the foreign exchange market in the face of intense pressure on the naira and the need to maintain stability.

    The CBN said the pressure on external reserves was deemed to be consistent with the seasonal annual payment of dividends to foreign investors.

    Oil prices remained relatively high while production was improving, and there were signs of accretion to external reserves. The CBN also expressed concern over the sudden surge in domiciliary account balances which may offset the gains from imposing 75 per cent Cash Reserve Ratio (CRR) on public sector funds.

    It expressed concern over the continued depletion of the Excess Crude Account (ECA) which balance stood at less than $2.5 billion on January 17, 2014 compared with about $11.5 billion in December 2012.

    According to the CBN, the absence of fiscal buffers increased its reliance on portfolio flows thus, constituting the principal risk to exchange rate stability, especially with uncertainties around capital flows and oil price.

    On the depletion of fiscal buffers, the regulator decried the continuous fall in revenue from oil despite stable price of oil and production last year.

    The apex bank said accretion to external reserves remained low while much of the previous savings have been depleted, thereby undermining the ability to sustain exchange rate stability. The Committee therefore, urged the fiscal authorities to block revenue leakages and rebuild fiscal savings needed to sustain confidence and preserve the value of the naira.

    It said the reduction of the United States stimulus especially, could in addition, trigger capital flow reversals and put greater pressure on the naira exchange rate.

  • Customers laud Sterling Bank for rewarding loyalty

    Customers laud Sterling Bank for rewarding loyalty

    Impressed by the ‘One Customer’ experience they had at the exclusive private pre-release screening of the award winning film, ‘Half of a yellow Sun’, Customers of Sterling Bank Plc have commended the lender for providing a platform to access the film before its presentation to members of the local and international community via the public release tomorrow.

    The film is an adaptation of Chimamanda Adichie’s novel, which depicts the story of the Nigerian Civil War, its effects on families and the triumph of love over war.

    A cross section of the Bank’s customers who watched the film at the Silverbird Galleria last Sunday in Lagos, noted that with the sponsorship of the exclusive pre-release screening of the film for customers, by Sterling Bank had introduced a new dimension to banking in Nigeria. In this customer-centric path Sterling Bank has aggressively started rewarding its customers for their loyalty and this has gone far beyond promotions tied to deposits.

    The Nigerian-born British actor Chiwetel Ejiofor, Hollywood actress Thandie Newton and Onyeka Onwenu, Genevieve Nnaji, John Gboyega and Joseph Mawle all contributed in no small way to the palpable pride and nationalist fervor that buzzed through the cinema as the guests enjoyed seeing Nigerians on a world stage telling the nations of the earth our own story our own way. Half Of A Yellow Sun will be screened to the public from April 25 2014.

    This was quite exciting as Sterling Bank a truly national bank, provided a platform for this story to be told to Nigerians of various walks of life united by its one customer mantra. T was an opportunity seized to remind its clients that they are the centre of the brand’s attention, and it was truly a memorable day.

    Mr. Adepegba Ogunlesi, a customer who banks with the Yaba branch of the Bank said after watching the film with his wife, Bisi who is also a customer: “This is a new experience for me and coming during the festive period, there is no other way to celebrate Easter. This is a new dimension to banking and it’s been a sweet experience for me and my wife. For Sterling Bank, it is a matter of time for the Bank to increase its rising customer profile if this innovation is sustained”.

  • FirstBank pledges support for World Economic Forum

    FirstBank of Nigeria Limited has pledged its support for the World Economic Forum on Africa (WEFA) taking place for the first time in Nigeria.

    In a statement, FirstBank’s spokesperson Folake Ani-Mumuney, said the lender is happy to be playing a leading role at the foremost economic gathering on the continent; which will bring together regional and global leaders to discuss innovative structural reforms and investments that can sustain the continent’s growth while creating jobs and prosperity for all its citizens.

    According to her, aside the countless opportunities the WEFA offers to engage attendees from different spheres of life, FirstBank will also be organising a fringe breakfast session which would bring together captains of businesses and leaders of the economy to further distill the theme of the conference, ‘Forging Inclusive Growth, Creating Jobs’.

    “At FirstBank, we remain steadfast in promoting thought leadership and driving innovative reforms through our support for fora like the WEFA, Economist Conferences and Nigeria Economic Summit Group. We highlight business opportunities for small and large scale business ventures in the country, which we hope will sustain growth, enhance local capacity building and foster collaborations for expansion through partnerships with organszations,” she said.

    Also expected at the summit are President Goodluck Jonathan, Alhaji Aliko Dangote, President of Dangote Group and Africa’s richest man, and other top public and private sector executives. This will be the first time Nigeria will be hosting the annual conference since its inception 24 years ago.

  • Finance Houses’ reforms await CBN governor

    Finance Houses’ reforms await CBN governor

    Operators of finance houses are awaiting the resumption of the Central Bank of Nigeria (CBN) Governor designate, Godwin Emefiele, for the conclusion of the subsector’s stalled reforms.

    Sources said the suspended CBN Governor, Sanusi Lamido Sanusi, sent a draft guideline to operators for review. The document, the source said, had been returned to the CBN and was awaiting Sanusi’s consent, before he was suspended.

    A source said the deployment of Deputy Governor, Financial System Stability, Dr. Kingsley Moghalu, to operations, also contributed to the delay.

    The source said the appointment of Adebayo Adelabu as Deputy Governor, Financial System Stability, will speed up the reform process.

    Part of the guidelines obtained by The Nation showed that the apex bank had given the operators 18 months to shore up their capitals to N100 million from N20 million.

    The minimum capital base for the subsector has been under debate between the CBN and operators.

    The sources said there are variousl investors who have carried out due diligence on the strengths and weaknesses of some of the finance houses but could not move in funds because the regulation in the sub-sector remains unclear.

    He said the issue on a new capital base for the subsector remains a critical factor that investors want to be acquainted with before staking their funds. This, he said, would ensure that only seriously minded operators are allowed to carry on the businesses of finance houses in the country.

    The ongoing reform in the subsector is expected to look at regulatory framework that will govern finance lease practice; institutionalise a funding pool to stimulate lending activities; structured programme to address the reputation and poor visibility challenges among other issues.

    The CBN in March 2012 gave a 30-day notice to 47 finance houses closed or inactive to submit evidence of their existence and/or operations, or lose their operating licences. The order had expired on Tuesday, April 18, 2012 and the banking watchdog is yet to conclude decision on the matter. The CBN said the affected finance companies had closed shop, ceased to operate, or abandoned finance company business.

    Some of the affected finance houses include Asset Management Group, Cal Finance Investment Limited, Capri Martins Finance Limited, Corporate Finance Group , Equator Capital Assets Management Limited, Eston Funds Limited, First Bond Finance Limited, First Spring Finance and Investment Limited, among others.

  • Group grows sub-Saharan Africa Fund by $698m

    GLOBAL assess managers The Carlyle Group raised $698 million for its new sub-Saharan Africa Fund, exceeding its initial target by 40 per cent.

    The group is a global asset management firm, specialising in private equity. The firm views Ghana, Tanzania, Botswana and Benin as attractive places to allocate capital, in addition to its initial investment anchor countries of South Africa, Nigeria and Kenya. It forecasts that the new Fund’s portfolio at exit will be a mix of buyout and growth capital investments, in 15 countries across the region.

    The bank was a cornerstone investor and played a crucial role by investing $50 million at an early stage in the fundraising. “Private sector investment is one of the key ingredients in this continent taking charge of, funding and managing its own development destiny. This success shows another route through which the world can invest in Africa, a new global growth pole,” said Donald Kaberuka, AfDB President said.

    Managing Director and co-head of the Sub-Saharan Africa advisory team at the Carlyle Group, said Marlon Chigwende said the firm is one of the first global alternative asset managers to launch a dedicated Sub-Saharan African fund and we are grateful for the support of our fund investors, who share our belief that Sub-Saharan Africa offers many investment opportunities.

  • As cash-less banking goes nationwide

    As cash-less banking goes nationwide

    Ahead of the July 1 nationwide implementation of the cash-less policy, banks and the Nigeria Interbank-Settlement System (NIBSS) have been enlightening customers on the benefits of using the e-payment platform. COLLINS NWEZE examines the challenges.

    Oladipo Abiodun, a 32-year-old entrepreneur, spends part of his business time in banking halls sending money to his suppliers. On one of such visits to a bank in Central Lagos, a cashier who has been monitoring him for months, told him about electronic payment.

    “You don’t need to be present here to pay your suppliers. You can do it at home or even in your shops or even through your mobile phone,” the cashier told Abiodun.

    The use of Automated Teller Machines (ATMs), Point of Sale (PoS) terminals, web payment, online transfers and even mobile money is just getting popular in Nigeria after years of relying on cash payment for goods and services. Although e-payment saves costs and time, just about four per cent of transactions in the country are carried out through this platform.

    The figure was less than one per cent until January 2012 when the Central Bank of Nigeria (CBN) launched the cash-less banking initiative in Lagos. The ‘Cash-less Lagos’, as it was called, was later replicated in six other states and the Federal Capital Territory (FCT) last January. The policy will be implemented across the country from July 1.

     

    CBN’s position

    CBN Head, Shared Services, Chidi Umeano, said the cash-less policy which runs in six states and Abuja would be implemented nationwide on July 1.

    He said: “A decision was reached today that the cash-less initiative would now be deployed nationwide. As you are all aware, the pilot phase was done in Lagos about two years ago and last year we implemented in six other states namely Abia, Anambra, Ogun, Kano, Rivers and FCT.”

    Continuing, he said from the success recorded in those states, the CBN decided to move to other states. “By July 1, we are going live in all the states of the federation. As you well know, this is a critical part of the payment system modernisation and the success registered so far has been very impressive,” he said.

     

    Incentives for customers

    To get more people interested in using the e-payment platforms, the Nigeria Inter-bank Settlement System (NIBSS) is encouraging the use of cards to pay for goods and services via PoS terminal. The agency, in collaboration with banks, is working out modalities to ensure that bank customers using e-payment cards to pay for goods and services on PoS terminals and web platforms will be rewarded with cash back of 50 kobo for every N100 spent.

    Chairman, Committee of E-Banking Industry Heads (CEBIH), Mr. Chuks Iku, said the committee and member-banks have partnered with NIBSS for the incentive scheme for members of the public. The scheme, he said, will allow cash back rewards to card holders for using their cards to make payments on alternate channels.

    “The objective is to encourage usage of cards on PoS and the Web,” he said.

    As electronic payments gain ground, the number of connected card readers has increased to about 158,000 from 5,000 before 2012, according to the CBN statistics. The value of transactions rose 26 per cent to N1.4 trillion ($8.5 billion) in the first half of last year from the position, a year ago.

    CBN Deputy Governor, Operations, Kingsley Moghalu, told Bloomberg, an online news medium, that the bank was targeting 375,000 readers by the end of 2015. For him, improved e-payment would make the policy more efficient because of the ease of monitoring cash movement.

    The rise of online-shopping websites, such as Jumia and Konga.com, has also spurred Nigerians to consider electronic payments. The value of online retail transactions, estimated at N62 billion in 2011, may rise to N150 billion this year, said Euromonitor International, a London-based researcher.

    Some customers have expressed displeasure over services at PoS and web payments. Monday Adeoye, a civil servant, in Lagos, who was at the defunct Power Holding Company of Nigeria (PHCN), now Ikeja Distribution Company, Ogba unit to pay his bill, said it took him more than two days to pay because the PoS was not working.

    He said the challenge, which is becoming a daily occurrence, made users to abandon the device and reverted to cash payment. This, he said, led to long queues.

    “We have a long queue because there is only one person that is attending to us; besides the PoS is not working. There is need to get more people involved in bill collection, and also get the PoS working too. I have been here several times today and was told that the server is down,” he told The Nation.

     

    ATMs gain ground

    ATMs withdrawals accounted for 93 per cent of electronic payments by volume in the first half of last year, according to CBN data. Mobile money also hasn’t taken off in Nigeria, with phone payments accounting for a mere 3.7 per cent of all electronic transactions. The mobile money which allows mobile phones to be used to send and receive money, buy recharge cards, pay subscription fees for DStv, pay electricity bills, use of PoS terminals to pay for goods and services among others is under threat.

    The telecoms firms and banks, which are expected to drive the process, are not doing so. Both sectors want to drive the mobile money business and have found it extremely difficult to work together.

    General Manager, IBM Africa, Taiwo Otiti, said strategy being adopted by the key stakeholders is stifling the success of mobile money operation in the country.

    He said: “The approach we have taken in mobile money is the challenge. We have over 30 million unbanked, compared with over 100 million mobile phone users, the people who are unbanked, may have mobile phones, but how would you get them into the financial system? “You must be able to get into his lifestyle for you to be able to get him subscribe to mobile money scheme. But many of the stakeholders are not doing that.”

    Otiti said getting the mobile money scheme running requires both the payment and supply chain properly defined and implemented by the stakeholders. He said there is need for a paradigm shift that sees all the stakeholders working together. “The telcos can’t also do without the banks, so also are the banks. It is only by collaboration, will the mobile money project begin to deliver the needed results,” he said.

    So far, the CBN has licensed 21 mobile money operators, but the challenge remains how to link mobile money to the PoS, among other issues.

    “That is a challenge that we are also working on. If mobile phones can serve as a touch point, our transactions would go up rapidly. So, these are some of the things we are looking at, hoping that by next year, as we roll out more PoS machines, we have to see how we integrate the mobile phones into the network because in the hinterlands, the challenges would be more. We hope to roll-out to all the state capitals by the second quarter of this year,” the CBN said.

    It explained that the second anniversary is an opportunity for operators and regulators to come together and talk about how to continue to transform the payment system in the country.

    “Of course we have ratcheted up transactions around electronic payment. We haven’t done badly at all, but there are still a lot to be covered and we have made significant progress in the area of infrastructure provision, particularly led by the cashless programme of the CBN. We believe that if we continue to drive this, then we will make the payment system a lot more efficient,” it said.

    Also, the CBN said an efficient payment system is good for the transmission of monetary policy adding that it underscores its importance to the apex bank. “It is also good for financial stability because a stable financial system is seen through how efficient the payment system is,” the CBN added.

    While mobile payments increased more than threefold in recent years, only N6 million was transacted using mobile money, compared with N57.2 billion ($352.5million) on ATMs, and PoS.

    The CBN bank wants commercial lenders to drive growth rather than phone operators because they regulate the banks and not the telecoms firms, Moghalu said.

    Even among Nigerians with ATM cards, cash still dominates daily business as connection and network difficulties and delays in transaction times get worse.There have been cases where consumers are debited twice for the same purchase.

    Between 40 and 50 per cent of card-reader transactions also crash because of patchy radio and phone networks, Moghalu said. The CBN is trying to reduce failure to below 10 per cent over time, he said.

    Partner and Head, Management Consulting at KPMG Advisory Services, Bisi Lamikanra, said fixing botched transactions causes “quite a bit of frustration” because they can take months to resolve, said adding that with these hitches, consumers typically rather withdraw cash from the ATM, even if they’re withdrawing it outside the shop. The start of chip-and-pin-card technology in 2010 helped lower incidents of ATM fraud by more than 90 per cent.

    Analysts said critical success factors for mobile payment in the country are the integrity and security of the end-to-end transition during a payment transaction process. They insist that the chain of transaction must be secured from initiation to authentication. Therefore, confidentiality and integrity of the data transition are critical factors in mobile payment.

  • Fidelity Bank’s foreign currency exposure hits 27per cent

    Fidelity Bank’s foreign currency exposure hits 27per cent

    Fidelity Bank’s exposure to foreign currency lending rose to 27 per cent last year, from one per cent in 2012, a report by Renaissance Capital (RenCap), an investment and research firm, has shown.

    The firm said Fidelity achieved the growth after deploying its foreign currency liabilities as the pressure on funding costs persisted.

    The bank’s 2013 result showed that it reported the lowest Net Interest Margin (NIM) in Nigerian banking universe, reaching a 10-year low of four per cent. It said Fidelity’s NIM squeeze started in 2011, when the lender increasingly focused on corporate lending and was subsequently faced with a tightening monetary policy environment.

    RenCap said Fidelity’s management acknowledges the current challenges and its initial focus will be on reducing the funding costs by continuous downward re-pricing of costly term deposits, which is under way and increasing the proportion of staff in market-facing roles while also rewarding them appropriately. It also plans to increase branch footprint (e-branches mainly) to increase market reach.

    “Overall, there will be significantly more focus on driving e-banking products for customer mobilisation and service and an merger and acquisition deal could happen for the right target and price,” it said.

    On the asset side, Fidelity is positioning itself to be a Small and Medium Enterprise-focused bank, and, coupled with its payroll lending retail book, management expects combined exposure to rise to 50 per cent over the medium term (2017), from 28 per cent in 2013.

    RenCap said management has also been re-pricing the existing loan book and plans to periodically review all concessions and lending rates.

    The research form advises the lender to improve the quality of reporting and investor communication. “We have made slight changes to our forecasts, largely along the lines of modestly higher NIMs and loan growth, the impact of which was offset by higher cost of risk over the forecast period. We expect the stronger growth in SME lending to keep Fidelity’s cost of risk elevated, at two per cent, against our previous forecast of one per cent over the next few years,” it said.