The Nation Newspaper

Category: Money

  • Banks raise interest on deposits by 4%

    .CBN may hike CRR to 100%

    Deposit Money Banks have hiked deposit rates by four per cent to augment the shortfall in deposits.

    The action became exigent after the Central Bank of Nigeria (CBN) began implementation of 50 per cent cash reserve ratio (CRR) on public sector deposits.

    Analysts at Consolidated Discount Limited (CDL) said in an emailed report that many of the lenders, including those perceived as fairly liquid, are taking the step to safeguard existing deposits from being prised away. They said interest rates on deposits have been on the rise even as the deposit wars reminiscent of the pre-2009 banking reforms have resurfaced.

    The analysts said CBN may further raise the CRR on public sector deposits from 50 per cent to 100 per cent adding that the naira has not fared better despite the hike.

    They said stability of the naira is the most significant threat to the CRR figure.

    “We believe that even with the 50 per cent CRR on public sector deposits, a policy aimed at increasing the scarcity of the naira, the local currency still remains vulnerable. Market hurts from the 50 per cent CRR on public sector deposits,” they said.

    The CDL analysts said the 50 per cent CRR on public sector has started to yield expected results. They explained that prior to the maintenance period of August 7, the market was logically jittery, which reflected in the interbank market.

    They said inflation rose to 8.7 per cent in July driven by the broad increases across all classes of the Consumer Price Index (CPI). “The July number is broadly in line with the Central Bank’s forward guidance which indicates that prices will be under pressure in the first two months of the second half of the year. The Core Index which is closely watched by the Central Bank because it excludes volatile food prices rose to 6.6 per cent in July from 5.5 per cent in June. But the sore point is that the Core Inflation recorded the biggest month-on-month change of 1.2 per cent in the CPI,” they said.

    They predicted that the headline inflation will remain in the single digit range for the second half of the year largely driven by the base effect and tight monetary policy.

    Also, pressure on the naira will continue despite the scarcity of the currency.

    Output leakages leading to a shortfall in government revenues, increased demand for US dollars by importers building stock for the yuletide season and fuel imports will serve as pressure points for the naira. But the CBN has demonstrated that it has options.

    “We believe the 50 per cent CRR on public sector deposit is a stop-gap measure on the International Monetary Fund (IMF) prescribed Single Treasury Account (STA). If the pressure on the naira persists, we believe the CBN can increase the CRR on public sector deposit even to 100 per cent which would, ultimately, mean it has achieved the objectives of the STA, a tool for consolidating and managing governments’ cash resources, thus minimising borrowing costs,” they said.

     

  • DMO: IFC, Barclays Capital, JP Morgan okay FGN bonds

    The nod given to the Federal Government of Nigeia (FGN) bonds by the Internationa Finance Corporation (IFC), Barclays Capital and JP Morgan has assisted in the development of the domestic bond market, the Director-General, Debt Management Office (DMO), Dr. Abraham Nwankwo, has said.

    Nwankwo, who spoke at a debt conference in Lagos, said JP Morgan included FGN Bonds in its Emerging Markets-Government Bond Index last year Barclays Capital did the same on its emerging markets –Local Currency Bond Index in March.

    The IFC has issued naira-denominated bonds in Nigeria’s bond index, he said, adding that these steps were indications of the confidence these global the financial institutions have in Nigeria’s bond market.

    This, he said, led to some benefits, including increased foreign exchange inflows, adding that by December, last year, foreign investors holdings in FGN securities amounted to $5.112 billion, compared to $500 million in January, same year.

    The DMO chief said there was significant reduction in government’s cost of borrowing, which fell by about 400 points between August and December, last year.

    He said financial institutions issued Eurobonds amounting to $1.45 billion in the last three years.

    He said GTBank issued $500 million, Access Bank, $350 million. Fidelity Bank and FirstBank, $300 million each.

    The development, he said, had also given foreign investors information for investment decisions and created market benchmarks for future borrowings by the sovereign, sub-nationals, as well as corporate bodies.

    He said with a favourable domestic market environment created by the DMO, 20 organisations also raised long term capital of over N200 billion from the domestic debt market between 2005 and last year.

    “The atmosphere is conducive for Nigerian corporates to access fund both in the domestic and international capital markets to develop the sector. For now, banks can only use the fund generated for lending purposes. It is also important to explain that it is not only banks that have the advantage of credit rating, as companies can be rated too because, in the domestic market, most markets that access debenture gets rated,” he said.

    Nwankwo said with DMO’s efforts towards establishing a viable competitive presence in the international capital market, through its debut of $500 million 10-year 6.75 per cent sovereign Eurobond issuance in January 2011, followed by the successful issuance of a $1 billion dual-tranche bond offering on July 2013, of $ 500million five-year bond and $500 million 10-year bond coupons of 5.125 per cent and 6.375 per cent per annum, had necessitated the need for private sector and Nigerian corporates to tap into the achievement.

     

  • Stanbic launches executive service

    Stanbic IBTC Bank has launched its executive bank ing services to cater to the banking and other financial needs of high networth individuals and busy professionals.

    Executive Banking is a personalised banking service that allows clients to be served 24 hours on one-on-one by a bank executive, who helps to evaluate the client’s specific banking needs and then assists him in a timely and professional manner.

    At the launch in Lagos, Executive Director, Personal and Business Banking, Obinnia Abajue, said the service offers considerable benefits to customers adding that it was designed to save clients and their loved ones money and time “At Stanbic IBTC Bank, we realise that people have different banking and financial needs and that the busy professional needs a specialised banking service that is safe, secure and convenient during and after office hours,” he said.

    He said the Executive Banking service provides the busy executive with convenient banking locally and internationally, with an array of products and services to satisfy diverse needs for clients and their families. He assured that as an end-to-end financial solutions provider backed by the experience of the Standard Bank Group, to which Stanbic IBTC belongs, clients are guaranteed a safe, secure, and speedy financial services experience.

     

  • Why banks fail, by NDIC

    What is responsible for bank failures? Banks failbecause of insider abuses, weak internal control system, poor corporate governance, says Nigeria Deposit Insurance Corporation (NDIC).

    NDIC Deputy Director Research, Usman Wali told members of the National Association of Banking and Finance Students (NABAFS), of Federal Polytechnic, Nasarawa that the corporation’s role in protecting depositors’ interest was key to the nation’s financial stability and economic development.

    He said the visit was crucial to the enhancement of NDIC’s public awareness on its mandate and activities, adding that the corporation is focusing on its core mandate of deposit guarantee, banking supervision, distress resolution and liquidation.

    He said the NDIC insured deposit liabilities of Deposit Money Banks (DMBs), Microfinance banks (MfBs) and licenced Primary Mortgage Banks (PMBs). Depositors of insured banks will get N500,000 for DMBs and N200,000 for MfBs and PMBs in the event of failure.

    Representatives of Bank Examination Unit (BEU) Shehu Aladire said on-site and off-site activities of the corporation are aimed at efficiency and compliance with rules.

    He listed four types of on-site bank examination as maiden, routine, target and special examinations.

     

  • CBN’s action stirs anger

    Criticisms are trailing the Central Bank of Nigeria’s decision to raise the Cash Reserve Requirement (CRR) on public sector funds.

    The policy quarantined N520 billion, about 38 per cent of the estimated N2.6 trillion government deposit in the system.

    The Chief Executive Officer, Economic Associates, Ayo Teriba, said the policy is destablising the sector, adding that it also showed that the CBN could be unpredictable.

    He said in more developed countries, the CBN would have carried the banks along in the scheme of things.

    “In a more civilised environment, the CBN would have carried the banks along. It was an impulsive decion which may place some banks ahead of others in terms of deposit mix and balance sheet size,” he said.

    He said what the CBN had done might have altered the equation, to put some banks ahead of others in terms of deposit mix and competition.

    Afrinvest West Africa Plc said the policy has affected its market and rate performance.

    It said last week’s decline in the All Share Index (ASI) by 280 points was attributed to attractive yields in the money market due to the CBN’s policy.

    In the firm’s weekly report, it said the policy has led to a switch by investors in favour of the money market instruments, saying that the Nigeria Interbank Offered Rate (NIBOR) rates surged by an average 600 points in the last two weeks.

    It said the call rate gained the most, with 820bps to 18.9 per cent last Friday. This was followed by the seven-day and 60-days tenor with about 700bps average increase. This increase in money market rates can be associated with the recent increase in CRR on public sector funds, creating liquidity shrink at the inter-bank.

    However, the firm said it expects a marginal decline in rates in the coming weeks as the market gradually absorbs and normalises the disequilibrium.

    The policy raised cash reserve ratio on public sector deposits from 12 per cent to 50 per cent.

    Its implementation began on August 7, when the the apex bank debited banks’ accounts.

    This policy has drained liquidity from the system. Now banks are scrambling for funds/accounts outside the public sector.

     

  • ‘Sanusi’s coming exit will put pressure on Okonjo-Iweala’

    ‘Sanusi’s coming exit will put pressure on Okonjo-Iweala’

    THOUGH he still has 10 months to go, Central Bank of Nigeria (CBN) Governor Sanusi Lamido Sanusi’s coming exit is already causing ripples in the financial market.

    His exit in June next year, says Renaissance Capital (RenCap), Global Chief Economist Charles Robertson, will shift the burden of the banking reforms to Finance Minister and Coordinating Minister for the Economy Dr. Ngozi Okonjo-Iweala

    Robertson, in an emailed report obtained by The Nation, said Sanusi’s exit would, however, not alter views about Nigeria’s economy.

    “We doubt the expected 2014 change of the CBN Governor will change our currency view, but his departure does mean even more responsibility lies on Minister of Finance, Ngozi Okonjo-Iweala to maintain the reform process,” he said.

    Sanusi became CBN governor in June 2009. He has aside sacking Chief Executive Officers (CEOs) of eight rescued banks and appointing new ones, also injected about N620 billion into the troubled banks to keep them afloat.

    The reforms that followed, have pushed majority of the banks into profitability. Their results for the financial year ended December 31, last year, showed that almost all the lenders declared huge profits.

    Their combined results were over N500 billion. This is against losses made by some of the banks in previous years, following the financial crisis which started in 2008 that affected many of them. Also, virtually all the banks also declared dividends for their shareholders.

    Robertson said corruption seemed to get worse when leaders stay in power for more than 15 years.

    He said South Africa’s Gross Domestic Product (GDP) per capita is disappointing. “So while South Africa looks good relative to its peers, it has, in fact, deteriorated for the best part of a generation. Rwanda is best within Sub-Saharan Africa, but Nigeria has improved significantly over the past decade,” he said, adding that Russia, Kazakhstan, Nigeria remain among the best in the world on public finances.

    “We continue to forecast growth at the higher end of a six to seven per cent range through to the 2015 presidential elections. The elections (and relatively high oil prices) also means we expect the Central Bank will succeed in keeping the currency broadly stable. We expect only mild depreciation in nominal terms,” he said, noting that there is value for foreign investors in local naira debt in Nigeria.

    Robertson said a rise in electricity supply was key to the success of Nigeria’s development.

    He said the budget deficit would shrink after what he calls the “brave decision” to remove fuel subsidy, but stated that more work is required before “we can” get comfortable with this credit.

    ‘’Even dollar investors required an eight per cent yield on the 10-year dollar bond July issue, against 6.8 per cent for a Nigeria bond a month earlier,” he said.

  • Western Union’s $1.7m grant for Nigeria, others

    Western Union Foundation is committing $1.7 million to more than 20 non-profit, Non-Governmental Organisations (NGOs).

    This year, the Foundation has announced grants worth over $2.9 million.

    In Africa, $25,000 has been given to kick-start a small business training for farmers in Kenya and $20,000 to supporting Mashutwero pre-schools in Botswana – helping to provide academic and personal development opportunities for local youths.

    This quarter, $114,114 will be given to the Daniel Ogechi Akujobi Memorial Foundation (DOAMF) towards Project Read to Succeed, which provides libraries for public schools in Nigeria.

    The grants are designed to help increase access to, and improve the quality of education programs in multiple regions. The grant cycle provides further support for the Western Union Education for Better programme, which is a three-year commitment to growing young minds through strategic grants that focus on secondary education and vocational training.

    “We are supporting NGOs that are committed to expanding educational opportunities for global communities,” said Patrick Gaston, president of the Western Union Foundation. “Education for Betteris a long-term programme that not only includes grant making, but also consists of collaborations with Western Union Agents to make a tangible impact on the communities and customers we serve.

    To date, many Western Union Agents have joined in the Education for Betterprogramme, with the Western Union Foundation matching Agent grants to support educational programs around the world.”

     

  • CBN, Bankers’ Committee plans biometric database for customers

    CBN, Bankers’ Committee plans biometric database for customers

    The Central Bank of Nigeria (CBN) is collaborating with the Bankers’ Committee to set up a biometric database for bank customers.

    In a statement the banking watchdog said the platform, when completed, would help operators and regulators of the financial system address issues of Know Your Customer (KYC), anti-money laundering (AML), and access to credit.

    This will help fast-track use of channels, such as biometric Automated Teller Machines (ATMs) and Point of Sale (PoS) terminals, among others.

    The CBN said it is also planning a Consumer Complaints Management System that will make it possible for it to monitor banks’ breaches in customers’ accounts.

    When completed, the platform will enable the regulator see which customer complaints are being treated, and which are not being considered. The CBN is expected to with the platform, see the complaints by bank customers and track the turnaround time of their resolution.

    It said the role of consumer protection is not limited to the CBN alone, but remains a collective responsibility of everyone. It said the Consumer Protection Unit of the CBN is mandated to educate consumers and defend their interest, detect money laundering and combat financial terrorism as well as enhance awareness on these issues.

    The apex bank is also reviewing the framework on consumer protection to ensure that all complaints by customers are promptly addressed.

    Also, where any of the cases is proved, the affected bank will be required to make necessary amends and where financial obligations are involved, will be required to refund the money. The measures are aimed at encouraging good banking habits and promoting efficiency in the delivery of financial services as well as boosting public confidence in the system.

    The Consumer Protection unit of the CBN is meant to ensure that banks’ customers enjoy not only quality services but also protection from excessive charges and outright loss of funds. Also, the apex bank has also established a Help Desk at its headquarters where all the consumer complaints in respect of any services are directed to.

     

  • Ecobank rewards customers

    Ecobank Nigeria has started a promo tagged, Giant prize give away to reward its customers.

    In a statement, the bank said the promo, which started this month, will end in November this year and that participating customers have opportunity to win Honda CRV Sport Utility Vehicle (SUV) and other prizes.

    The monthly draws will give each customer a chance to win LED TVs, deep freezers, generators, washing machines, home theatre systems and Blackberry smart phones.

    However, the customer is required to deposit at least N30,000 into his/her current or savings account and maintaining such deposit for at least three months qualifies the customer for the grand draw.

    Announcing the promo in Lagos, Ecobank Deputy Managing Director, Anthony Okpanachi said the bank is committed to rewarding its loyal customers while offering them best of banking services. She said the bank will continue to contribute significantly to the growth of the Nigerian economy.

    He encouraged non customers to walk into any of the bank’s branches and open accounts. He said for a customer to qualify for the monthly draws there is need to make new deposits of N30, 000 into their current or savings accounts each month. Depositing multiples of N30, 000 gives the customer more chances of winning.

    He said maintaining a minimum of N30, 000 throughout the promo period qualifies the customer for the grand draw.

    He emphasised that the bank will continue to expand its product portfolio, which includes current account, savings account, cards, regional and local remittances, consumer finance, loans and advances, investment banking and asset management, regional and international trade.

  • Skye Bank introduces two products

    Skye Bank Plc has introduced two new products into the market namely, Skye Flex and Skye Ease.  Both products are savings accounts, with relaxed Know Your Customer (KYC) requirements for account opening to make it easier for the majority of the unbanked populace to be catered for.

    In a statement, the bank said it introduced the products to support the Central Bank of Nigeria’s (CBN’s) drive for financial inclusion.

    The General Manager, Retail Banking, Skye Bank Plc, Mrs Arinola Kola-Daisi, said the Skye Flex is a low-value account that does not require any supporting documents apart from the account opening form and passport photograph to be opened.

    She explained that a customer only needed to fill an account opening form and submit two passport Photographs. The account has as its features zero opening balance, access to mobile banking products in addition to attractive interest rate.

    She described Skye Ease account as a medium-value account which requires the account opening form and passport photograph, along with proof of information submitted. Features of the account are zero opening balance, access to mobile banking products and attractive interest rate.

    She advised members of the public to key into the bank’s Skye Dreams programme which is a customer loyalty programme that rewards customers on the basis of points accumulated through banking with it.

    She said rewards range from air tickets, household items, among others, and urged members of the public to avail themselves of those benefits.