The Nation Newspaper

Category: Money

  • FMDA elects president

    Financial Markets Dealers Association (FMDA) has elected Sola Adegbesan, Head of Global Markets at Stanbic IBTC Bank, as its President.

    In a statement, the body said Adegbesan was elected for a two-year term at the 21st delegates conference/annual general meeting of the association in Lagos. Other members of the seven-man governing council are Mrs. Sumbo Adigun as vice president; Mr Ayo Babatunde and Mr Zeal Akaraiwe as members while Mr Akin Dawodu, Mrs Femi Owopetu, and Mr Ini Ebong are ex-officios.

    In his acceptance speech, Adegbesan thanked the association for entrusting its affairs to him. He promised to uphold the objectives of the body and work with other members, member-institutions and regulatory authorities to move the association forward.

    According to him, “The financial services industry in Nigeria is faced with challenges which require our collective attention and commitment to surmount. As a body, we must ensure that the ongoing reforms in the financial services sector are successfully concluded, that corporate governance structures are strengthened and global best practices engendered in the industry. This will make our financial markets attractive for foreign portfolio investments and the resultant market development.”

    The new president’s over 15 years cognate banking experience is expected to have a positive impact on the activities of the association as it strives to deepen treasury services in the industry.

    The Association’s contributions to the financial markets include its introduction of the Nigerian Inter-bank Offered Rate (NIBOR), the benchmark interest rate, in 1998 and the Nigerian Inter-bank Foreign Exchange Rate (NIFEX), respectively.

     

  • Forex demand dropped in Q 4 2012, says CBN

    Forex demand dropped in Q 4 2012, says CBN

    Foreign exchange (forex) demand by authorised dealers consisting of the Wholesale Dutch Auction System (WDAS) and Bureau De Change (BDC) operators dropped to $4.29 billion between October and December, last year, the Central Bank of Nigeria (CBN) External Sector Development Report has said.

    The report said it recorded 34.2 per cent decline, when compared with the third quarter’s performance and 59.4 per cent when compared with the levels recorded in the corresponding quarter of 2011.

    The report showed that dollar continued to dominate external reserves as the currency constituted 84.3 per cent of the $43.83 billion reserves as at December 31, last year. The figure represents an increase of $3.15 billion compared with its level of $33.81 billion in third quarter.

    Other currencies in the basket included Euro (5.9 per cent), Chinese Yuan (1.9 per cent), GB Pounds (1.9 per cent) and SDR (5.9 per cent). A review of the management of external reserves revealed that the portfolio was composed of fixed deposits (48.6 per cent), funds under Asset Management (20.1 per cent), Joint Venture Company cash call (0.1 per cent) and current account (6.3 per cent) as well as Sovereign Wealth Fund (SWF) (2.3 per cent).

    This development, the report said, was traced to the increased supply of foreign exchange through the autonomous sources to the interbank foreign exchange market.

    Equally, a total of $10.22 billion was utilised in fourth quarter consisting of $6.41 billion and $3.80 billion for visible and invisible trade. This represented 62.8 and 37.2 per cent. Further analysis showed that foreign exchange utilised for visible transactions has remained dominant over the last two quarters of 2012.

    Analysis of foreign exchange utilisation by sectors revealed that $6.42 billion or 62.8 per cent was spent on the importation of visible goods into the country. The importation of industrial, oil, food and manufactured products utilised 28.3, 27.3, 19.2 and 18.0 per cent of the total, respectively services. It comprised, financial ($2.97 billion or 78.1 per cent), business ($0.23 billion or 6.1 per cent), transportation ($0.29 billion or 7.7 per cent) while “others” accounted for the balance.

    “Foreign exchange utilisation of 19.2 per cent for food importation was high and suggests the need for adequate funding of the agricultural sector and the vigorous pursuit of the financial inclusion programme,” it said.

    Also, the average WDAS rate appreciated marginally by 0.04 per cent in during the fourth quarter as the naira exchanged for N157.32 to a dollar as against N157.39 to a dollar in third quarter of 2012. Similarly, the naira appreciated, by 1.63 per cent, at the BDC segment of the market, as it exchanged for N159.19 to a dollar in the review period as against N161.79 to a dollar in third quarter 2012. This made the BDC premium to contract by 1.61 percentage point to 1.19 per cent.

     

  • GTBank launches social network platform

    GTBank launches social network platform

    Guaranty Trust Bank Plc (GTBank) has launched a social banking platform, which allows customers to meet their needs on Facebook. The first of its kind in the country, the paltform allows members of the public to open GTBank accounts and get customer service support on Facebook.

    Speaking with reporters, Managing Director/Chief Executive Officer of GTBank, Mr Segun Agbaje, said the bank’s objective is to engage the public where they work, live or play, adding that the new service would enable those on the social media to have a relationship and carry out transactions.

    Agbaje said: “This novel service at present allows people open GTBank accounts and get customer service support on Facebook and in a couple of weeks, we will introduce new service options that include money transfers, airtime purchases and bills payments.”

    He said GTBank’s commitment is for the convenience of its stakeholders, saying that the bank would continue to introduce value adding alternative channels in the future.

     

    He said: “ has over one million followers on Facebook; the largest for any African Bank. Additionally, the bank recently introduced GTBank Mobile Money, a highly secure application that allows customers and non GTBank customers perform transfers and payments from their mobile phones to any mobile phone subscriber within the country.

    “Furthermore, the bank’s internet banking platform is one of the most robust in the industry, supporting a wide array of service offerings that include bills payments, own and third party transfers and foreign exchange transfers to any bank account in the world,”

     

     

  • IFC to build collateral registry for SMEs

    The International Finance Corporation (IFC) is working with the Corporate Affairs Commission (CAC) to build a collateral registry system that will make it easier for banks to lend to the Small and Medium Scale Enterprises (SMEs).

    Speaking at the SME Toolkit Global Partner conference in Lagos, IFC, Nigeria Country Manager, Solomon Quaynor, said the corporation had realised that banks do not want high risk transactions, synonymous with lending to SMEs.

    He said the corporation was also partnering with 10 local banks to de-risk lending to the subsector. He said the SME Toolkit lunched in the country by IFC, IBM and EDC Pan African University, will enable the entrepreneurs effectively to manage their businesses. He therefore said the IFC has stepped in to de-risk such loans by providing financial infrastructure and developing collateral registry that will assist banks in lending to the subsector.

    Quaynor said that since a lot of the SMEs do not have landed assets, except receivables, IFC is working with Corporate Affairs Commission (CAC), Ministry of Trade and Investment to build a registry system that should include the ability of SMEs to borrow from banks.

    “We are working on getting the SMEs to use toolkit, so that banks can be more comfortable lending to the subsector. Our focus is not about giving money to the banks to lend to SMEs. It is about building their confidence in the SMEs so that that subsector can easily obtain loans from lenders,” he said.

    He said the corporation spends a lot of time training the banks to understand SMEs, by designing products for the subsector among other things. It is not about the money we are providing for banks, but that we are getting them to be more careful in lending to SMEs.

    He said the corporation is investing broadband services to ensure that the right communication platform needed to reach more entrepreneurs across the country is made available.

    General Manager, IBM Africa, Taiwo Otiti, said the SMEs tools help entrepreneurs manage their businesses properly, and in the process, making it attractive for banks to grant them loans.

    “The SMEs Toolkit will help entrepreneurs input their financials, making it easier for banks to understand and take lending decisions on their account positions,” he said.

    He said SMEs remain engine of growth for the economy, adding that they are the largest employer of labour within the economy. He said that when the SMEs businesses are run well, then they will have the capacity to employ more people. “Part of the SMEs teaching is how to package their businesses to attract banks’ lending. Also note that there are several types of banking in the country,” he said.

    He said as the economy grows, the ability of banks to loan funds to entrepreneurs also grows adding that the presence of credit bureaux have also raised banks’ appetite to lend to the SMEs’ subsector.

     

    Director, Enterprise Development Centre, Pan African University, Peter Bankole said that minimum 80 per cent of jobs created in Nigeria are from small businesses. “The National Bureau of Statistics survey conducted last year showed that SMEs sector will continue to play dominant role in job creation in the economy,” he said.

    Bankole said the challenge remains that majority of SMEs are micro, but government is trying to move as many as possible from micro to small because that will give better multiplier effects for the economy and job creation.

     

  • Mobile money firms collaborate

    Mobile Money Operators (MMOs) are to collaborate on Shared Agency Network to foster growth, an official of Fortis Mobile Money, Mr Kunle Ogunmola, has said.

    Ogunmola said the network would provide operators the opportunities to share the same scheme or platform for growth.

    He said: “Shared Agency Network, among mobile money operators, will enable them to have a single access to scheme or platform for growth, as well as reducing the cost of setting up an agency.”

    He said collaborations among the operators on the issue of shared agency network is more popular, as against merger and acquisition in the industry.

     

  • DMO to raise N104b through bonds today

    The Debt Management Offices (DMO) is to raise N104.8 billion ($670 million) in its monthly auction of bonds today, FBN Capital has said.It said the total sales target is higher than its projection given that the agency had raised N285 billion (gross) in just three months and that the approved 2013 budget sets domestic borrowing (net) at N577 billion.

    In a report, FBN Capital said the DMO tentatively offered Nigeria’s long bond in February to raise just N15 billion and may have been surprised by the bid of N79 billion for the paper.

    “The auctions in the past year have generated demand comfortably above projected sales, a rare exception being September. Many offshore investors may favour the longer dated treasury bills but few, if any liquid government bond markets match the yields available in Nigeria. Also, the shift by domestic institutional investors from bonds to equities has not been dramatic,” it said.

    It said that the market rally since last August driven by tight monetary policy is not exhausted, and that yields on the more liquid bonds may narrow by 100 basis points in the first half of the year.

    FBN Capital said this calendar, unlike that for the first quarter, has been prepared with an approved 2013 federal budget in place. The budget statistics showed an expenditure of N4.99 trillion, a deficit of N887 billion and domestic borrowing (net) of N578 billion. It said once the proposed $1 billion Eurobond was excluded, and the $100 million Diaspora bond, too, there would be a deficit financing gap of about N140 billion.

    The deficit, it said, could be covered by asset sales and signature bonuses, though the government’s recent track record for the first is poor and prospects for the second are undermined by the continuing impasse over the Petroleum Industry Bill in the National Assembly.

    “We accept that best practice requires a range for issuance and favours front-loading in the calendar year. Yet, the low point in the range for second quarter still looks high in the context of the DMO’s sales of bonds totaling N285 billion (gross) in first quarter and of the projection for domestic borrowing (net) in the budget,” it said.

    It said the DMO reopened the bond in February and found that it attracted the highest bid at auction (N79 billion). This vindicated the its thinking that the reopening would be well-received, given the increasing role of the Pension Fund Administrators (PFAs) and other institutional investors at auction.

    It said the total monthly bid has averaged N161 billion over the past 12 months, except for September last year when (N83 billion) auction was recorded.

    “We expect the DMO to meet the calendar comfortably. We detect a certain cooling of offshore interest in the market, and cite the sharp increase in sales at the Central Bank of Nigeria’s forex auction. That said, we feel that the good inflation story as well as Nigeria’s inclusion in the government bond indices of JP Morgan and Barclays will underpin strong demand for domestic and some offshore investors,” it said.

     

  • CIBN partners Moody’s Investor

    The Chartered Institute of Bankers of Nigeria (CIBN) is partnering with Moody’s Investor, Institute of Financial Services (IFS) and Centre of Study of Financial Innovation (CSFI). The deal, it said, in a statement, will increase its global recognition.

    CIBN Chairman, Segun Aina, said the institute is considering working with CSFI in syndication of articles and joint authorship with Nigerian-based authors, among others.

    He said the institute was willing and ready to collaborate with Moody’s Investor on some critical areas of mutual interest to both organisations.

    Aina maintained that the institute would follow up on the UK-based organisations until the collaboration was consummated.

     

  • Visa canvasses more cash-less banking for travellers

    Visa canvasses more cash-less banking for travellers

    Visa, the global electronic payments company, has called for an improved use of e-payment products by business travelers both within and outside the country.

    Speaking at the BT Africa West Africa Expo and Conference in Lagos, Country Manager for Visa West Africa, Ade Ashaye, said the firm is committed to helping the country achieve its cash-less banking initiative.

    “Visa is committed to helping move Nigeria to a cashless economy and share some of the benefits of secure electronic payments within the industry.”

    The conference was hosted in association with Future Group’s Business Traveller Africa. He said Nigeria is growing as a destination for both leisure and business travel and rise in spending is a credit to the efforts of those promoting Nigeria as a tourist destination.

    According to VisaVue Travel data, Nigeria’s top three source markets of spend on Visa cards were the United Kingdom, United States and South Africa. Visa cardholders from these three markets account for 60.1 per cent of all total spending by international Visa cardholders in Nigeria.

    “What was great to see was the various players in West African business travel coming together under one roof, debating the issues, looking for solutions and engaging with existing and potential clients,” said Dylan Rogers, of Business Traveller Africa.

     

  • ‘CBN’s reserve policy won’t affect banks’ cash flow’

    ‘CBN’s reserve policy won’t affect banks’ cash flow’

    The Central Bank of Nigeria’s (CBN’s) decision to leave the Cash Reserve Requirement (CRR) at 12 per cent will not affect the liquidity of banks, analysts have said. They said the CBN’s decision was borne out of the need to ensure a well-regulated macro economy, and not to hinder the liquidity status of banks.

    The Chief Executive Officer, Dunn Loren Merrifield, Mr Sonnie Ayeye, said the measure was aimed at creating a buffer for banks to enable them to access funds when they do not have enough money for operations.

    Ayeye said the CRR was one way of strengthening the liquidity position of banks, adding that the regulators know what best suits the banking operators.

    He said: “Banks have three major sources of raising funds. They collect deposits, raise funds from the capital market though public offers/right issues, inter-bank market, and approach CBN for money when they are in need. This has enabled them to play better than other operators in the industry. Now that CBN is keeping CRR at 12 per cent, it’s telling the banks that they have more money to fall back on when they are in crisis. The issue cannot affect banks because they have already raised their liquidity to a level whereby they can sustain themselves taking from their reserves with the apex bank.”

    Ayeye said it would be wrong to conclude that CBN wants to create illiquidity among banks by not reviewing its cash reserve requirement downward.

    According to him, the reforms policy was to implemented to fast-track the growth of banks, make them competitive and lend to the economy.

    “The banks are playing well locally and internationally. They have established offshore branches as well getting listed in foreign markets. This is a plus to the nation’s banking industry. How can CBN destroy what its has built? He asked

    A Senior lecturer at Lagos Business School, Dr Austine Nweze, said the various initiatives of CBN have paid off, giving the provision of a single digit inflation of nine per cent. He said CBN has kept CRR at 12 per cent to deepen the reserves of banks and further make functional.

    He urged banks to lend more to the economy, arguing that economy growth is not moving at a pace it supposed to be.

    “The economy position can only be galvanised when operators have enough money to operate with,” he said.

    Analysts from FBN Capital Limited said the maintenance of CRR at 12 per cent, among other decisions taken by the CBN, was widely anticipated in line with its monetary tightening stance.

     

  • Equities down by N265b

    •Bagco’s shareholders get 50.9m shares in merger deal

    The Nigerian stock market was overshadowed by strong mid-week recession as equities lost N265 billion in spite of a last-day rally. Average return of quoted equities recorded a weekly loss of 2.30 per cent, pushing the year-to-date return to 19.36 per cent.

    Aggregate market value of equities at the Nigerian Stock Exchange (NSE) closed the week at N10.713 trillion as against its week’s opening value of N10.978 trillion. The All Share Index (ASI), the main value-based index that tracks prices of all quoted equities and serves as Nigeria’s country index, dropped by 2.30 per cent to close the week at 33,514.14 points as against its index-on-board of 34,301.37 points.

    Besides insurance sector, most tracked sectors recorded losses but the recession was more pronounced in the banking sector. The NSE 30 Index, which tracks 30 most capitalised stocks, dwindled by 2.35 per cent. The NSE Consumer Goods Index declined by 0.19 per cent. The NSE Banking Index slipped by 5.36 per cent. The NSE Oil and Gas Index lost 1.40 per cent while the NSE Industrial Goods Index dropped by 1.12 per cent. The NSE Insurance Index meanwhile, appreciated by 3.86 per cent, reflecting gains by some leading insurance companies including Wapic Insurance and Mansard Insurance.

    With 59 decliners to 20 advancers, the market was overtly bearish. Access Bank dropped by N1.66 to close at N8.84. United Bank for Africa (UBA) lost N1.52 to close at N6.60. Airline Services and Logistics dropped by 85 kobo to close at N3.90. Eterna declined by 66 kobo to close at N2.85 while AG Leventis lost 54 kobo to close at N1.07.

    Turnover increased to 2.19 billion shares worth of N24.94 billion in 33,100 deals, partly due to the additional trading day in the five-day trading week as against the four-day trading week in the previous week. Turnover stood at 1.60 billion shares valued at N19.09 billion in 26,264 deals two weeks ago.

    Meanwhile, the number of listed companies reduced by one with the delisting of Nigerian Bag Manufacturing Company (Bagco) Plc. The delisting was the final process in the merger with its erstwhile parent company, Flour Mills of Nigeria.

    Subsequently, a total of 50.89 million ordinary shares of Flour Mills of Nigeria were allocated and listed for shareholders of the former Bagco.

    The NSE has also placed Crusader Nigeria on full suspension, in preparation for the impending delisting of the financial services company after it consummated business combination with Custodian and Allied Plc.

    Okomu Oil Palm continued to ride high on its combined cash dividend of N7 and bonus issue of one for one share with a gain of N9 to close at N104. Julius Berger Nigeria rallied N3.39 to close at N54.49. CAP added N2.90 to close at N40 while Ecobank Transnational Incorporated gained 90 kobo to close at N14.90 per share.