The Nation Newspaper

Category: Money

  • CBN won’t relax control of MfBs, mortgage firms, others

    The Central Bank of Nigeria(CBN) will continue to monitor Development Finance Institutions (DFIs) for growth this year.

    In a report on activities of Other Financial Institution Department (OFID) on its website, it said the aim of monitoring CBN primary mortgage banks, finance houses, microfinance banks, among others, grouped under DFIs is to see whether they are in order.

    CBN said: “The aim of monitoring DFIs is to institutionalise strong corporate governance and risk management programmes in those firms. The exercise will enable the companies to effectively deliver on their mandates. The bank shall also continue to enforce the Uniform Prudential and Assessment Standards prescribed for DFIs in Africa, developed under the aegis of the Association of African Development Finance Institutions (AADFI) for benchmarking operations of the DFIs.

    “All Other Financial Institutions (OFIs) are required to strictly comply with the prudential requirements specified in the existing guidelines/circulars, directives and provisions of BOFIA CAP B3 Laws of the Federation of Nigeria, 2004. Appropriate sanctions shall be imposed on any OFI found in contravention of the prudential guidelines, circulars, directives or provisions of the BOFIA, 2004.”

    The CBN also said it would sustain the implementation of the Microfinance Certification Programme for Microfinance Banks (MfBs). It added that it would continue to license microfinance banks in line with the prescribed new capital regime of N20 million, N100 million and N2 billion for unit, state and national microfinance banks.

    The apex bank said it is introducing specialised second-tier institutions that would provide short-term liquidity, long-term funding or guarantees to mortgage banks and housing finance providers.

    According to CBN, reforms of the primary mortgage banks shall, among other things, target the enhancement of access to mortgage/housing finance, introduction of sound risk management, strong corporate governance and the promotion of secondary mortgage market.

     

  • CBN: 50 big customers owe banks N2.39tr

    No fewer than 50 top customers are owing banks N2.39 trillion, the Central Bank of Nigeria (CBN) has said.

    Their debt represents 30 per cent of the N7.87 trillion owed the banks, according to CBN Financial Stability Report for June, last year.

    The report put the banks’total credit at N7.2 trillion at the end of December 2011.

    The report signed by CBN Governor Sanusi Lamido and Deputy Governor, Financial System Stability, Kingsley Moghalu, said top 100 obligors accounted for 39.1 per cent of the gross credit, indicating a high loan concentration within the banking sector. The ratio of non-performing loans (NPLs) to gross loans declined by 0.6 per cent from 4.9 per cent, but falls within the regulatory threshold of five per cent.

    The ratio decline, the report said, was partly attributable to the sale of N52.85 billion Eligible Bank Assets (EBAs) to the Asset Management Corporation of Nigeria (AMCON) by six banks.

    The NPL classified as substandard was N74.81 billion (22.3 per cent), doubtful, N123.44 billion (36 per cent) and lost loans, N141.63 billion (41.7 per cent). The NPL also declined by 5.6 per cent to N339.88 billion from N360.09 billion.

    A further deterioration of earlier classified loans resulted in an increase in loan loss provisions from N202.27 billion to N242.13 billion.

    The CBN said it received 444 petitions, amounting to N1.41 billion from customers, relating to alleged excess charges and other unethical practices. Its intervention resulted in banks refunding N5.76 billion to customers.

    The report said banks are facing current or prospective risk arising from changes in the business environment and adverse decisions. Others are improper implementation of decisions or lack of responsiveness to changes in environment.

    The CBN noted that as the environment changes because of changes in economic and regulatory framework, it is critical that financial institutions manage the risk from their business strategy.

    The report said a stress test conducted at the end of June last year, evaluated the solvency risks in banks’ balance sheets and imbalance in the financial system. The result of the exercise reaffirmed the increasing resilience of the industry to shocks. Comparatively, the results showed slight improvements over the December 2011 position in credit, foreign exchange and interest rate risks; liquidity risks increased marginally.

    The reforms in the sector, CBN said, would address liquidity and exchange rate volatility concerns in the near to medium term. It added that liquidity risks were adjudged significant as the impact of 10 per cent general run on the industry’s liquidity resulted in 815 basis points reduction in liquidity ratio. The results, according to the report, showed that small and medium banks were less vulnerable to liquidity risks than big ones.

     

  • AfDB blames National Assembly for non-release of $700m SMEs loans

    The African Development Bank (AfDB) has explained the rationale for delay in the release of the $700 million (N108 billion) loans for small and medium scale enterprises (SMEs). It blamed the delay on what it called technical hitches and the National Assembly.

    In 2011, AfDB approved $700 million for the development of SMEs in Nigeria. It also provided loans to the Bank of Industry (BoI) and NEXIM Bank two weeks ago following the signing of an agreement. The loans were given in two tranches of $500 million to BoI and $200 million to NEXIM for distribution to the qualified SMEs.

    AfDB’s representative in Nigeria Dr Ousmane Dore told The Nation that the loans arrived late because the National Assembly did not approve it in time.

    He said: “This is a sovereign-guaranteed (Federal Government-backed) credit lines. In this case, the credits must be approved by the parliament. So, it was one of the loans that had to wait for the approval of the National Assembly before it can be released.

    “We are trying to work out some conditions guiding the release of the loans.These are technical issues relating to the capacity of the beneficiaries to pay back the loans. Some negotiations need to be done to ascertain whether the banks have the capacity to undertake the risks of collecting the loans. This is important to ensure that confidence between the AfDB and Nigeria is intact.”

    Dore said the board of the AfDB has since approved the loans, adding that the technical issues must be sorted out before the cash is released to the would-be-beneficiaries.

    According to him, the bank is lifting its operational goals to employment generation to foster the growth of the continent. This, he said, is evident by the decision of the bank to approve and release the $700 million loans promised the operators of small and medium scale enterprises in the country.

    He said AfDB has set up loans for capacity building in some countries, including Nigeria, adding that the loans are sovereign guaranteed.

    The AfDB, he said, looks at the conditions attached to sovereign- guaranteed loans, before it releases the loans to the beneficiaries. He added that the loans are given to people at a considerable terms to ensure flexible mode of payments.

    He berated banks for not providing enough funding for the agricultural sector, adding that the sector plays a critical role in the economy. The agricultural sector, he said, is poorly funded, and as such cannot deliver expected results.

    “If you look at the overall credit in the economy, only two per cent goes to a sector like agriculture identified as one of the strongest contributors to the Gross Domestic Product(GDP). The Federal Government can work towards improving the scheme. I think the government has some schemes on that,” he added.

    He said the AfDB has dedicated loans for the growth of the power sector, stressing that infrastructural development is of major priority to the institution.

    The bank has medium-term projects in Nigeria, with a gestation period of four years.The projects spanning road construction, transportation, water, irrigation, among others, aimed at meeting the nation’s infrastructural challenges.

     

  • Investors stake N25b on N289b gains

    Investors stake N25b on N289b gains

    Investors staked about N25 billion on equities last week and earned N289 billion in capital gains as positive sentiments continued to send most stocks to new price level.

    Turnover at the Nigerian Stock Exchange (NSE) stood at 3.57 billion shares worth N24.69 billion in 39,321 deals, a marked increase on a total of 2.81 billion shares valued at N22.19 billion traded in 33,123 deals two weeks ago.

    The overall market situation remained exceedingly positive with average weekly gain of 2.78 per cent. Aggregate market capitalisation of all equities rose from N10.37 trillion to N10.66 trillion. The All Share Index (ASI), the market-wide valued-based benchmark index at the NSE, also trended upward to 33,313.49 points as against its index-on-board of 32,411.86 points.

    The financial services sector remained the most active with 70.75 per cent, 66.16 per cent and 58.71 per cent of the total equity volume, value and number of deals. It recorded a sectoral turnover of 2.53 billion shares valued at N16.34 billion in 23,085 deals. Banking stocks were the main drivers of turnover. Banking subsector recorded turnover of 1.78 billion shares worth N13.05 billion in 16,104 deals.

    Volume in the banking subsector was largely driven by activities in the shares of Unity Bank Plc, Access Bank Plc and United Bank for Africa (UBA) Plc, which altogether accounted for about 45 per cent of the subsector’s turnover. The conglomerates sector followed with a total turnover volume of 473.15 million shares worth N1.05 billion in 2,341 deals. Volume in the sector was largely driven by the shares of Transnational Corporation of Nigeria Plc with a turnover volume of 465.210 million shares valued at N803.042 million in 1,826 deals.

    The pricing trend indicated an overtly bullish market with 73 advancers against 18 decliners. Lafarge Wapco Cement led the advancers with a gain of N6.20 to close at N74.20. Guinness Nigeria followed with a gain of N5.38 to close at N297.41 while Ashaka Cement added N5.33 to close at N26.03.

    On the downside, Nestle Nigeria topped the losers’ list with a drop of N5.03 to close at N814.96. Nigerian Breweries slipped by N1.50 to close at N163.50 while Flour Mills of Nigeria lost 91 kobo to close at N80.

    Meanwhile, about 30.96 million shares resulting from recent bonus issue was at the weekend added to the outstanding shares of Guinness Nigeria Plc, bringing the total outstanding shares to 1.505 billion shares.

     

  • Exposure draft on e-payment arbitration out

    Exposure draft on e-payment arbitration out

    The Central Bank of Nigeria (CBN) has released the exposure draft on e-payment arbitration, The Nation has learnt.

    In a circular to banks, mobile money operators and payment service providers, the apex bank called on stakeholders to submit their input on the draft to enable it arrive at the final framework.

    According to the circular, issues relating to number of agents, type and nature of agents including considerations for super agents, are critical areas being considered in the draft exposure, adding that processes for this line of banking to become functional in the country would be finalised by this year-end.

    The CBN said there had been improvements in the payment system, including the drive for financial inclusion.

    “The cashless economy initiative has tremendous benefits for the people and the economy. It would reduce the cost of cash handling and cost of funds, with available statistics showing that the apex bank and the deposit money banks (DMBs) would have spent over N200 billion on cash management by 2012. This cost can be ploughed into infrastructure development. It would also mean that majority of Nigerians would stop subsidising the cash handling cost of heavy cash users,” it said.

    It said electronic banking was introduced to give a new face to financial transactions adding that there are various aspects of electronic transactions, adding that telecommunication firms play important roles in this regard. The apex bank also ordered banks to change from strip-based to chip-based cards to encourage the growth of electronic transactions.

  • Enterprise Bank goes live on Google maps

    Enterprise Bank Limited has been listed on Google Maps.

    Google Maps is a Google service offering powerful, user-friendly mapping technology and local business information – including business locations, contact information and driving directions.

    In a statement, the bank said the map offers street maps, a route planner and an urban business locator in numerous countries around the world. It also provides such special features as scale control, street view, and configurable location icons amongst other facilities.

    “By getting listed on to this mapping platform which now features its branches, Automated Teller Machines (ATMs) and Point of Sale Terminals (PoS) locations, it is now easier for stakeholders to access us and our services from anywhere in the world. This unique relationship between Enterprise Bank and Google has enabled the financial institution boost visibility and excellent service delivery to its numerous customers,” it said.

    The statement added that this is yet another milestone in the bank’s move to reposition the brand, products and services by providing excellent customer service to its existing and prospective customers in the years ahead.

    Also commenting on the development, Juliet Ehimuan Chiazor, Google Nigeria Country Manager, said: “The goal of Google Maps is to make it easier for people across the world to locate places and businesses of interest. We are excited to see Enterprise Bank Limited and more Nigerian businesses using Google Places to get listed on maps.

    “This makes it easier for Nigerians to find and engage with these businesses. Customers can also search for their banks and get directions on the go, using Google Maps on their mobile phones.”

  • ‘African banks lead sector’s innovation’

    The Group Managing Director, First City Monument Bank (FCMB) Plc, Ladi Balogun, has said innovation in mobile payments, financial inclusion, and regulatory intervention is making sub-Saharan African banks the future of sustainable banking in the continent.

    In a presentation made in London, Balogun said: “In a region that is often a slow follower, African banks are increasingly becoming first movers.”

    He cited M-PESA, the Kenyan banking system and the role its regulator has played in promoting mobile payments and financial inclusion which has resulted in the highest mobile payment penetration numbers in the world.

    Balogun also cited a leading South African bank recently conferred with a global award for innovation, with solutions such as social (network) banking, cardless Automated Teller Machine (ATM) withdrawals, unique branch formats, aimed at increasing accessibility and convenience.

    In the case of Nigeria, Balogun said regulatory innovations, led to one of the boldest and most efficient crisis resolution efforts to be recorded by any bank regulator in recent times. He noted: “Within three years the Nigerian banking industry has gone from non-performing loan ratio’s of over 25 per cent to less than five per cent, and aggregate industry operating profit likely to cross $3 billion in 2013.”

     

     

     

  • World Bank chief to manage $27b

    World Bank chief to manage $27b

    World Bank’s Vice-President for Concessional Finance and Global Partnerships (CFP) Joachim von Amsberg has been authorised to oversee a trust fund portfolio of about $27 billion and implementation of the $49.3 billion International Development Association (IDA) replenishment.

    The IDA is the World Bank’s fund for the poorest. Mr. von Amsberg brings to the post extensive global and country development experience. As the bank’s head of Operational Policy and Country Services (OPCS) for the past two and half years, he drove a series of institutional innovations, including the introduction of the bank’s first new lending instrument in 30 years.

    He also oversaw a major reform programme focused on improving the flexibility of investment lending and strengthening the institution’s support to fragile and conflict-affected states.

    “I am pleased to be joining the concessional finance vice presidency, a unit that plays an important connector role in helping the bank secure and leverage the resources needed to provide support to the world’s poorest countries and in areas of global public concern, such as conflict and other crises,” he said.

    “The current replenishments of IDA and the Global Environment Facility, as well as efforts to continue improving our trust fund operations and mobilise financing for other development needs, are hugely important to the well-being of billions of people around the world,” he added.

     

  • CIBN to organise risk management confab

    CIBN to organise risk management confab

    The Chartered Institute of Bankers of Nigeria (CIBN), Lagos chapter is organising a risk management conference for regulators and operators in the financial services industry. The conference is billed for Dubai, United Arab Emirates between February 17 and 20.

    In a statement, the body said there will be a strategic session for senior management staff of the Central Bank of Nigeria (CBN), Nigerian Deposit Insurance Corporation (NDIC), Money Deposit Banks, Discount Houses, Mortgage Banks, Microfinance Banks, among others.

    The statement reads: “The event would serve as a training and strategic session for evolving best practices for the implementation of BASEL 11 and 111 in Nigeria. Bank of International Settlement (BASEL) had been developing new rules and practices to forestall re-occurrence of the global financial crisis that had put the world economies in prostrate since 2007. We are all living witness of how bad an economy could go, notwithstanding the so-called blessings of oil windfall revenue in the world.”

    According to CIBN, participants would leverage on the forum to bring about desired growth to their employers.

     

  • Banks await CBN’s nod to implement e-clearing at branches

    Banks await CBN’s nod to implement e-clearing at branches

    Electronic clearing (e-clearing), being implemented only at banks’ headquarters, will soon be extended to their branches nationwide, The Nation has learnt.

    It was learnt that the banks are waiting for the approval of the Central Bank of Nigeria (CBN) for the extension.

    The policy, which became effective last August, could not be implemented across board because of poor technical know-how and infrastructure needed for seamless take-off.

    e-Clearing involves stopping the physical movement of the cheque and replacing the physical instrument with the image of the instrument and the corresponding data contained in Magnetic Character Ink Character Reader (MICR) line.

    The cheque details are captured, typically by the bank presenting the cheque or its clearing agent and electronically presented in an agreed format to the clearing house for onward delivery to the paying bank.

    Unlike the more common form of presentment where a cheque is physically presented to the paying bank, a truncated cheque is typically stored by the presenting bank electronically.

    The banking watchdog said clearing period under the new rule would allow cheques clear on a T+1 basis such that customers receive value in the morning of T+2 even as the clearing house is also expected to operate three sessions.

    Besides, the images of all the instruments in a batch/file shall be duly captured along with MICR data using scanners set up for the purpose. The amount needs to be captured/keyed in to complete the data record.

    “The incoming images are subjected to validations. The images which fail validations are rejected with an appropriate response file. The bank may rescan the instrument and present in line with bank’s internal processes/ control procedures. The member banks have to maintain control over such re-presentments,” it said.

    Besides, banks are expected to plan transmission of their outward presentation by taking into account presentation volume, the bandwidth of network with the clearing house, and the session window.

    In the event of an exchange file being received at the clearing house within a session time but not passed to the clearing house, the clearing house would unbundle the exchange file, and reattach to a new session.

    In case validation of digital signature of presenting bank fails, paying bank may return such items with appropriate return reason codes.

    The introduction of the truncation process changes the roles and the responsibilities of the various participants in the clearing system and may lead to introduction of certain risks