The Nation Newspaper

Category: Money

  • NDIC advocates safe, stable financial sector

    NDIC advocates safe, stable financial sector

    The Nigeria Deposit Insurance Corporation (NDIC) has said the safety and stability of the financial sector cannot be compromised if the economy must improve.

    Speaking at the NDIC Day during the Lagos International Trade Fair, it’s Managing Director, Umaru Ibrahim, said the corporation would support the Central Bank of Nigeria (CBN) and other regulators to ensure that the financial system achieves the set objective of building a strong economy.

    He said the corporation was established by the Federal Government to insure deposit liabilities of licensed financial institutions.

    “The key mandate is to provide financial guarantee to depositors of the insured financial institutions in the event of failure to enhance confidence in the nation’s banking system. The corporation has contributed greatly to the various banking sectors in the country,” he said.

    The cumulative liquidation dividends of N77.38 billion, he said, had been paid to depositors whose claims were in excess of the insured amount in the 48 closed commercial banks as at last August 31. This is against N73.55 billion that was paid in the same period last year.

    Ibrahim said a total of N2.45 billion had been paid to depositors of the 103 closed microfinance banks as at August 31, this year while N2.25 billion was paid to insured depositors of the closed MfBs as at December last year.

    He said a cumulative liquidation dividend payment to shareholders of Alpha Merchant Bank, Nigeria Merchant Bank and Pan African Bank stood at N373.04 million, N620 million and N293 million during the period.

    The NDIC boss said deposit insurance has been facing low-level public awareness in most jurisdictions worldwide, adding that the corporation has mapped out some public awareness initiatives to sensitise the public about its activities.

    He said the theme of the fair “Promoting trade for sustainable economic transformation” was an indication of the government’s commitment to Vision 20: 2020.

    He said the safety, soundness and stability of the financial sector cannot be downplayed in the economy of any nation. He added that the key mandate of the corporation is to provide financial guarantee to depositors of the insured financial institutions in the event of failure to enhance public confidence in the nation’s banking system. “The NDIC has a crucial role to play towards the safety, soundness and stability of the financial system,” he said.

    ‘’The NDIC expresses its profound appreciation to the Lagos Chamber of Commerce for its support and co-operation since 2008 when the participation in the Lagos International Trade Fair started, and also to the press which has continued to be partner in their progress,” he added.

  • MfBs negotiate CoT with banks to cut costs

    MfBs negotiate CoT with banks to cut costs

    Microfinance banks (MfBs) are negotiating with banks for a concessionary Commission on Turnover (CoT) to enable them reduce the rising cost of operations.

    Managing Director, Seed Capital Microfinance Bank, Gbenga Komolafe, made this known during a meeting organised for MfBs by Sterling Bank Plc in Lagos.

    He said some of the banks that had granted concessions on turnover for the MfBs reneged on the agreement, thereby raising the cost of operation for the subsector. He said merged and acquired banks were the worst affected because the new owners denied having anything to do with the concession.

    “We have seen this happened in several cases, especially in merged and acquired banks. They have always denied there were concessions at any time before the merger or acquisitions,” he said.

    Komolafe said some of the banks that retained the concession usually give COT target to MfBs, which is usually above their financial capabilities.

    Managing Director, Sterling Bank Plc, Yemi Adeola, said commercial banks and MfBs could always agree on things that will reduce their cost of operations including CoT slash.

    He said his bank is proactively positioning its key customers in the subsector to benefit from the N220 billion intervention funds from the Central Bank of Nigeria (CBN) expected to be launched this week.

    Other opportunities that the MfBs can key into include the N5 billion small business development funds, $4 million renewable energy project, and another $200 million provided by Ford Foundation to enable MfBs increase their market penetration.

    He said banks concentrate on big customers, not understanding that 50 to 60 per cent of finance in the economy usually comes from the Small and Medium Scale Enterprises (SMEs). He said unless banks refocus on SMEs, the economy will not grow.

    Noting that massive investment is needed to run a bank, the Sterling Bank boss said the lender is committed to channel some of its products and services as well as dedicate competent staff to meet the business needs of MfBs.

    He said the MfBs need enabler, in terms of commercial bank to be able to access the funds and other intervention funds from the apex bank to the subsector. He said there is also a N600 billion agricultural development fund, which the bank has given opportunities for several customers to benefit from.

    Chief Finance Officer, Sterling Bank, Abubakar Suleiman, said the bank believes in strategic partnership and is partnering with some MfBs in relation to electronic business, agricultural finance among others. “We identify with the brand promise of MfBs and believe there is need to leverage on technology to increase their retail penetration and enable their customers enjoy electronic banking facilities,” he said.

    Consequently, he said the bank will be assisting the MfBs on co-branded card issuance, e-payment inflows, global teller, Automated Teller Machine (ATM) deployment and mobile banking. Such services, he said, would enable the bank increase customer patronage, enhance deposits, revenue and boost efficiency through automation of operations.

    He said the bank has increased its exposure to the agricultural sector and will continue to do that going forward.

    Managing Director, Support Microfinance Bank, Sunny Akahmiorkhor, said the step taken by the bank is commendable. He said the process of achieving intervention funds from the CBN has been hectic for the susbsector, adding that the move by Sterling Bank to mediate between the MfBs and CBN on the intervention funds will address such hitches.

  • Domestic debt market will pay private sector, says DG

    Domestic debt market will pay private sector, says DG

    Private sector operators seeking long-term funding will get better opportunities in the domestic debt market, which is dominated by the Federal Government, Director-General, Debt Management Office (DMO), Dr Abraham Nwankwo, has said.

    The domestic debt market is an alternative source of borrowing for the government and organised private sector. Such debts are in form of bonds, Treasury Bills (TBs), debentures, loans among other instruments.

    Speaking on the Federal Government’s decision to borrow $7.9billion during a television interview, Nwankwo said the government was gradually retreating from the local debt market to give more space for private operators to access funds to grow the economy.

    He said: “After exiting the debt owed the Paris Club and London Club of Creditors few years ago, we saw the need to develop the domestic debt market so that private sector would be issuing debt instruments to develop the economy. We use the advantage of the market to fund the budget deficit. But now, the government is retreating to give private sector wider opportunities to operate.  The government is strategically withdrawn from the market, you can see it in the declining of the government burrowing domestically in the past three years.”

    He added: “In 2003, there was no long-term market for long-term funding. But with the establishment of DMO in 2005, the government has been having the opportunity of accessing long-term funding of 20 years tenor. This is unlike a gestation period of 12 months, usually given by the banks.”

    According to him, Nigeria debt has grown primarily for reasons not known to many Nigerians.

    “It is true that we exited the obvious components of our debts – that is debts owed the Paris and London Clubs. But we have not exited the debt owed the African Development Fund (AfDB), World Bank among others. Thereafter, we have to continue burrowing to pursue developmental agenda. I challenge any expert to go and look at the balance sheets of most developed economies. They are still borrowing empirically and historically. Debt is continuous. As at September 31, 2012, the foreign debts were $6.2 billion, while the domestic debts were N6.3billion. The debts are sustainable,” he said.

    The DMO’s boss allayed the fears that the government’s plans to borrow $7.9 billion would further affect the economy, stressing that the loans would be taken at concessionary rates from the World Bank and AfDB windows.

    “Prior to 2008, the nation’s debts were unsustainable because we could not pay the interests, and the principals on the debts. But the $7.9 billion debts Nigeria is planning to take would be sustainable. The reason is because the interests are  going to be very low. Some of the loans are going to the health, education, employment generations, among other areas germane to the growth of the economy,” he said.

  • Union Bank records N17b Q3 profit

    Union Bank records N17b Q3 profit

    •Investors stake N11.5b on equities

    Union Bank of Nigeria (UBN) Plc further consolidated its performance in the third quarter as the recently recapitalised bank reversed net loss of about N59.14 billion with net profit of N17.18 billion.

    Interim report and accounts of the bank for the nine-month period ended September 30, 2012 showed strong bottom-line performance as improvement in core banking operations continued to impact on overall performance.

    Profit before tax stood at N14 billion in 2012 as against pre-tax loss of N75.8 billion in comparable period of 2011. While tax write back of N16.66 billion helped reduced net loss to N59.14 billion in 2011, the company recorded net profit of N17.2 billion in 2012. Tax write-back for third quarter 2012 was N3.2 billion. Net interest income increased from N47.81 billion in 2011 to N52.23 billion in 2012.

    The latest report steadied the bank’s returns outlook with earnings per share of N3.29 in 2012 as against net loss per share of 5.0 kobo in the comparable period of 2011. At today’s opening price, earnings yield stood at 41 per cent, indicating the probable return to investors.

    The report also reaffirmed Union Bank’s large capital base with shareholders’ funds of N209.93 billion in 2012 as against deficit of N189.04 billion recorded in corresponding period of 2011.

    The third quarter report showed sustained growth trend, building on turnaround noted in the first and second quarter. In the first half, the bank recorded net profit of N16.14 billion compared with a loss of N40.30 billion posted during corresponding period in 2011. This translated to earnings per share of N2.51 as against a loss per share of N3.05 kobo recorded same period last year. In the first quarter, the bank posted gross earnings of N25.51 billion while profit after taxation was N6.32 billion.

    Directors of the bank stated that the third quarter report indicated the resurgence of the bank following its recent recapitalisation and restructuring programmes.

    According to the bank, the stellar performance is due to full re-capitalisation, emergence of core investor; faster service delivery to customers and other growth spurring polices of the management.

    The bank said its robust performance sprang from a solid foundation laid during the recapitalisation and restructuring period, thus creating momentum that has helped to feed the investing public optimism as evident in the rising risk appetite and share price of the bank.

    Directors of the bank said they expected the uptrend to continue in the periods ahead as investors look towards first full-year profit in recent years.

    Meanwhile, investors staked N11.49 billion on 1.19 billion shares through 22,277 deals last week at the Nigerian stock market. The financial services sector remained the toasts of the investors with turnover of 835.158 million shares valued at N6.380 billion in 13,326 deals, representing 70 per cent of aggregate turnover for the week. The consumer goods sector staged a distant second with turnover of 178.863 million shares valued at N3.65 billion in 4,204 deals. The trio of Dangote Sugar Refinery Plc, Zenith Bank and United Bank for Africa were the three most active stocks, accounting for 324.977 million shares, some 27 per cent of total turnover.

    On the over-the-counter (OTC) bond market, investors staked N187.51 billion on 179.414 million units of bonds through 1,196 deals. Nigeria’s sovereign bonds are traded on the OTC.

    The benchmark value indices at the Nigerian Stock Exchange (NSE) showed modest gain for equities. The All Share Index (ASI), the main index for Nigerian stock market, inched up from its opening index of 26,559.55 points to close at 26,718.30 points, indicating an increase of 0.60 per cent.

    Aggregate market capitalisation of all equities also added N50.6 billion to close at N8.514 trillion.

     

  • Unity commits N2.1b to housing, transportation

    Unity Bank Plc has said it has committed N2.13 billion to fund housing and transport projects in Lagos State.

    Managing Director of Unity Bank Mr Ado Wanka, who said this at the weekend disclosed that the bank had committed about N1.5 billion to financing affordable houses in the state while another N6.33 million was earmarked for the purchase of 100 42 seater buses by HFZ Transport services.

    Wanka, represented by Mrs Yemi Adeyinka, the bank’s Regional Manager in Ikeja, made spoke at the bank’s Special Day at the ongoing 2012 Lagos International Trade Fair in Lagos. “The bank is involved in financing 112 housing units comprising 84 units of four-bedroom and 28 units of three- bedroom apartments in Lekki area of Lagos. “The project is worth N1.5 billion,” he said.

    Wanka said that this was the way the bank could participate in the turning Lagos to emerging mega city.

    He said the bank was also involved in promoting hospitality and tourism in the country by providing N250 million to fund the building of “African Sun Amber Residence”.

    The managing director also said that the bank was involved in financing the purchase of 50 Nissan Sunny cabs to ease transportation in Lagos to its POD of Diamonds customers. He said that the bank had been participating in the Lagos Trade Fair because it had large numbers of its branches in the state.

    “We are directly participating in the laudable steps taken by the Lagos Sate government to reshape the state into a model mega city of the 21st century,” he said.

    Mr Goodie Ibru, President, Lagos Chamber of Commerce and Industry (LCCI), said the bank had been reliable in providing finance to the private sector. He urged the bank to continue in its financial intervention to help businesses to grow in the country.

  • CBN reviews policy on agric sector funding

    The Central Bank of Nigeria (CBN) has reviewed rules for lending to the agricultural sector of the economy. The apex bank The Nation learnt, took the decision after reports from banks and discount houses indicated that lending to the subsector remains a high-risk, which should be followed with caution.

    In a circular to all deposit money banks and other stakeholders in the agric funding chain released at the weekend, the CBN said agricultural lending accounts for approximately 1.4 per cent of formal lending, and has been on the decline since 2006 because of the perceived risk of the sector. This situation, it said, was because banks have limited understanding of and lack of confidence in the sector.

    To reduce the inherent risk in the level, the apex bank advised that going forward, lenders should conduct environment and social risk analysis and assessment of agricultural clients and activities before extending loans to them. The lenders, by this rule, are also expected to ensure that identified risks are adequately monitored and managed while adhering to local environmental and social laws.

    The CBN also wants lenders to be consistent with Nigeria Incentive-based Risk Sharing System for Agricultural Lending (NIRSAL) agenda, ensuring that, they finance the manufacture and distribution of improved and high seeds; lending to indigenous seed companies and importers of seed varieties and ensuring that farmers are able to procure seeds directly from seed manufacturers by availing them adequate credit.

    Also, with support from industry stakeholders, banks are to establish agricultural value chain research development fund that produce high quality research on the needs of the sector. Lenders are also to encourage and finance providers of storage facilities for seeds, produce and other value-added products provided that they take into consideration energy efficiency issues.

    The apex bank said it is collaborating with local banks for the institution of principles that will assist them in the identification and management of complex environment and social risks associated with the provision of financial products and services to the agriculture sector.

    It is also meant to provide additional sector-specific guidance to supplement the Nigerian Sustainable Banking Principles Guidance Note and ensure that banks adopt relevant international standards and best practices in the management of environment and social risk.

    The principles will equally position agriculture as an attractive, rewarding and sustainable business opportunity given the large proportion of the population that depends on agriculture as a source of livelihood. “It is clear that agriculture is a practical means of reducing poverty, unemployment, food insecurity, whilst providing raw materials for industries and export in the medium to long term,” it said.

     

     

     

  • Banks breaching ATM rules

    Banks breaching ATM rules

    Banks are yet to comply with the Central Bank of Nigeria’s directive that all Automated Teller Machine (ATM) related complaints should be resolved within 72 hours.

    The Nation investigations showed that it still takes many banks about a month to resolve simple complaints, such as non-dispensal of cash, debit without payment, card trapping or repair of non-functional machines. The banks are also not abiding by global best practices that require them to specify and inform customers about machines that need repairs, or those out of use.

    This breach is likely to be sanctioned by the CBN.

    A customer of one of the banks, Chukwudi Okafor, who is yet to have his N40,000 refunded after the ATM debited him without dispensing the cash, said he has written several letters to the bank, completed the complaint forms for almost a month, but nothing has been done.

    He said the challenge of delayed resolution of ATM complaints may affect customers’ perception on use of other e-payment channels, such as Point of Sale (PoS), among others.

    Okafor said the problem would have been averted if there was a notice on the machine, informing customers that it was faulty.

    “In many cases, customers get into problems because banks fail to properly inform them about the working condition of ATMs at a given time. I doubt if any customer will attempt using a machine that is faulty knowing the implications,” he said.

    Another customer, Abiodun Ogundipe, whose card was trapped in one of the ATMs, said he had problems getting the bank to reissue a new one, adding that after paying N1,000 to replace the card, nothing has been done in the last one month.

    Investigation showed that although many banks advise customers to complete forms to guide them in resolving such complaints, such resolution, if at all, takes about a month or more.

    The apex bank had earlier warned banks to resolve complaints from ATMs within 72 hours. “The CBN circular said: Failure to respond to the customer or the CBN on ATM complaints within 72 hours will attract a fine of N50,000 per day for each complaint after the 72 hours until the response is received, while failure to resolve any ATM dispute with evidence of resolution within 14 days, the operator will refund the total money involved in the fraud.

    “All cardholders’ complaints are to be treated within a maximum of 72 hours from the date of receipt of the complaints. Networks used for transmission of ATM transactions must be demonstrated to have data confidentiality and integrity. Where the user of the ATM blocks his image for camera capture, the ATM should be able to abort the transaction.”

    The regulator also said operators that fail to establish help desks contacts, or non functional help desk contacts will attract a fine of N50,000 for each day of infraction, while failing to disclose ATM surcharge to customers, the CBN will enforce a refund of the surcharge.

    The CBN added that other non-monetary sanctions that could be applied for these infractions include naming the offenders at the Bankers’ Committee Forum, suspension of offenders from participating in clearing operations until the infraction is corrected, in addition to suspending offenders from participating in Real-Time Gross Settlement (RTGS) operations until the infraction is corrected.

    Also, the CBN directed that the helpdesk contacts are to be adequately displayed at the ATM terminals, while all surcharges are to be fully disclosed to customers. The new rule also stipulates that there must be availability of cash in ATMs at all times.

    “The funding and operation of the ATM deployed by non-bank institutions should be the sole responsibility of the bank or institutions that entered into agreement with them for cash provisioning. Every ATM is expected by this arrangement to have cameras that will view and record all persons using the machines and every activity at the ATM like card insertion, Personal Identification Number (PIN) entry, transaction selection, cash withdrawal and card taking, among others.

    Also, regulatory monitoring stipulates that any institution which operates ATM should file an updated list of such machines, including the details of location of their addresses with Banking and Payment Systems Department of the CBN for compliance monitoring. The apex bank is expected to conduct onsite checking of such machines, with a view to ensuring compliance with cash and service availability at the ATMs.

    On penalties to defaulters, the new CBN guidelines stipulate sanctions in the form of monitory penalties, or suspension of the acquiring /processing services or both will be imposed on such erring institutions for failure to comply with any of the provisions.

    Analysts insist that there is little or no implementation of these rules by the apex bank which would have improved ATM usage and confidence in the country.

  • RenCap: Oil shut down to widen budget deficit

    The three-week shutdown of oil production in October over floods will have negative impact for revenue collections and could expand the 2013 budget deficits, analysts at Renaissance Capital (RenCap), an investment and research firm, have predicted.

    It said in an emailed report that the budget was premised on oil production of 2.48 million barrel per day (mbpd), which means the budget deficit will exceed the targeted 2.85 per cent of Gross Domestic Product (GDP).

    The flooding also led to increase in food index. As anticipated, food inflation rose to 10.2 per cent due to a shortage in supply as the flooding delayed the harvest for some crops like cocoa, beans and pepper. Also, transporting harvested products to the markets has become more difficult and expensive as most of the roads are now impassable.

    It said the impact of the decline in core inflation far outweighed the rise in the food index, the largest contributor to the consumer price index, leading to an overall ease in headline inflation for September.

    President Goodluck Jonathan recently presented the proposed 2013 budget to the National Assembly. The budget is a plan of the intended revenues and expenditures for the country. It is also a tool for macroeconomic management that could help promote fiscal prudency and foster growth in the economy.

    RenCap said the 2013 budget is similar to the Medium-Term Expenditure Framework (MTEF) and Fiscal Strategy Paper sent to the National Assembly for approval. However, while the budget has a span of one year, the MTEF is a strategic document designed for a period of three years.

    The budget highlights showed an aggregate expenditure of N4.92 trillion, representing an increase of 4.7 per cent from the 2012 expenditure of N4.7 trillion, while total revenue is put at N3.89 trillion, an increase of 9.3 per cent from the 2012 revenue of N3.56 trillion.

    However, indicators in the proposed 2013 budget that demonstrate the commitment to fiscal prudence are the reduction in fiscal deficit to 2.17 per cent of GDP from 2.85 per cent (N1.15trn) in 2012, which is within the threshold stipulated by the Fiscal Responsibility Act, 2007.

    There was also reduction in domestic borrowing by 2.3 per cent to N727 billion, from N744 billion in 2012, to ensure that debt stock remains at a sustainable level.

  • Ex-bankers protest non-payment of entitlements

    Workers who lost their jobs to the 2005 banking consolidation have protested against the non-payment of their entitlements, seven years after. They are allegedly being owed N8billion as entitlements.

    Also, the workers have appealed to the Senate President David Mark to invite the Central Bank of Nigeria(CBN) and the Nigerian Deposit Insurance Corporation of Nigeria(NDIC) to resolve the issue.

    The workers, who staged the protests under the aegis of the Ex-Staff of Non-Consolidated Banks of Nigeria (AESNBN), were drawn from All States Bank Plc; Hallmark Bank Plc; Liberty Merchant Bank Plc; Lead Merchant Bank Plc; City Express Bank Plc; Assurance Bank Plc andTrade Bank Plc, among others.

    Speaking during the rally, the association Chairman, Mr Magnus Maduka, said the development has put the affected workers in a dire situation. He said the affected staff were 14,000, adding that some have died when struggling to get their benefits.

    He said the former CBN Governor, Prof Charles Soludo, reneged on his promise to pay the workers of the banks that failed to consolidate their terminal benefits in line with the policies of their employers.

    Maduka, who was the former Deputy General Manager, Head of Operations, Hallmark Bank Plc, said members have made several moves to get their gratuities and severance packages without success.

    He said: “Initially, we had thought the CBN will live up to its billing by honouring its promise within 90days, but later referred us to NDIC. This made us to conclude that something is amiss. On the other hand, NDIC, in order to keep us off its back, classified our entitlements as “Other Creditors,” meaning that they may never pay us in our lifetime. It is quite unfortunate that NDIC which had earlier agreed in our meeting with them and in a letter dated June 20, 2008 to pay us would make a U-turn within a short time of one year.” (565).

    Similarly, a former staff member of All States Bank Plc, Mr Charles Elelegwu, said NDIC and CBN have paid workers of the Lead Merchant Bank and City Express Bank, and must accord the same privileges to them.

    “The NDIC, through its existing legal framework of winding up banks, has set aside a maximum of N200, 000 for depositors of the failed banks irrespective of the balance in their accounts. We are, therefore, asking that the same principle be applied to the settlement of the staff entitlements,” he added.

    Sources close to the management of CBN said the apex bank would look into the matter to ascertain the level of genuiness of the complaints of the aggrieved staff. The sources said the winding up of banks, valuation of their assets, payments of the affected depositors/staff, among other issues, are sensitive, and need to be handled with cautions.

    “We would look into the issue and see what really happened, the sources added.

  • Voter Cards: CBN wants depositors to report defaulting banks

    Voter Cards: CBN wants depositors to report defaulting banks

    Depositors who were denied the opportunity of using their voter cards for identification in banks should forward their complaints to the Central Bank of Nigeria (CBN), its Director of Corporate Communication, Mr Ugochukwu Okoroafor has said.

    CBN had last month directed banks to accept voter cards duly signed and approved by the National Independent Electoral Commission (INEC) for transactions as part of its Know Your Customer (KYC) programme to promote financial inclusion in the country.

    Ugochukwu said though the apex bank has not received any complaints, depositors should report erring banks to the CBN.

    He said the three levels of Know Your Customer initiative was introduced to enable people with different means of identifications access the banking services.

    He said: “Though we are yet to hear that banks do not accept voter cards for identification, if there are depositors facing this problem, they should let the CBN know. Based on CBN’s study, 65 per cent of people are out of the financial system, representing over 90million of the 160 million Nigerian population. We want to ensure that 32.5 per cent of this figure is brought into the financial community before 2020. We would like to see a situation whereby Nigerians that have been excluded from financial activities, mostly women, embrace banking transactions. If identification is the major problem in the industry, we should do something about it to encourage more participation in the industry.”

    According to him, lack of proper means of identification is one of the major problems affecting operations in the industry, adding that the inability of many people to have driving licence, international passports, among other major means of identification, resulted in the introduction of voter cards for banking transactions.

    “What we are trying to do by the three levels of KYC initiative as stated in the policy guidelines, is to ensure that banks know their customers in details. Through this, banks would take lesser risks, guarantee the safety of funds, make more money and help in stabilising the system. It is not everybody that has the same level of identification.

    ‘’So, when there are multiple and varying means of identifications in the banking system, the more people come into the industry, the better for the growth of the industry and the economy in particular,” he added.

    The Association of Chief Compliance Officers of Banks in Nigeria (ACCOBIN) said the acceptability of voter cards for identification in banks is a welcome development. The association said banks would not leave any stone unturned to carry out a through customer due diligence.

    The association at a forum in Lagos said the approval of voter cards for transactions will give as many customers as possible an opportunity to have an interface with the banks.