The Nation Newspaper

Category: Money

  • Euro rises on bonds purchase

    Euro rises on bonds purchase

    THE euro rose for a sixth day against the yen, the longest run since March, as European Central Bank (ECB) President Mario Draghi said the currency was irreversible and that the bank’s decision to purchase bonds helped ease tensions.

    Bloomberg report said the 17-nation currency gained the most in almost three weeks versus the dollar after Draghi said the ECB was ready to start buying government debt from nations such as Spain as soon as the necessary conditions are met.

    The euro appreciated against all but one of 16 major counterparts on speculation ECB President Mario Draghi will provide more detail of the bond-purchase program announced last month.

    The euro advanced 0.8 per cent to 102.08 yen after rising earlier to 102.21 yen, the strongest level since September 20. Japan’s currency depreciated past its 200-day moving average against the 17-nation currency, 101.75 yen, for the first time in more than a week.

  • CIBN flays amendment of CBN Act

    CIBN flays amendment of CBN Act

    The Chartered Institute of Bankers of Nigeria (CIBN) has said that the proposed amendment of the Central Bank of Nigeria (CBN) Act would jeopardize the membership composition of the Board.

    CIBN President, Segun Aina said the proposed bill will reduce the impact of the CBN’s management on the board’s decisions, as it will create situations where only one member of its management, the Governor, sits on the CBN’s seven man board.

    He said that currently, five members of the management of CBN, that is, the Governor and Deputy Governors, sit on a 12 -man board.  This, he said, does not augur well for good governance and management succession.

    The board composition proposed by the Bill increases the number of direct government officials on the CBN Board from two to five despite the almost 50 per cent reduction in the board’s size. “Consequently the new composition would create the perception of a government majority on the Board.  This is capable of undermining the “independence” of the CBN and may lead to unintended consequences,” he said.

    According to him, the situation where the Governor acts as Chairman of the CBN’s Board is aligned to international best practice and is designed to support the independence of the CBN. Such independence, he explained, includes the authority of the apex bank to manage or handle its own operations without excessive involvement of the government.

    Such practices, he maintained, exists in many countries including Australia, Belgium, Canada, Germany, Japan and Netherlands, India, Korea. The same is true of other African Countries such as The Gambia, Ghana, Botswana, Zambia, Kenya and South Africa.

    “A survey of many Central Bank Boards, in countries at various levels of development revealed that, without exception, the Central Bank Governors act as Chairmen of the Boards of Central Banks. It is also pertinent that, in Mexico and South Korea, there are no external Directors, as their Central Banks Boards consist of solely the Governor and a number of Deputy Governors,” he said.

    Aina said many Central Bank laws set out qualifications for board members that are designed to reduce the risk of conflicts of interest. He added that board members could come from different backgrounds but must not be delegates of special interest groups. Also, some countries have mechanisms, which ensure that a wide range of political interests are involved in the appointment process and enhance, the legitimacy of the board.

    He said the ability of the Central Bank to speak out, if needed, and possibly on critical issues with respect to economic and budgetary policies, might also be impaired if the Governor, or the other members of the board are subjected to restrictive controls and this might be interpreted as political interference.

    He said the subsisting CBN Act is a product of several rigorous efforts to align with international best practices, adding that the independence and autonomy of the apex bank must be guaranteed to ensure effective execution of its mandate.

    “In this era of globalization, Nigeria cannot afford not to follow well tested and enduring global trends and practices. A truly independent and autonomous Central Bank of Nigeria has become more imperative for the integration of the Nigerian financial and economic systems with the rest of the world, and it is therefore necessary that the independence and autonomy of the Central Bank be strengthened to ensure it effectively, efficiently and successfully executes it’s very important national mandates in the interest of the economy and the citizenry,” he said.

  • ‘Forced merger for tier 2 banks likely’

    ‘Forced merger for tier 2 banks likely’

    Nigeria’s smaller banks may be forced to consolidate to compete with the biggest institutions, Mark Mobius, executive chairman of Templeton Emerging Markets Group, has said.

    According to Bloomberg report, Nigerian banks have reported rising profits and loan growth this year. “The largest banks are moving forward at a fast pace to strengthen their position, so smaller banks may not have any other choice but to merge or acquire,” Mobius, who oversees about $45 billion, said. According to him, there is a possibility of further consolidation in the banking sector although he failed to identify any banks that may combine.

    He said the growth of the industry comes after Central Bank of Nigeria (CBN) Governor Lamido Sanusi fired the chief executive officers of eight of the country’s 24 lenders in 2009 and bailed them out with 620 billion ($4 billion) because loans by banks to equity speculators and fuel importers had pushed the industry to the verge of collapse. The government then set up Asset Management Corporation of Nigeria (AMCON) to buy bad debts from the country’s banks.

    He said that most banks have swung back to profit after selling their bad debts and are set to benefit from an economy forecast by the government to grow 6.5 per cent next year, the same pace as it expects this year.

    He said that Bloomberg NSE Banking Index, which tracks Nigeria’s 10 biggest banks by market value has advanced 60 per cent this year, compared with the 31 per cent rise of the Nigerian Stock Exchange All-Share Index. Templeton holds shares in Nigerian lenders including Guaranty Trust, Zenith Bank, Access Bank Plc, United Bank for Africa Plc and First Bank of Nigeria Plc, according to data compiled by Bloomberg.

    “We are not reducing,” said Mobius. “We are long-term holders.” Templeton is also considering buying shares in Kenyan banks to “get exposure to the entire Kenyan economy, which we see growing at a healthy pace,” Mobius said.

    He said that Kenyan banks are attractive to international investors because their practices, capital adequacy and other ratios are fundamentally good. “Given the generally low penetration of banking services throughout the country there are excellent prospects for growth,” Mobius said. “We see continued growth in the next 10 years.” Increased capital requirements in Nigeria and other African countries are “quite positive,” he said.

    Kenya, Ghana, Gambia and Zambia increased minimum capital requirements for foreign lenders in the past 12 months. Banks must obtain new funds to re-capitalise their foreign units and won’t be allowed to use money already raised by their parent companies, the CBN said in a statement published on its website on July 26.

  • UBA spearheads talks on infrastructure devt

    UBA spearheads talks on infrastructure devt

    United Bank for Africa (UBA) Plc has taken a frontline position in stakeholder’s discussions on bridging the gap between opportunity and infrastructure investment in Nigeria and Africa.

    A two-day United States (US) /Africa Infrastructure Conference, themed Building the Infrastructure for Nigeria ’s Vision 20:20, was organised in the US by The Corporate Council on Africa (CCA) in conjunction with the Embassy of Nigeria and co-sponsored by UBA Plc.

    CEO, UBA Capital, Africa, Wale Shonibare spoke at a panel session titled “Financing it All”. He commended the Federal government’s renewed focus on developing infrastructure to stimulate economic growth. According to him, “policy decisions such as the recently announced tax incentives to encourage private sector investment in infrastructure are essential to accelerating investment in the sector.

    He sid UBA Capital is positioned to assist American and other overseas investors with interest in exploring the abundant opportunities presented by the rapid growth in the Nigerian economy. “As one of Africa’s leading financial services group, UBA has proven ability to finance big ticket transactions,” he added.

    He said the confab was an important step in bringing the Vision 2020 goal to fruition. Key speakers at the conference identified project opportunities totaling $2.8 billion for successful development of roads and bridges, rail, ports, airports, agro-allied cargo operations, housing, water and information communication technology.

  • World Bank forecasts $20b agric earnings for Africa

    World Bank forecasts $20b agric earnings for Africa

    THE African continent would generate an extra $20 billion in yearly earnings if African leaders can agree to dismantle trade barriers that blunt more regional dynamism, the World Bank has said. It disclosed this in a report released on the eve of an African Union (AU) ministerial summit in Addis Ababa on agriculture and trade.

    In a statement, the bank said that Africa’s farmers can potentially grow enough food to feed the continent and avert future food crises if countries remove cross-border restrictions on the food trade within the region.

    The report urged African leaders to improve trade so that food can move more freely between countries and from fertile areas to those where communities are suffering food shortages. “The World Bank expects demand for food in Africa to double by the year 2020 as people increasingly leave the countryside and move to the continent’s cities,” it said.

    According to the new report, Africa Can Help Feed Africa: Removing barriers to regional trade in food staples ¯ rapid urbanisation will challenge the ability of farmers to ship their cereals and other foods to consumers when the nearest trade market is just across a national border.

    It said that countries south of the Sahara, could significantly boost their food trade over the next several years to manage the deadly impact of worsening drought, rising food prices, rapid population growth, and volatile weather patterns.

    With many African farmers effectively cut off from the high-yield seeds, and the affordable fertilizers and pesticides needed to expand their crop production, the continent has turned to foreign imports to meet its growing needs in staple foods.

    “Africa has the ability to grow and deliver good quality food to put on the dinner tables of the continent’s families. “However, this potential is not being realised because farmers face more trade barriers in getting their food to market than anywhere else in the world. Too often borders get in the way of getting food to homes and communities, which are struggling with too little to eat,” Makhtar Diop, World Bank Vice President for Africa said.

    The new report suggests that if the continent’s leaders can embrace more dynamic inter-regional trade, Africa’s farmers, the majority of whom are women, could potentially meet the continent’s rising demand and benefit from a major growth opportunity. It would also create more jobs in services such as distribution, while reducing poverty and cutting back on expensive food imports. Africa’s production of staple foods is worth at least $50 billion a year.

  • ‘Ringfencing ‘ll hit large offices market’

    Government plans to force banks to ringfence their retail businesses from riskier investment banking units might prove “a drag” on the London office market, according to the chief executive of property company Hammerson.

    David Atkins according to The Telegraph said the move would potentially limit the market for large headquarter prelets to the banking sector if operations were split.

    Under Mr Atkins’s leadership, Hammerson has sold off its London office portfolio to focus on prime shopping centres, retail parks and upmarket designer outlets. “It wasn’t really a call on London offices, although I think there is more of a risk there than many commentators think,” he said.

    Although the banking reforms might create demand for smaller lettings, he said many developments are reliant on a large prelet to kickstart a scheme. “It could be a drag on the City in the years to come,” he added.

    Hammerson pressed ahead with its focus on retail last week after it bought The Junction Unit Trust portfolio of four retail parks for £254.5million, including the Thurrock Shopping Park at Lakeside.

    The FTSE company is also locked in a battle with Westfield for dominance of a retail scheme in south London. Both companies are hoping to secure the right to develop the Whitgift shopping centre in Croydon, an area considered ideal for the UK’s next super-mall because of its transport links and proximity to central London.

  • Operators consider financial accountability support

    Operators consider financial accountability support

    A partnership between the International Federation of Accountants (IFA) and the Chartered Institute of Public Finance and Accountancy (CIPFA) is in the offing to assist private and public sector operators achieve highest level of accountability.

    Through this, operators would be taken through the rudiments of financial accountability on international best practices to foster growth.

    The Executive Director, Finance and Resources, CIPFA, Mike Suarez, who spoke at the 42nd Annual Conference of the Institute of Chartered Accountants of Nigeria (ICAN) in Abuja, said the development would help private and public sector operators to improve financial accountability and corporate governance practices.

    Suarez, in his paper entitled: Financial reporting and value creation in the public sector: Issues, challenges and prospects, said an international good governance framework would evolve through the partnership.

    He said the framework would help in guiding and addressing issues relating to financial reporting, malpractices and corporate governance in Nigeria among other countries on its watchlists.

    He said the framework would be dominated by issues such as strong commitment to integrity and ethical values; openness and stakeholders engagement; defining outcomes in terms of sustainable economic, social and environmental benefits.

    He listed others to include determining and delivering output and transfers to optimise the achievement of intended incomes; and developing the capacity of the organisation and the capability of its leadership and the individuals within it.

    Others are managing performance and risks through robust control and strong public financial management; and implementing good practices in transparency and reporting to deliver affective accountability.

    He said governments, international organisations and financial operators need to come together to address weaknesses inherent in financial reporting and corporate governance practices, adding that the organisation has earlier partnered with ICAN on the issue.

    Also, a Director, Lagos Business School (LBS), Prof Pat Utomi, urged the private an public sector to play crucial roles in the area of nation building. He said transparency, accountability and service delivery are required to achieve the goals of nation building.

    He said operators must adhere to the best practices of corporate governance to achieve success for themselves and the economy in particular. He added that there a lot of intermediation in the banking industry, and that entrepreneurs depend on the sector to record growth.

  • ‘Board review’ll check executive recklessness’

    ‘Board review’ll check executive recklessness’

    Review of banks’ board of directors’role will help check executive recklessness and bring lasting stability to the banking sector, the Central Bank of Nigeria (CBN) has said.

    CBN Director, Banking Supervision, Agnes Martins, disclosed this at a meeting for banks’directors in Lagos.

    She said the role of the board of directors has come under increased scrutiny in the aftermath of the global market crisis and that lax board governance was a major corporate governance issue that fuelled the crisis.

    According to her, stakeholders are demanding reforms that would enable directors to discharge their responsibilities more effectively while being held accountable for their actions and for inactions.

    She explained that the role of bank’s boards is increasingly subject to public scrutiny, adding that the pressures on and responsibilities of bank directors have also increased.

    She said boards are expected to ensure compliance with complex and stringent reporting and regulatory requirements, safeguard their bank’s businesses against excessive risk and hold managers to performance targets to satisfy the demands of the market for improved returns.

    “The responsibility for the way in which a bank’s business is conducted lies with its board of directors. The board sets the strategic direction, appoints management, establishes operational policies and most importantly, takes responsibility for the soundness and profitability of the bank. It is answerable to depositors and shareholders for the lawful, informed, efficient and competent administration of the institution,” she said.

    According to her, while the board usually delegates the daily running of the institution to management, it retains the responsibility for the consequences of unsound and imprudent policies and practices concerning lending, investing, protection against fraud, among other things.

    However, she explained that the board is not in a position to guarantee a bank’s success, but must oversee the institution to ensure that it operates in a safe and sound manner and complies with applicable laws and regulations.

    “The board must establish an appropriate corporate culture and set the “tone at the top”, hire and retain competent management, stay informed about the institution’s operating environment, and ensure that a suitable risk management system that is commensurate with its size and complexity of operation is in place. It also must oversee the bank’s business performance,” she said.

    Martins reiterated the need for the board and senior management to establish culture by upholding corporate integrity and enforcing zero tolerance for compromised ethics. She said directors should understand that their actions and those of management reflect their attitudes about commitment to integrity, honesty, and ethical conduct.

  • NEXIM mulls ECOWAS shipping to boost trade

    NEXIM mulls ECOWAS shipping to boost trade

    The Nigerian Export and Import Bank (NEXIM) is facilitating the establishment of a regional shipping line that will boost trade flows within the Economic Community of West African States (ECOWAS) sub-region, its Managing Director, Robert Ungwaga Orya, has said.

    He said this at the investiture and induction of the Chartered Institute of Bankers of Nigeria (CIBN), while fielding questions from reporters. He said there are huge potential in the sub-region that needed to be harnessed. He regretted that West Africa has the highest transport and logistics cost.

    NEXIM Bank with the mandate of diversifying the external sector of the economy away from the mono-product of oil, has taken several steps as an export credit agency to deepen trade.

    According to Orya, who was presented with Honorary Fellowship of the Chartered Institute of Bankers of Nigeria (CIBN), one of such steps is the discovery that trade in the West African sub-region was not growing.

    He identified the movement of goods within the ECOWAS sub- region as part of the challenge, due to lack of efficient sea going vessels. He said Nigerians are not actively participating in the maritime business. According to him, until this is reversed, foreigners will continue to exploit Nigerians.

    “Our exporters will not be able to enhance the volume of non-oil trade flows. So, what NEXIM has done is to find a way of facilitating the setting up of a regional maritime shipping line to be run by the private sector, because it is the private sector that is actually trading,” Orya stated.

    According to him, “If you have to move goods from Lagos to Tema port in Ghana by truck, with all the multiple check points, all the harassments from security agencies, lack of road infrastructure, it will take you like six days. But if you want to move you goods from Lagos to the same Tema port in Ghana, it will take you like 60 days. This is because they will first take our goods to Europe and then do transshipment.”

    He regretted that under that scenario, if a N500 million loan, for instance, is given to a producer who produces 20 containers, before getting products to final consumers, all realisable profits would have been eaten up. The tonnages of goods in the past decades have moved from 4.7 to 13.2 million tones, but nothing has been done to improve the road infrastructure.

    “We believe that for us to have a safe and sound banking environment we need to have professionalism and the CIBN are doing quite a lot in this direction. They are ensuring that members of the institute apply ethics and professionalism in running the banks. He said the recognition by CBN was a great exposure.

    “It is an exciting moment for me and I want to say that it will spur me to build capacity of the younger bankers. I think we need to leave a legacy. It will spur me to do more in capacity building to ensure that professionals who will take after us are well equipped,” he stated.

    Though the CIBN has come up with an Act, the NEXIM boss wants the institute to step up enforcement of the Act. However, he believes the enforcement of the Act requires collective effort. The success of NEXIM in the past few years has been meteoric. NEXIM, under the leadership of Orya, has seen a rapid and sustained transformation that has changed the fortunes of the bank since 2009.

  • Surge in MfBs fraudulent e-mails, says CBN

    Surge in MfBs fraudulent e-mails, says CBN

    •Customers get N4.3b refund

    FRAUDULENT e-mails in the microfinance bank sector have been on the increase, the Central Bank of Nigeria (CBN) has said.

    The apex bank said the sector recorded and processed 10,845 e-mails on various financial crimes.

    The crimes, which include cheques knitting, forging of banks’rubber stamps, letter headed papers, and signatures of the managing directors of the over 700 microfinance banks were committed in the past few years.

    Other Financial Supervisory Institutions Department, CBN Examiner, Mr David Adelana, disclosed this during a conference organised by the National Association of Microfinance Banks (Southwest Zone) in Lagos.

    He said the crimes were mainly advanced fee fraud.

    He delivered a paper entitled: Frauds and forgeries in microfinance banks: causes, detection and control.

    Adelana said the number of fraudulent cases reported against the banks fell by 3,433 from 5,960 in 2010 to 2,527 in 2011. He said the number of complacent cases recorded and treated was 1,526 in 2010 as against 1,800 in 2011.

    He said the refund to customers was N4.3billion in 2011, as against N2.2billion in 2011, adding that the apex bank has put in place institutional frameworks to check sharp practices in the industry.

    He divided the perpetrators of the criminal activities into three groups, namely internal, external and mixed. He said the internal group relates to the financial crimes committed by the staff of the banks, while the external group has to do with non-staff of the banks, while the mixed group includes the staff and non-staff of the banks.

    According to him, CBN has organised capacity building programmes for the management of the banks to prevent undue exposure to risks. He said the banks have been directed to provide measures that would prevent poor management of funds and further check unwholesome practices.

    He said: “We have said it times without number that banks must tightening control on dormant accounts. Dormant accounts should be transferred to the table of the managing directors of the banks, and not information and technology (IT) among other ordinary members of staff to prevent manipulation. To ensure firm control of dormant accounts, the managing directors and the IT section should be allowed to have access to dormant accounts in the banks.”

    On cheques knitting, Adelaja said its becoming harder for fraudsters to succeed because the system of transactions has improved considerably.

    “Cheques knitting cannot fly again because the system has gone 3+3 and 3+2 transactions. Based on this, it would become difficult to manipulate the transaction process and made away with the bank’s money,” he added.

    Also, the Chairman, National Association of Microfinance Banks (NAMBs), Mr Olufemi Babajide, said the association was aware of sharp practices people were committing in the name of the banks. He said cases abound where people forged the signatures of the managing directors, the logos, letter-headed papers among other documents of the banks to get visas.

    “On the issue of people approaching embassies with forged documents of the banks to get visas or conduct any other transactions, we made our positions known on it. What we agreed is that the statements that are being taken to the embassies must bear the original signatures of the managing directors of the banks. The names of the MDs must be handwritten. We have advised the embassies, among other agencies to confirm the identity of any statement brought to them in the name of MFBs,“ he said.