The Nation Newspaper

Category: Money

  • Experts hail CBN on banks’ foreign subsidiaries financing

    Some financial experts have praised the Central Bank of Nigeria (CBN) for stopping banks from using their funds to finance foreign subsidiaries.

    The step, they said, would checkmate fraudulent practices and enhance sanity in the financial system.

    According to them, the banking sector is overheated and it needs effective measure to restore investors’ confidence in it.

    Former President, Finance Houses Association of Nigeria, Eddie Osarenkhoe, said the initiative was welcome because it would make credit facilities available in the economy. He said it was regrettable that banks mobilised money from the public and diverted it to run subsidiaries at the expense of giving loans to customers.

    According to him, the funding of bank subsidiaries with public fund has made the financial sector incapable of discharging its financial obligations to the customers.

    Osarenkhoe said many banks had been hiding under the universal banking system to siphon money for personal use and negatively affected the industry. He said that corruption in the banking sector led to the financial crises in the banks.

    “The CBN’s ability to implement and enforce the directive will bring sanity and reduce capital flight out of the country,” he said.

    Also, the President, Association of National Accountants of Nigeria (ANAN), Dr Samuel Nzekwesaid the move by CBN would curb money laundering. “The collapse of the capital market was due to actions of the bank executives to divert money and buy shares in the same bank to finance their subsidiaries,” Nzekwe said.

    He said many bank managers borrowed money from the banks and used them to buy stocks of their subsidiaries and converted them to personal use.

    Nzekwe said many banks in the country failed to become mega banks because of the lack of capacity to give long term loans to customers and failure to finance their foreign subsidiaries effectively.

  • PMIs in merger bids to beat recapitalisation deadline

    Primary Mortgage Institutions (PMIs) are considering mergers and acquisitions to beat the April 2013 deadline to recapitalise their operations, The Nation has learnt.

    Other plans include approaching the capital market for funds to execute capital projects and for reca-pitalisation. The development is necessary to enable PMIs that wish to operate at the national level raise their capital base from N100 million to N5 billion; those seeking to play at the states’ level must have N2.5 billion before the deadline expires.

    According to operators, the step will enable the banks consolidate their businesses, compete favourably, and avoid being axed by CBN.

    Managing Director, Skyfield Savings & Loans Limited Mr Kola Abdul said mergers and acquisitions have become necessary to enable the PMIs get fresh capital for their operations. Abdul said mortgage banks can only work efficiently when they have enough capital at their disposal, adding that negotiations are on-going among the banks to merge their operations and get the needed capital before 2013.

    Mortgage banks, he said, are not looking at their sizes with regards to mergers and acquisitions, arguing that the ultimate is meeting the deadline.

    He said: “The smaller mortgage banks need to merge with the bigger ones, in view of the recapitalisation deadline. The CBN has provided a flexible recapitalisation regime by directing the firms to either play at the state or national level. Therefore, the issue of merger is a welcome development that would foster the growth of the sub-sector. There is no way mergers and acquisitions would not take place under the present dispensation.”

    According to him, the issue of continuous devaluation of the naira has watered down the local currency and the operational capital of the mortgage institutions.

    “The required capital to set up a mortgage firm has become low due to the instability of the foreign exchange market. What a mortgage firm is holding in its vault to meet operational demands is nothing now. N200 million is nothing when the sub-sector is expected to finance big-ticket transactions for the growth of the economy. Often times, when you finance mortgages, you get locked to bad foreign exchange regime. To finance another one becomes a problem.“

    He said mortgage banks are contributing less than one per cent to the Gross Domestic Product (GDP), adding that its contributions would increase after the banks have pooled their capital base in the name of mergers and acquisitions.

    Abdul said PMIs would become functional at the secondary market in line with the CBN’s recapitalisation order.

    The Executive Secretary of Mortgage Banking Association of Nigeria (MBAN), Mr Kayode Omotoso, said mortgage institutions would approach the capital market to source for funds. Omotoso said apart from raising funds from the capital market, there would be mergers and acquisitions as well as takeovers in the mortgage banking sector in the coming months.

    “There would be mergers, there would be acquisitions, there would be takeovers, there would be strategic investments and there would be efforts to go to the capital market for the mortgage banks to meet up with the recapitalisation deadline. More mortgage banks will approach the capital market to raise equity while the sector itself will approach the capital market to raise equity, hybrid and long term debt instrument to finance home ownership,” he added.

  • Unity Bank restates commitment to customers

    Unity Bank restates commitment to customers

    As part of activities to mark the World Customer Service Week, Unity Bank Plc has again restated its commitment to its customers and meeting the yearnings of its entire stakeholders through value creation.

    The bank, which is presently at a N45 billion capital base is working towards raising a tier one capital from the Nigerian Stock Exchange (NSE) in the next few months.

    Speaking at an interactive session with the press at the weekend, the Managing Director and Chief Executive Officer of the bank, Ado Y. Wanka, represented by the Executive Director, Lagos and West Lanre Fagbohun ,said that bank has overcome all its merger challenges and it set to continue to deliver quality service to its customers.

    According to him, the bank has put in place measures to allow for superior customer experience as never been seen before in the banking industry. Some of these include excellent security measures to ensure that on-line banking and transactions’ safety are guaranteed and uncompro-mised in a bid to safeguard customer identity in support of the cashless policy of the Government.

  • CBN moves against money laundering

    CBN moves against money laundering

    Account opening forms for all commercial banks have been unified by the Central Bank of Nigeria (CBN).

    In a circular to all banks and Other Financial Institutions (OFIs), the apex bank said it took the step to forestall the use of the accounts for money laundering and financial terrorism by bank customers.

    The circular signed by CBN Director, Financial Policy and Regulation, Obot U.A said the absence of uniformity in account opening procedure and documentation for prospective customers has continued to hinder the effectiveness of Know Your Customer requirement in banks and OFIs.

    He said, the apex bank has prepared a draft copy of the proposed form, and directed banks and OFIs to make inputs to enable it approve the final copy for implementation by the lenders.

    The Director said that the adverse effect of this on the fight against money laundering and combating of financial terrorism cannot be overemphasised.

    Obot explained that the apex bank, in conjunction with the Committee of Chief Compliance Officers of Banks of Nigeria, has said developed draft uniform account opening forms for adoption by banks and OFIs in order to increase the effectiveness of customer due diligence, comply with anti-money laundering /combating the financial terrorism (AML/CFT) standards.

    Such plan, he added, will also facilitate quick investigation of financial crimes by relevant agencies. For review therefore, are all account opening form for individuals, companies, partnership and sole proprietorship, and for designated nonfinancial businesses and profession.

    The banking watchdog said implementation of risk-based supervision to combating money laundering and terrorist financing depends on a sound understanding of the threats and vulnerabilities of the menace to each financial institution in particular and entire financial industry in general.

    The apex bank has commenced full implementation of its anti-money laundering /combating the financial terrorism (AML/CFT) risk-based supervision framework, it issued in 2011.

    The CBN said the measure is further supported by the importance the Financial Action Task Force (FATF) attached to the risk-based approach to AML/CFT supervision in its revised recommendations issued last February.

  • Asset Managers, SEC facilitate securities lending

    The Association of Assets Custodians of Nigeria has said that its partnership with the Securities and Exchange Commission (SEC) assisted in the implementation of securities lending in the country.

    Speaking at the first annual general Meeting of the Association held at the weekend, in Lagos, President of the association, Segun Sanni said the group is at the forefront of promoting securities lending because, such will help deepen the market.

    Sanni said the group was able to ratify its constitution, received report of its activities, approved its audited financial year for 2010 and 2011, appointed auditors among other deliberations at the AGM.

    According to him, the group has also partnered with the Central Bank of Nigeria (CBN) on collective investment and automation of the Certificate of Capital Importation (CCI). The CCI enhances confidence of foreign investors when they are investing in the country.

    Sanni explained that foreign investment constitute between about 70 per cent of the total turnover volumes in the capital market.

    He said there is increasing need to automate the CCI as such would enable foreign investors to easily find out the status of their investments in the country, increase transaction efficiency and ensure that investors get adequate returns on their investments.

    Sanni explained that the group also prevailed on the apex bank to relax its rule, mandating foreign investors to keep their investments for at least one year, before disposing them.

    He said such policy affects foreign direct investment (FDI) as there should be free entry and exit by investors. He said the risk of investors not being able to take away their investments at will would not favour the economy, adding that after presenting these views to the CBN, the policy was abolished in 2011.

     

     

     

     

     

  • Resource staff disrupt Enterprise Bank’s operations

    Resource staff disrupt Enterprise Bank’s operations

    Staff of First Spring Franchise Services (FSFS), a human resource service provider of Enterprise Bank Limited have failed to honour agreement between the lender and their organisation. This affected banking operations at the bank’s Head Office last Friday.

    According to a statement from the bank, representatives of national officers of Nigeria Union of Banks, Insurance and Financial Institutions Employees (NUBIFIE) and the Nigeria Labour Congress (NLC), the bank and the FSFS had reached agreement on how to resolve the matter, but the workers were alleged to have failed to keep their own side of the agreement. .

    The Management of Enterprise Bank said it was surprised that the FSFS staff will recant and resort to picketing the financial institution, disallowing staff and customers’ access to the offices and banking halls respectively, while carrying placards with denigrating remarks.

    “ Appeals to the picketing staff by the management of the bank for more time to look at the issues have fallen on deaf ears as they have continued with the illegality which began without due notice of the required minimum of seven days,” it said.

    Following the intervention of the Nigeria Deposit Insurance Corporation (NDIC) in the now defunct Spring Bank in August last year, the Asset Management Corporation of Nigeria (AMCON) took over the bank and recapitalised it to start a new bank.

    Enterprise Bank Limited, which has stabilised its operations over the period, and has shown positive indices in all areas of operation.

  • Fix legal, debt issues, banks told

    Banks must ensure they get legal and debt recovery is sues right before giving loans to customers, a university teacher, Taiwo Odumosu, has said.

    Speaking at a workshop on credit management and debt recovery organised by Monsad Ventures Limited, Odumosu said the direction of commerce required lenders to be painstaking and diligent in analysing credit requests, including dealing with legal issues and challenges faced by credit recovery agents.

    He called for a proactive legal regime and control that understand the relevant laws, know how and when to invoke legal processes, avoid legal pitfalls in debt collection negotiations.

    He explained that credit analysts and lawyers have to understand what a credit report contains, especially information about customer’s borrowing history. They also need to be abreast with credit bureau service providers that collect – and then distribute – all of this information about borrowers.

    He described credit buraux as information warehouses, adding that where there is erroneous information from this segment of the market, credit could suffer.

    According to him, a bank should adhere to the Nigeria Deposit Insurance (NDIC) Act, Section 22 which stipulates that it is illegal for an insured bank-not to make adequate provisions for bad and doubtful debts up to the amount recommended by the Corporation or pays dividends in defiance of this provision.

    He explained that where an insured bank is closed on account of its inability to meet the demands of its depositors, the corporation is empowered to recover any debts owed to the closed bank or any asset which are in possession of any other person or institution. He said these policies have to be continually enforced for the credit industry to grow.

    Odumosu regretted that the laws have not been able to provide enough safeguard for the banks and other money lending agencies to ensure that they are adequately covered when there is loan default.

  • MAN, firm partner on IFRS

    Akintola Williams Deloitte (AWD) and the Manufacturers Association of Nigeria (MAN) have concluded a one-day seminar on assisting Small and Medium Enterprises to achieve the International Financial Reporting Standard (IFRS) implementation. The IFRS will take effect from January, next year.

    The IFRS are principles-based standards, interpretations and framework adopted by the International Accounting Standards Board (IASB) that requires disclosure on a range of issues including risk management measures and changes in accounting policy.

    The IFRS Leader for Deloitte West and Central Africa, Oduware Uwadiae, said there are benefits and challenges of IFRS reporting for SMES. He listed them to include IFRS conversion process and the need for early preparation.

    A statement said MAN has approached Akintola Williams Deloitte to take the seminar to other regions in Nigeria, where its other SME members, who could not attend, are Deloitte is also partnering with MAN after signing a Memorandun of Understanding (MoU) to organise elaborate training and assist in IFRS implementation for all SMEs under the platform of MAN.

    The seminar, which was hugely applauded by participants and stakeholders, was the third phase of the adoption of IFRS in Nigeria. It highlighted the need to create awareness and sensitise participants.

    According to the roadmap for IFRS adoption in Nigeria, this phase of the adoption, statutorily requires SMEs to issue financial statements based on the framework of IFRS for SMEs at the end of 31st December, 2014. This effectively means that the transition date to IFRS for all SMEs in Nigeria is January, 2013.

  • Why co-operatives are weak, by group

    Limited systematic data on the co-operative sector is hindering effective engagement with the segment, Enhancing Financial Innovation & Access (EFInA) has said.

    EFInA, which promotes financial inclusion in the country, said it was difficult to determine the optimal strategy for expanding financial services through co-operatives based on a survey it conducted.

    The firm had undertaken a study of the sector in Enugu, Kebbi and Oyo states. Findings from the survey showed they were disseminated and discussed by panelists and participants from co-operative groups, traditional co-operatives are common throughout the country, but these groups tend to be small, with a common bond based on membership of a kinship, societal and/or professional group.

    According to the Federal Department of Co-operatives, as at 2010, there were over 80,000 co-operative groups with over 1.4 million members in 605 local government areas in the country. The EFInA Access to Financial Services in Nigeria 2010 survey also revealed that almost 21.9 million Nigerian adults used informal groups including co-operatives while 14.8 million rely on the sector as their only means of access to financial services.

    Chief Executive Officer, EFInA, Ms. Modupe Ladipo, said: ”There is a core and dedicated following of co-operatives in Enugu, Kebbi and Oyo states, which is probably also replicated across Nigeria. Members regularly save and have a real demand for loans.

    “Our data revealed that the 700 members interviewed in these three states saved over N243 million annually; and that the 150 managers interviewed, managed a loan portfolio of N122 million. Therefore, there is a significant potential for co-operatives to make a bigger impact amongst those who are un-banked or under-served. If optimised, co-operatives can be a force in empowering rural communities, farmers, women and micro entrepreneurs throughout Nigeria.”

    Minister of Co-operative Development and Marketing, Kenya, Mr Joseph Nyagah and Dean, Faculty of Co-operative and Community Development, Moshi University College of Co-operatives and Business Studies (MUCCoBS), Tanzania Mr Christian Malamsha, agreed with her.

    Nyagah shared insights on how effective regulations can support the growth and development of co-operatives and maximise their impact on financial inclusion. “Kenya’s Savings and Credit Cooperative (SACCO) is the most dynamic and largest in Africa. At the end of 2011, there were 14,126 registered co-operatives – serving over 10 million members in Kenya,” he said.

    He reiterated the need for government to create a conducive environment for growth and development of co-operatives through effective policies, overseeing development and administration of co-operative legislation and regulations.

    “Co-operatives remain important in providing access to finance, and in particular credit to low income individuals given the rising cost of lending by banks,” he said.

    Malamsha, on his part, said co-operative can strengthen the competence of co-operatives and their managers, which would assist in accelerating the uptake of formal financial products in the co-operative sector.

    “Co-operative colleges should identify, develop and review programmes continuously, to ensure that the training needs of co-operatives are met,” he said.

  • Lottery board to sanction banks over fake promos

    The National Lottery Regulatory Commission (NLRC) will not hesitate to seal off the premises of any bank whose promotional campaigns are bogus or misleading.

    Other sanctions include issuing a public disclaimer and an order to stop the promo.

    The Assistant Director, Enforcement and Compliance, NLRC, Henry Uwadiae, said the sanctions were in line with the powers conferred on the commission as the sole regulator of all aspects of lottery in the country.

    He told The Nation that the lottery body would resort to such measures to protect consumers from being hoodwinked into patronising certain banking services and further maintain the integrity of the commission.

    He said the commission has been intimated with issues of fake presentation and claims prizes among various players in the economy, and would try as much as possible to protect consumers.

    He said: “The Lottery Commission regulates national lotteries including promos. What the banks are doing is under promo in which we have oversight functions. It is part of regulatory duties to investigate promos to see whether they are genuine or not.

    “For instance, a bank (name withheld) organised a promo sometimes ago. The bank stated in its promo that it is presenting 20 cars to the lucky winners, but we discovered that the information was not true. At the end of the day, the bank said it could not reach all the twenty winners in question. We were able to find out that the bank had three cars, instead of the twenty cars.

    “If a bank is doing a promo that is lottery in nature, it is the duty of the lottery commission to tell the bank to regularise it. If the bank fails to regularise the promo, there is no other thing the commission can do other than to stop the promo.”

    If any bank or company violates the law regarding the running of a promo, and it was discovered to be deliberate, the firm will be charged in accordance with the criminal code act, he stated.

    Uwadiae said the commission has taken it upon itself to monitor all activities relating to promotional campaigns, from beginning to the end, to ascertain their genuineness.

    “We give banks the permit to organise promos. Not only that, we take our men to the venue of the promo to witness it. We involve ourselves in the presentation of the prizes. Some institutions may not be able to present the prizes centrally due to their sizes and the volume of the promos they are running.

    “To ensure fairness and further prevent any form of sharp practices, “we ask the institution(s) to send the list of winners to us, and verify them to know whether they are genuine. Through this, we would be able to know the level of redemption of the prizes,” he said.