The Nation Newspaper

Category: Business

  • Global securities regulators issue new rules on securitisation

    The International Organisation of Securities Organisations (IOSCO) has released some recommendations aimed at ensuring that securitisation markets develop on a sound and sustainable basis.

    The recommendations, contained in the global body’s final report on Global Developments in Securitisation Regulation, would ensure that securitisation becomes more valuable financing tool that contributes to economic growth and the efficient diversification of risk.

    IOSCO is the umbrella body for securities regulators. The organisation’s membership, which included Nigeria, regulates more than 95 per cent of the world’s securities markets in 115 jurisdictions. Nigeria is a member of IOSCO board, the governing and standard-setting council of the global body. There are also 31 other countries on IOSCO board including securities regulatory authorities of Argentina, Australia, Belgium, Brazil, Chile, China, France, Germany, Hong Kong, India, Italy, Japan, Korea, Malaysia, Mexico, Morocco, the Netherlands, Ontario, Pakistan, Portugal, Quebec, Romania, Singapore, South Africa, Spain, Switzerland, Trinidad and Tobago, Turkey, United Kingdom and the United States.

    The new set of rules comes as part of ongoing efforts by the Financial Stability Board (FSB) to review the reforms of securitisation markets, in line with ongoing work for the G20 on the shadow banking sector. FSB had requested that IOSCO conduct a stock-taking exercise on certain aspects of securitisation, including risk retention, transparency and standardization, and to provide necessary policy recommendations.

    In a statement made available to The Nation, IOSCO stated that the final report on securitisation was another step in its efforts to support sustainable growth of securitisation markets. It had in June 2012 published the report of a round table with industry participants and responses to a consultation paper on global developments in securitisation regulation.

    “IOSCO has worked on the premise that regulation can contribute to a restoration of confidence and trust by setting standards market participants must meet to address issues that surfaced through the Crisis. These include securitisation practices and structures that created misaligned or wrong incentives and encouraged inadequate risk management practices. IOSCO considers that risk retention requirements and enhanced disclosure requirements have an important role to play in addressing these issues,” IOSCO stated.

    IOSCO said the new regulatory recommendations on securitisation were based on its analysis of the various standards being implemented and extent to which different approaches to regulatory reform might result in impediments to cross border activity.

    According to the global standard-setting body, the new regulatory recommendations cover a roadmap toward convergence and implementation of approaches to incentive alignment, in particular regarding risk retention requirements.

    “Risk retention requirements better align the incentives of the suppliers of securitisation products and, in particular, investors. Enhanced disclosure requirements about the underlying assets, flow of funds or waterfall and performance of securitisation structures will help inform investors, and have the potential to re-build investor confidence in the securitisation market. The greater availability of information will also help reduce the reliance on credit ratings agencies,” IOSCO noted.

    It noted that the newly recommended rules built on recent developments in standardised templates for asset level disclosure and other disclosure-related initiatives to assist informed investment decisions.

    The final report also contained several useful observations about the role sound securitisation markets can play in supporting economic growth and the role regulation can play in reducing systemic risk and restoring investor trust and confidence while it also summarised key themes, observations and issues coming out of the responses to the consultation paper in relation to approaches to risk retention, transparency and standardization.

  • ‘ALSCON’s asset devalued by 90%’

    The total asset base of Aluminium Smelter Company of Nigeria (ALSCON), Ikot Abasi in Akwa Ibom State has been devalued by 89.47 per cent since 2006, a report from its auditors has revealed.

    The company prior to being sold to the Russian firm, UC Rusal, had a total asset base of $3.2billion, but the summary of the company’s financial statement since 2006 has revealed that over 89 per cent of the company’s assets, have been devalued.

    A certified true copy of the audit report by the audit firm of KPMG obtained from the Corporate Affairs Commission, CAC, showed that from N30.98 billion in 2007, the company’s net asset value dropped to N25.2 billion in 2008; N19.4 billion in 2009 and N14.9 billion in N2010. The report for 2011 is yet to be published.

    The audit report suggested that the company’s asset base suffered massive devaluation by over N101.2 billion within a year of the take-over of the plant by UC Rusal.

    Ownership of the plant was transferred by the Bureau of Public for Enterprises (BPE) to the Russian firm, UC Rusal, in controversial circumstances in 2006 following the annulment of the bid won by the American-Nigerian consortium, BFIGroup Corporation in 2004.

    Prior to the bid, the company’s fixed asset as at December 31, 2003 stood at about N127.7 billion,while the figure dropped marginally to N127.3 billion at the beginning of 2004, according to  a report published by the audit firm, Pricewatercoopers Limited.

  • EFCC, NIBSS, others to fight e-fraud

    The Nigerian Electronic Fraud Forum (NeFF) is partnering with the Economic and Financial Crimes Commission (EFCC), Central Bank of Nigeria (CBN), Nigerian Inter-Bank Settlement System (NIBBS), among others, to check electronic payment frauds and related offences.

    NeFF’s Chairman Mr Emmanuel Obaigbona, told The Nation that the development was borne out of the need to boost confidence in the electronic payment system.

    He said: “We are trying to bring together the tradition of electronic payment system in Nigeria. We are seriously working with the EFFC, NIBBS, CBN, owners of switches, and industrial workers on the issue of checking electronic payment frauds. We are working on how to educate the law enforcement agents, and the judiciary on what e-frauds is all about.“

    According to him, the body has created a lot of awareness on fraud issues to enlighten people on the causes of e-payment frauds.

    “We have tried to let people know some of the likely fraudulent activities, arising from the use of electronic payment channels such as Automated Teller Machines (ATMs), Point of Sale (PoS) terminals, mobile phones, among others. Also, we have taught them how to mitigate such risks to stimulate the growth of the financial system,” he added.

    Obaigbona said the relevant stakeholders were being carried along to check fraud in e-payment transactions.

    He said the anti-fraud committee set up by the CBN to tackle e-payment frauds has been working to proffer solutions to the problems, adding that the committee has been consistent with its mandates to fight e-payment frauds among the stakeholders in the nation’s financial chains.  580

    Similarly, an official of the Shared Services Office, Governor’s Department, Mr Chidi Umeano, said the committee, which has been upscaled to e-payment fraud forum has, as members, managing directors of the banks, and the electronic payment card companies, such as MasterCard, Visacard among others.

    He said the forum holds meetings regularly to discuss and fine- tune plans on how to solve problems relating to e-payment frauds in the industry.

    “There has been growing concern on the part of the forum to address the issue of frauds relating to electronic payment transactions in Nigeria. The forum hopes to provide solutions to the problems”, he said.

  • ‘Assets seizure ’ll check money laundering’

    The Managing Director, DataPro, Abimbola Adeseyoju, has called for the implementation of the asset seizure, confiscation and forfeiture policy of the Economic and Financial Crimes Commission (EFCC) to check money laundering.

    Speaking at the DataPro Inaugural Lectures in Lagos, he said the anti-money laundering/combating the financial terrorism (AML/CFT) initiative was instituted by the Central Bank of Nigeria (CBN) to ensure that financial crime perpetrators are punished to ensure they do not benefit from their crimes.

    He advised that an acceptable framework that tallies with ‘Recommendations Four of the Financial Action Task Force 2012 Principles’, which is on asset seizure, confiscation and forfeiture be implemented as one of the deterrents to money laundering and terrorists financing.

    He said the government should ensure that competent authorities have powers to freeze or seize laundered property or proceeds including instrumentalities used or intended to be used for money laundering or terrorism financing.

    Besides, he said there is also need to allow such proceeds to be confiscated without requiring criminal prosecution otherwise called a Non conviction based confiscation approach.

    According to him, it is no longer required for an offender to demonstrate the legal ownership of the property before it is confiscated. For him, once the offender’s known source of income cannot provide the basis for such property, it should be enough room for confiscation and conviction.

    He said DataPro is committed to supporting banks, regulators and other stakeholders in fighting money laundering in the country, adding that the firm was established to supply information and data on individuals, entities, agencies central authorities and institutions in the country to the relevant authorities.

    The firm had also partnered with Dun & Bradstreet International to offer services to banks, manufacturers and other conglomerates around the world.

    Meanwhile, the apex bank has started 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 was 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.

  • The Palms, Shoprite’s developer to list on NSE

    The Palms, Shoprite’s developer to list on NSE

    Persianas Properties, the real estate firm behind high-brow The Palms Shopping Mall in Lagos, has concluded arrangements to list its shares on the Nigerian Stock Exchange (NSE).

    Persianas’s portfolio of real estate assets include the 11-acre The Palms Shopping Mall in Lekki, Lagos; Polo Park Mall, Enugu, Enugu State and two other world-class malls under construction in Kwara and Oyo states.

    Executive Director, Persianas Properties, Mr Mike Williams, who spoke alongside the Chairman of Persianas Group, Mr Tayo Amusan, confirmed the impending listing of the real estate company.

    Williams said the company would soon submit its application for listing to the NSE as it restructures its operations to meet international best practices and unlock values in its real estate assets.

    According to him, Persianas is working to meet regulatory and listing requirements, including compliance with the International Financial Reporting Standard (IFRS).

    He said the company would meet the management of the NSE to sort out certain peculiarities relating to the company as a real estate company.

    Williams added that the company has been positioned as an attractive investment to investors.

    He said as part of efforts to bring down costs, the company engages in direct procurement and construction of its properties.

    Meanwhile, Amusan has called on the government to put in place amenable policies that could stimulate the growth of the real estate market and create immense job opportunities for Nigerians.

    He said the Central Bank of Nigeria (CBN) should provide support for the development of the real estate sector and subsidise the costs of housing units by creating single-digit mortgages that could stimulate demand for properties.

    Amusan noted that improved demand for housing units and real estate properties would greatly reduce the high unemployment rate in Nigeria given the large number of people involved in real estate value chain.

    He pointed out that the double-digit high interest rate of between 20 and 30 per cent and short tenors of bank loans were unsuitable and stifling the growth of the real estate sector.

    The International Finance Corporation (IFC) recently announced plans to invest $124 million in the Persianas Group. The investment package consists of up to $74 million in equity provided by IFC, IFC ALAC Fund, and $50 million in debt provided by IFC.

    Persianas Group is expected to use the funds to further develop retail and mixed-use centres in major commercial cities in furtherance of its overall vision of a fully integrated design, property development, and asset management firm.

    IFC indicated that Persianas’ vision was to develop and list Nigeria’s first investment grade real estate portfolio.

    Underlining the attractiveness of the investment, IFC noted that the Nigerian real estate sector is expected to produce high growth in the medium-term driven by the recovering economy, and other high growth sectors of commerce, construction, telecommunications, and a recovery in the financial services sector.

    It pointed out that improved economic recovery would lead to demand for real estate product in all sectors in an environment where there is a dearth of quality stock of real estate and the market is undersupplied.

    To address Nigeria’s vastly underserved commercial property, it outlined that Persianas is undertaking a restructuring and expansion of its operations including building and development of new retail and mixed used centres, establishment and development of a professional asset management company and restructuring of the company’s balance sheet.

  • CBN, NDIC to monitor banks’ compliance with ATMs’ directive

    CBN, NDIC to monitor banks’ compliance with ATMs’ directive

    The Central Bank of Nigeria(CBN) is to monitor compliance with its directive stopping the N100 depositors pay for using other banks’Automated Teller Machines (ATMs).

    CBN will deploy examiners in banks to ensure compliance, Managing Director, Nigeria Deposit Insurance Corporation (NDIC) Umaru Ibrahim said.

    He was speaking at a workshop for finance reporters in Dutse, the Jigawa State capital.

    Last Tuesday, CBN stopped the N100 charge for the use of ATMs other than those of a depositor’s banks.

    The decision followed a meeting at the lenders’ committee comprising executives banks directors and top CBN officials.

    Depositors hitherto paid N100 per withdrawal for rising other banks’ ATMs.

    The NDIC boss said the decision to stop the charge would increase the patronage of ATMs and deepen the financial inclusion strategy.

    He listed the other projects meant to promote financial inclusion to include the cash-less policy designed to bring low-cost, secure and convenient financial services to urban, semi-urban and rural areas in the country.

    Ibrahim called for the promotion of all-women microfinance banks, adding that evidence from other countries indicate that such institutions have the potential to promote easy access to credit among rural women, especially at the group levels.

    He said the platform could also be used to mobilise more funds from the group. He said out of the total number of provisional and final microfinance bank licences issued by the CBN, the north, including Federal Capital Territory had only 24.75 per cent, and therefore called on the state governments in the region to establish more grassroots banks.

    According to him, financial inclusion, alternatively characterised as ‘access to finance’ has been defined as ‘universal access at reasonable cost, to a wide range of financial services to everyone needing them, provided by a diversity of sound and sustainable institutions.’

    He said the CBN and NDIC have and uphill task in improving financial inclusion given the relatively low level of penetration of financial services in the country.

    The NDIC boss said the rising trend in bank customers’ complaints is a source of worry to the regulators.

    He said such complaints arising mainly because of poor customer service, high bank tariffs, frauds and forgeries as well as bank distress could threaten confidence in the banking system.

    He said banks are aware of whom their customers are but many of them do not appreciate the need to determine their expectations and how to manage them.

    “The inability to manage customers coupled with the serious corporate governance issues could explain the high frequency of complaints among bank customers in Nigeria. To determine the causes of customer complaints and design appropriate strategies for preventing and controlling it, the need to determine customer expectations and how to effectively manage them cannot be overemphasised,” he said.

  • FirstBank’s Interswitch network hits 5m

    FirstBank has received a “Milestone Achievement Award” for hitting five million Verve card issuance mark on the Interswitch network to five million Verve cards in one year.

    According to Mr Mitchell Elegbe, group managing director of Interswitch, the bank also increased the activity rate of its cards on the Interswitch network from 56 per cent to 90 per cent in 12 months.

    “To put this in proper perspective, 90 per cent of FirstBank Verve cards are active and have carried out at least one transaction in the last two months. The average rate across the switch is about 70 per cent. These are huge milestones which deserves recognition and commendation,” he said.

    The Group Managing Director of the bank, Mr Bisi Onasanya dedicated the award to the bank’s numerous customers, noting that their patronage and loyalty had continued to drive the Bank along the path of innovation, service excellence, and profitability.

    Onasanya said the award would encourage the customers to remain loyal to the bank, and promised that the bank would continue to provide superior services.

    He said the bank would continue to defend and extend its leadership of the financial services sector through technology-driven service and specialised products and services that speak to all sections of the banking public.

    “FirstBank’s investment in e-business reflects our commitment to promoting financial inclusion which is widely regarded as a panacea for ensuring sustainable economic growth and development as well as enhancing entrepreneurship. Our passion to serve and extend financial services to the unbanked and under-banked has since inspired several innovations including the introduction of a card-less Automated Teller Machine (ATM) Transfer service which ensures that people without bank accounts or electronic cards can receive funds from our ATMs across the nation,” he added.

  • Agric earnings for Africa hit $20b

    Africa will realise extra $20billion in yearly earnings if its leaders can dismantle trade barriers hindering regional dynamism, a World Bank report has said.

    The report was released on the eve of an African Union (AU) Ministerial summit on agriculture and trade in Addis Ababa, Ethiopia.

    In a statement, the bank said Africa’s farmers can 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 urges 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 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 fertilisers 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.

  • Fidelity Bank rewards customers

    Fidelity Bank has given out five cars to five of its customers that emerged winners in the ongoing ‘Cars and Cash’ promo.

    Muhammed Isah Shemsu, Saidu Sanusi, Benita Onwuneme, Odo Ngozika Blessing and Blessed Maka Ventures were winners of the first set of cars in the first mega draw, held to pick winners across five zones in the country—Northeast/West, Southeast, Southsouth, Abuja/Northcentral and Lagos/Southwest.

    Other 20 customers also won various cash prizes ranging from N100, 000 to N1 million each. Nwanjoku Chima from Lagos zone won N1 million,while Umar Bashir from Abuja/Northcentral and Anayo Evelyn Onyishi from the South East won N500,000 each. Eight customers from the five zones in the country won N250,000 each while 10 other customers won N100,000 each.

    The bank’s Managing Director, Reginald Ihejiahi, said the lender has fulfilled promise it made to its customers by rewarding winners in the promo. He said the bank embark on the campaign to encourage savings culture among Nigerians and to celebrate its 25th anniversary, coming up early next year.

    The bank’s General Manager, Lagos, Mr Emeka Obiagwu, said the anniversary promo will last for five months, ending in May 2013, with 25 cars given out and N25 million won in cash prizes by depositors in the bank.

    He said the bank will look for other ways to continually reward its customers after the end of the anniversary promo as they have been supportive of its businesses.

    A car winner from Kaduna in the Northeast and West zone, Muhammed Isah Shemsu, expressed his appreciation for being a winner, while commending the bank for its initiative in embarking on the promo.

  • GDP grows by 6.48% as inflation rate hits 11.7%

    GDP grows by 6.48% as inflation rate hits 11.7%

    Nigeria’s Gross Domestic Product’s (GDP’s) growth rate when measured on aggregate basis, grew by 6.48 percent in the third quarter of 2012, as against the 7.37 percent recorded in the corresponding period of 2011, it was learnt yesterday.

    Against government’s efforts to keep inflation rate at a single digit, the Composite Price Index (CPI) for October rose to 11.7, compared with the 11.3 per cent rate in the preceding month.

    In a statement signed by nation’s Statistician-General, Dr. Yemi Kale, the National Bureau of Statistics (NBS) said the new GDP and inflation growth rate trend, which were among the major economic highlights, showed that in the quarter under review, the oil sector outperformed the non-oil sector in GDP outputs for the first time in the last four quarters.

    The NBS report indicated that the nominal GDP for the third quarter of 2012 was estimated at N10, 967,272.89 million as against N9, 856,176.33 million during the corresponding quarter of 2011.

    It added that the overall performance of the economy in GDP output from both oil and non-oil sector recorded slower growth rate as a result of declines in non-oil sector growth, which was driven by growth in activities recorded in the building and construction, cement, hotel and restaurant, and electricity sectors.

    According to the Bureau, the average daily crude oil production stood at 2.52 million (mbpd) in the third quarter of this year, as against 2.38 mbpd in the corresponding quarter of 2011based on data received from the Nigerian National Petroleum Corporation (NNPC).

    These figures indicated that the sector grew in real terms by 0.08 per cent in oil GDP compared with the -0.26 per cent for the same quarter last year.

    Despite its ebbing growth rate, the statistical agency noted that the non-oil sector is still a major driver of the economy, as it recorded 7.55 per cent growth in real terms in the quarter under review compared with 8.76 per cent growth rate it recorded in the corresponding period of 2011.

    The decline, according to NBS, was largely attributed to declines in output in the Agriculture, Telecommunications, Wholesale and Retail trade and Real Estate sectors.