The Nation Newspaper

Tag: Banks

  • Why banks are vulnerable to robbery attacks- Lagos CP

    Many banks are vulnerable to armed robbery attacks because of their location, the Lagos State Police Commissioner, Mr. Fatai Owoseni, has said.

    He made the remark yesterday in Lagos during an interactive session with chief security officers and representatives of various business organisations in the state.

    The event titled ‘Night out with chief security officers’ was hosted by Augusta Peter, the Managing Director and Chief Executive Officer of Bain and Braces Group.

    “Most banks are not qualified to operate where they are sited. Such banks should have been mere cash centres and not fully fledged banks. The ways some of them are located make them vulnerable. Location is one of the things you have to consider when establishing banks. When the last robbery incident occurred at Festac, we did our best. Festac was constructed between 1976 and 1977 for the Festival of Arts and to accommodate those people that came for the festival. Later civil servants were asked to move there. But today, if you check, the number of legitimate residents is not up to the number of illegitimate ones.

    “Someone who knows the geography of that area must have been part of that operation. Who would have known that someone channeled a canal to the back of the bank? And where the hoodlums entered through would not even take two persons moving side by side.

    “When the incident in Lekki occurred, we observed that the hoodlums took advantage of the darkness in the area. When I got there, I used my personal money to get a powerful generator to light the area so that we could have a floodlight facing the water. I have refused to see this kind of operations as armed robbery. I see it as militancy because when you have up to 50 men carrying not even AK47 that the police use in their operations, you won’t call that armed robbery. I am not trying to justify crime,” he said.

     

     

     

     

  • All banks sound, stable, says CBN

    All banks sound, stable, says CBN

    •Naira strengthens

    The Central Bank of Nigeria (CBN) has defended the stability of the banking system, saying no Nigerian bank is “experiencing stress.”

    CBN’s Director of Communications, Ibrahim Mu’azu, assured the banking public that the Nigerian banking system is sound and that all banks are in compliance with both the regulatory and prudential requirements.

    Meanwhile, the naira yesterday strengthened by 2.1 per cent to N235 per dollar on the unofficial market. The local currency became upbeat after the Central Bank of Nigeria (CBN) moved to enforce documentation requirements on bureau de change (BDC) operators prior to dollar sales.

    The CBN had asked BDC operators to submit accounts showing their dollar usage at the start of each week before they can access future sales, a move traders say was aimed at curbing speculation.

    The naira had fallen sharply on Wednesday, a day after the apex bank unexpectedly cut interest rates to stimulate lending. The currency was quoted at the pegged rate of N197 on the official interbank market on Thursday. “It has been observed that a good number of bureaux de change purchased foreign exchange from the central bank without rendering returns on their utilisation,” the CBN said.

    The CBN has introduced currency controls to stop the naira weakening, defying calls to further devalue the currency hard hit by the plunge in global crude prices.

  • Panic grips investors over ill-capitalised banks

    Two-thirds of quoted banks have recorded share price depreciation as investors continued to react to a report by the Central Bank of Nigeria (CBN) that three banks had failed minimum capital adequacy test and have been given up till June 2016 to recapitalise and beef up their capital base.

    Share prices of 10 out of the 15 commercial banks and bank-holding companies quoted on the Nigerian Stock Exchange (NSE) fell on Monday, the first trading day after the weekend report. Market analysts said they expected the CBN’s report to continue to moderate share pricing trend in the banking sector as investors speculate on the banks that were involved. The apex bank did not name any of the three banks.

    Banking stocks represented more than one-third of decliners and the NSE Banking Index, which tracks banking sector, recorded the highest loss of 2.3 per cent, more than twice the market’s average loss of 1.0 per cent.

    A trader at the Exchange, who preferred anonymity because the firm deals on banking stocks, said investors appeared to be caught in between panic and perplexity because they could not authoritatively pinpoint the affected banks and there were apprehensions over the ability of the banks to raise much-needed funds.

    A report by the apex bank did not mention the three banks but it provided a descriptive view of the banks. According to the apex bank, the three inadequately capitalised banks belong to the group of 14 that have licenses to operate as regional and national banks. Regional banks are expected to have minimum capital base of N10 billion while national banks are expected to have minimum capital base of N25 billion.

    The apex bank said it was monitoring the three banks’ recapitalisation plans, noting that 10 others banks with international status met the 15 per cent minimum capital base for that category of banking as at the review period ended June 30, 2015.

    Nigerian banks have been under pressure due to impending adoption of stricter international requirements, loan impairments due to the global oil crisis, foreign exchange crisis and tighter monetary regulatory policies.

    Nigerian banks and other companies have been forced to suspend planned new offers and capital raising due to the downtrend at the Nigerian capital market. Many companies had opted to delay their new issues because of the significant undervaluation of their fundamentals by the losing spree. Recent new issues by banks, including United Bank for Africa and Access Bank, were undersubscribed.

    A report had indicated that Nigerian banks might need to raise some N400 billion to strengthen their capital base in view of the impending implementation of the Basel II.

     

     

     

     

     

     

  • Scores dead as robbers raid banks in Ogun

    Scores dead as robbers raid banks in Ogun

    Several persons were Thursday feared killed after daredevil armed robbers raided commercial banks in Agbara, Ogun State.

    The robbers, who stormed the area at about 8am, were said to have announced their presence with sporadic gunshots.

    It was learnt that the hoodlums’ attack, which disturbed the usually peaceful nature of the estate, left so many people in the pool of their blood.

    While many were said to have bled to death as the attack lasted, The Nation gathered that employees of companies such as Nestlé Foods, Beta Glass, Reckitt Benckiser and Lotus Plastics scampered to safety.

    It could not be immediately ascertained which banks were affected but The Nation gathered that First Bank, Zenith Bank, Guarantee Trust Bank, Union Bank, Eco Bank, Diamond Bank and First City Monument Banks, as well as United Bank of Africa (UBA) are located in the area.

    A resident in the area who gave his name as Adewale said the robbers attacked all the banks and killed many people.

    “They arrived the area at about 8:30am and started operating in some of the popular banks. They were seriously robbing and killing people. They were just shooting anyhow. So many people on the ground bleeding,” he said.

    When contacted Ogun State Police Commissioner, Abdulmajid Ali declined comment on the issue.

    He claimed that they were still on top of the situation directing the reporter to call the command’s spokesman, Muyiwa Adejobi.

    However, all calls made to Adejobi were not answered nor returned.

  • CBN orders banks to build buffers against bad loans

    CBN orders banks to build buffers against bad loans

    •Banks’ credit with CBN hits N622b

    The Central Bank of Nigeria (CBN) has ordered deposit money banks to double provisions on performing loans to two per cent to build adequate buffers against unexpected losses.

    General provisions on performing loans had been fixed at one per cent before the new regulation, said the CBN circular which came into effect last week.

    “In recent times, the adverse macro-economic environment has been a source of concern in the financial sector,” the bank said.

    Meanwhile, the interbank lending rate held steady for the second consecutive week at 0.5 per cent after the CBN injected matured Open Market Operation (OMO) bills into the system, traders said.

    Banks’ credit balance with the CBN opened at N622 billion ($3.13 billion) on Friday, compared with a surplus of about N514 billion last week.

    The secured open buy-back (OBB) – the rate at which lenders can borrow from the interbank market using treasury bills as collateral – held steady at 0.5 per cent same level last week, far below the CBN’s 13 per cent benchmark interest rate.

    Traders said about N179 billion in matured OMO bills was injected into the system on Thursday. They also expected an unspecified amount of refunds from cash that banks had deposited with the central bank for forex purchases to hit the banking system on Friday.

    Traders said although about N70 billion for bond purchases and N18 billion debited for cash reserve requirements left the system on Friday, the market remained substantially liquid.

    “The market is highly liquid and we are not seeing any change in the lending rate at the interbank market in the near term unless the central bank resumes the issuance of OMO bills as is being speculated in the market,” one dealer said.

    A few commercial lenders were transacting overnight placements at one per cent on Friday, the same level last week, but most are still insisting on secured lending, traders said. “We expect the system to remain liquid next week and interbank rate trading at the prevailing level,” another trader told Reuters.

     

  • Court bars banks from ‘instigating’ Kashamu’s arrest

    Court bars banks from ‘instigating’ Kashamu’s arrest

    The Federal High Court in Lagos Thursday barred five commercial banks from instigating Senator Buruji Kashamu’s arrest by security agencies over an alleged debt.

    Justice Chukwujekwu Aneke made an order of perpetual injunction restraining the banks and their officers from instigating the Economic and Financial Crimes Commission (EFFC) to arrest, interrogate or detain Kashamu.

    It is with regards to “an innocuous and unblemished civil contractual transaction” between Kashamu and the banks.

    The banks are Ecobank Nigeria Limited, Union Bank Plc, Enterprise Bank Plc, Zenith Bank Plc and First City Monument Bank Plc.

    The judge declared that the EFCC and the police were not empowered to act as debt collectors.

    Kashumu sued along with his companies: Kasmal Properties Limited, Hotel De Island Limited, Nacoil International Limited, Hotel De Island Bureau De Change Limited, Island Auto International Limited, Daily Capital Microfinance Limited and Kasmal Group of Companies.

    They claimed the banks were being used by his political opponents to send the EFCC after him over loans he obtained.

    “The applicants’ relationships with the third to seventh respondents (banks)  are purely banker/customer relationships with valuable security collaterising all loans taken from the banks and therefore devoid of criminality as to justify reference to law enforcement agents.

    “The first and second respondents (EFCC and IGP) are agencies of government charged with the responsibility of combating economic and financial crimes respectively in Nigeria.

    “In the course of their relationships with the third to seventh respondents (banks), the plaintiffs have not committed any economic, financial or general crime as to warrant being reported to and or interrogated and detained by the first and second respondents.

    “I believe that the indebtedness of a customer to his bank is not a crime under the laws of the Federal Republic of Nigeria,” Kashamu said in a supporting affidavit.

    He urged the court to declare that the respondents had violated his fundamental rights to liberty and to own property under sections 35 and 44 of the 1999 Constitution for harassing, intimidating, arresting and threatening him with detention.

    However, Ecobank asked the court to dismiss or strike out Kashamu’s suit for being a gross abuse of the court processes.

  • Banks spend $4b quarterly to stem ATM scam

    Banks spent $4 billion quarterly to settle their foreign counterparts before the Central Bank of Nigeria (CBN) pegged withdrawals with naira-denominated Automated Teller Machine (ATM) cards abroad, it has been learnt.

    The CBN pegged the withdrawals to $50,000 from $150,000 yearly. The daily limit was $300.

    The policy is also to protect the foreign reserves, which have been depleted over the last one year by the slump in oil prices. The reserves fell from $44 billion in December last year to $30.1 billion last weekend.

    CBN Director of Communications, Ibrahim Mu’azu told The Nation that there is no limit on dollar-denominated ATM cards because the account holder would be drawing from his domiciliary account.

    He said the CBN placed limits on naira-denominated ATM cards because it was being abused by foreign exchange (forex) speculators, who harvest hundreds of cards, make huge withdrawals abroad at official rate of N197 to dollar. He claimed that they bring the funds home to sell at the parallel market rate of N221 to dollar.

    Mu’azu said travellers can follow approved procedures and obtain Business Travel Allowance or Personal Travel Allowance from their banks, and when they need to import goods or buy products online above the limit, Letters of Credit (LCs) should be opened with local banks.

    “You need to fill LCs form in your bank and follow the right procedure. You cannot travel abroad and be drawing dollars from your naira accounts at this time. Before the controls were imposed, people were using their naira-denominated cards to take dollar from Nigeria. The local banks were complaining because they need dollars to settle the foreign banks,” he said.

    The CBN director said only those into illicit transactions will say the $50,000 limit is small, adding that most of those abusing the policy want to evade import duties and taxes.

    “We want to work within the $50,000 annual limit because it can be accommodated without abuse. The problem is when people have naira and want to take dollars. We want to sanitise the market, control abuses and illicit transactions,” he said.

    The $300 daily limit, he said, is to enable travelers pay for taxi, and other minor expenses while on their trip.

    In a circular to banks, the CBN Director, Banking and Payment System, ‘Dipo Fatokun said where a corporate entity requires a card(s) for overseas payments, such entities should be encouraged to obtain foreign currency denominated card(s).

    The cards, he insisted, would be issued against the corporate’s domiciliary account, prepaid or credit cards whose limits must be in line with the existing Business Travel Allowances (BTA) provisions.

    Cardholders, he insisted, should be informed that the banking industry has instituted a tracking system on the use of naira-denominated cards abroad, adding that banks are required to educate their customers on the need to operate within the approved limits, as violators would be sanctioned.

    The CBN director also threatened to sanction banks that violate its $50,000 annual spending limit on ATM withdrawals overseas with naira-denominated cards.

    He advised banks to submit reports of all naira-denominated card transactions consummated overseas to Nigeria Interbank Settlement System (NIBSS) on daily basis. The report, he said, must be sent electronically via a file upload portal as specified by NIBSS, which would include the Bank Verification Number (BVN) and the account numbers of the cardholder  for each transaction. NIBSS is expected to consolidate the reports and send details to the violators of the limits to the apex bank.

  • How banks can stimulate SMEs’ growth, by Standard Bank chief

    With Nigeria’s small and medium enterprises (SMEs) sector buffeted by a myriad of challenges, banks have the capacity to reverse the trend and put the sector on the path of sustainable growth, Head, Personal and Business Banking West Africa, Standard Bank, Lincoln Mali, has said.

    He said SMEs in Nigeria face diverse challenges such as management, finance and business environment. In the area of management are issues such as skills shortage, management expertise, financial management, business support and access to markets, while in the area of finance, the SMEs are confronted with cost of capital, lack of collateral, information requirements, regulation impact and culture clash.

    Mali noted that SMEs have underperformed, despite that they constitute over 90 per cent of Nigerian businesses, and their contribution to the nation’s Gross Domestic Product (GDP) is below 10 per cent.

    Also, MSMEs are estimated to contribute 10 per  cent of the employment level in Nigeria, a level well below that of several other countries, including United Kingdom (UK) at 54 per  cent; United States (US) at 50.3 per cent; Bangladesh 80 per  cent; India 80 per cent; Belgium 66.6 percent; South Africa 60 per cent; Malaysia 57.7 per cent, and China 58.8 percent.

    Enhancing financial inclusion according to Mali, is a major driver for moving SMEs from survivalist mode to formal entrepreneurship, and this is where banks have a pivotal role to play. Among other areas that banks can make the difference, according to him, include facilitating basic business trainings and various capacity development programmes; up-skilling relationship managers to become professional business advisors; providing various lending solutions and linkages between corporates and the SMEs in their value chain and strong partnership with MFIs to drive inclusive growth.

    Others include having a real financial inclusion focus with the capacity to understand the market and properly de-risk it; providing some infrastructure to identified SME clusters as CSR (internet access, warehouses, trade portals); advocating for standardised measures of taxation and levying of SMEs in local markets; and leveraging on international affiliations to sponsor knowledge sharing between local SMEs and their foreign counterparts.

    Though the commercial banks have the capacity, but they lack penetration, as they are largely concentrated in Lagos, Abuja and a few commercial hubs. This makes it imperative for banks to create workable partnerships and innovations for deeper penetration, leveraging existing capital to empower businesses and in turn drive economic growth.

    “There will always be opportunities for those with the proper business skills to build a real future for themselves and the economy. At Standard Bank, we are extremely proud to help facilitate this process by helping to structure the financial packages that will help advance the success of SMEs in Nigeria and elsewhere in Africa,” Mali stated.

     

  • ‘No approval for management franchise fee agreement for banks’

    ‘No approval for management franchise fee agreement for banks’

    The National Office for Technology Acquisition and Promotion (NOTAP) has explained why it does not approve franchise fee agreement for banks.

    It said: “The banking system has been in existence for a very long period of time. And we feel that the country has developed enough capacity to manage banks and we don’t expect to bring in people from outside to come and manage banks in Nigeria. It is for that reason that we have stopped giving banks management service agreement or even franchise, NOTAP Director General Dr Dan-Azumi Ibrahim, said yesterday in Abuja.

    The NOTAP boss was categorical in the agency’s resolve not to grant management franchise agreement approval but stated that “for software, we do because it is the software that drives the operation of all the banks and our level of development of software has not reached the level that we will deny the banks certificate or registration of software consultation.

    “So, as far as maintenance, management and franchise agreement, we are never going to approve it. So, the agreement is not approvable and we are not going to approve it.”

    NOTAP denied granting Stanbic-IBTC management or maintenance franchise agreement.

     

  • Banks deny oil marketers cash to import fuel

    Over 70 per cent of oil marketers that are eligible to import fuel into the country are not doing so because banks refused to lend them money, the Chairman, Integrated Oil and Gas Limited, Captain Emmanuel Ihenacho has said.

    He said banks are no longer extending credit facilities to operators because they  are hardly able to repay the loans with interest at agreed date.

    He lamented that the decision of banks deny operators facilities has further compounded the woes of indigenous oil and gas operators as they now operate at below installed capacity.

    He said: “More than 70 per cent of the operators in the oil sector want to import fuel in the wake of lopsided performance of the four national refineries but are unable to do so because banks have shut down credit windows against them. In the face of this, operators now rely on fuel allocations or supplies from the Federal Government.”

    Ihenacho said the country needs to adopt and implement a policy that will make the refineries to refine crude oil in-country in order to solve perennial fuel crisis and its attendant effect on foreign exchange.

    He said: “There is need for a paradigm shift from importing to refining in the country. This shift can only be made possible when more refineries are allowed to operate. Why can’t we encourage companies to establish more refineries to meet the fuel needs of operators in the downstream sector?”

    He blamed the absence of workable operation plan by the Federal Government for the stunted growth of the downstream sector of the oil and gas industry. He therefore urged the government  to properly restructure the sector.

    He said the deregulation of the downstream oil sector cannot be possible if private entrepreneurs do not invest in building refineries.

    Ihenacho said subsidy is a drain on the national treasury, stressing that trillions of naira has been paid as subsidies to fuel importers in the last few years.

    He urged the government to remove subsidies, and at the same provide conducive environment for private refineries to operate, adding that the idea would help in reducing the financial challenges the country is presently facing.

    Federal Government had ordered the payment of over N400billion subsidy debt owed fuel importers in the country.