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CBN: FRC report on Stanbic IBTC faulty

•Apex bank lambasts FRC

•‘Due process wasn’t followed’

The Central Bank of Nigeria (CBN) came down hard on the Financial Reporting Council of Nigeria (FRCN) saying the Council’s indictment of Stanbic IBTC Holdings Plc (SIBTCH) is baseless and lacking in merit.

The CBN Governor, Godin Emefiele who registered the bank’s displeasure with the Council in a letter addressed to its Executive Secretary/Chief Executive, Jim Obazee, said the body was reckless and hasty in sanctioning the bank and its directors for alleged misstatement of the company’s 2013 and 2014 accounts.

Emefiele absolved the bank’s management and board of almost all the Council’s allegations and regretted that the Council did not follow due process stipulated in the FRC Act No.6 of 2011 in punishing SIBTCH.

“In the light of the foregoing facts, which clearly show that FRCN did not follow due process, the CBN regrets to inform that it is unable to accede to FRC’s request to take disciplinary action against SIBTCH. Indeed, the CBN does not see any reason to advise or compel SIBTCH to obey the sanctions meted to it by the FRCN,” the apex bank said.

For instance, the CBN said the final notice and regulatory decision by the Council were based on the FRC Act No.6 of 2011 and Regulation 21 of the FRC Guidelines/Regulation for Inspection and Monitoring Entities 2014.

The CBN said contrary to the allegation of the FRC that Stanbic IBTC did not obtain approval from the National Office for Technology Acquisition and Promotion (NOTAP) for payment of affiliate software licence, its review showed that the bank actually obtained the necessary approval from NOTAP to pay affiliate software license from the Standard Bank South Africa, for the period of three years covering June 1, 2012 to 30th May 2015.

“With regard to the allegation of non-disclosure of intangible assets in SIBTC’s 2013 and 2014 financials, we note that the bank adequately recognised the software as an intangible asset in its 2011 financials and sufficiently disclosed the disposal of the software in the 2012 financials. Consequently, the said software could not have been reported as an intangible asset in the succeeding years 2013 and 2014,” the CBN said.

On the allegations of lumping several expense items under ‘Others’, the CBN said the items were not material enough to appear as line items in the income statement and that the non-disclosure of the items did not materially affect the true and fair view of the financial statements.

It however agreed with the FRC that SIBTC erred in the classification of some line items. “However, the identified misclassifications did not understate or overstate its assets and liabilities did not understate or overstate its assets and liabilities, neither did it increase nor decrease its income or expenditure, such as would have caused a material misrepresentation of the financials,” the CBN said.

Defending SIBTC, the apex bank said if the company used its judgment to capture donation of N275 million under ‘Others’ because it was of the opinion that it was not a charitable donation but a mandatory contribution towards the victims of terrorism in the country.

November 4, 2015
CBN: Oil, gas sector owes 23.8% of N13.5tr bank loans

Oil and gas owes 23.8 per cent of the N13.5 trillion loans given by banks to key sectors of the economy, the Central Bank of Nigeria (CBN) has said.

The statistics, contained in the Financial Stability Report released by the CBN said 50 per cent of the oil and gas loans were on default, noting that after a top-down (TD) balance sheet stress tests on the 22 licensed banks (DMBs), the industry is still resilient.

Its Director, Financial Policy and Regulation Department, Kelvin Amugo, said the report, which is for last June, indicated that although the proportion of credit to the sector declined by 0.6 percentage points against December last year position, credit to the sector grew by 26.3 per cent in absolute terms, similar to the rate of the total credit growth.

He said the industry Capital Adequacy Ratio (CAR) remained above the prudential hurdle rate at 13.55 per cent but was 0.52 percentage points lower than it was in December under the same scenario.

He said the stress tests assessed the resilience of banks to a wide range of risk factors, including credit, interest rate, foreign exchange rate and liquidity risks.

The stress tests quantified the impacts that shocks on these risk factors, based on historical antecedents and expert judgments, could have on the capital positions of the banks. Resilience of the banking system to the shocks was assessed against defined prudential hurdle rates.

The TD stress tests are usually applied on a bank-by-bank basis and on an aggregate basis to determine the impact of specific stress scenarios on the banks.

He said vulnerability to credit concentration in the oil and gas sector manifested under the shock scenario of a 100 per cent credit default. Under this shock scenario, industry CAR declined to negative 0.45 per cent, reflecting 3.68 percentage point decrease compared to the same situation in December last year. This deterioration in the industry resilience was driven by increased vulnerability of the large and medium banks to credit concentration in the oil and gas sector.

Furthermore, banks were classified into three broad groups for systemic and peer assessment. Banks in the “large” category had assets greater than or equal to N1 trillion. The “medium” category comprised banks with assets less than N1 trillion but more than N500 billion while the “small” category comprised banks with assets less than N500 billion.

Furthermore, the test showed that capital position of ‘three small banks’ have fallen below regulatory threshold. The CARs of the affected banks were below five per cent regulatory position. The three banks are not among the domestic systemically important banks (D-SIBs).

CBN Deputy Governor, Financial System Stability, O. J. Nnanna, said the goal of financial system regulators remains the enhancement of the stability of the financial system and its resilience to withstand unexpected adverse shocks while contributing to the growth of the real economy.

“A stable financial system should facilitate economic growth and development necessary for improved standard of living. This edition of the Financial Stability Report has highlighted the need for effective coordination among fiscal, monetary and regulatory authorities, which would help in the achievement of policy goals and targets while ensuring sustainable economic growth,” he said.

November 4, 2015
CBN workers donate N40m hall to group

Workers of the Central Bank of Nigeria (CBN), through the ‘CBN Staff Alms Fund’ have inaugurated a N40 million multipurpose hall for the Spinal Cord Injuries Association of Nigeria (SCIAN). The hall was meant to enable SCIAN members rent, generate income and enhance their welfare.

The CBN Governor, Godwin Emefiele inuagurated the project located in Festac, in Lagos.

Represented at the ceremony by CBN Director, Human Resources Department, Chizoba Victoria Mojekwu, he said through their personal and individual contributions to the ‘CBN Staff Alms Fund’, the Board of Trustees (BoT) of the fund approved the request to build a multipurpose hall for SCIAN and conveyed same to the promoters.

According to him, the CBN Staff Alms Fund was established as a result of an initiative to collectively address the nagging issues of street begging, and the destitute in major cities of Lagos and Abuja. Other branches of CBN, he added, later keyed into this project by establishing similar Funds in their locations.

According to him, five projects have been concluded under the CBN Staff Alms Fund since its inception. The SCIAN Chairman, Obioma Ononogbu commended the CBN for the gesture.

“The CBN team visited our centre from a contact made by a friend of the centre. At that meeting, the team expressed their interest in assisting SCIAN. We encourage staff of union of other corporate bodies to emulate this laudable gesture of CBN staff, “ he said.

November 2, 2015
BVN: CBN rules out deadline extension as project gulps N8bn

BANK customers who are unable to obtain their bank verification numbers (BVNs) by the end of today would be considered to have incomplete documentation and will not be able to operate their bank accounts.

CBN Director of Communication, Ibrahim Mu’azu, who disclosed this yesterday, said the marginal queues witnessed in some bank branches because of people trying to make last minute enrollment were expected and better than what happened last July.0

“The exercise is satisfactory. So far, there is no decision to extend the deadline. For Diaspora customers, BVN registration was ongoing in 14 countries. Any customer both at home and abroad is considered to have incomplete Know Your Customer (KYC) documentation,” he said..

Data obtained yesterday from the Nigeria Interbank Settlement System (NIBSS), which handles the project, showed that 2,533,299 customers have so far enrolled on the BVN network and had their numbers linked to their accounts.

NIBSS Managing Director, Ade Shonubi, said the BVN project had gulped N8 billion since the exercise started in February 2014 and that the project was to ensure unique identity for all bank customers and other users of financial services in the country.

He said the BVN protects customers’ bank accounts from unauthorized access, identity theft and fraud.

Shonubi said that at the expiration of the initial estimated 18 months deadline in July last year, a good number of bank customers were reluctant in registering, which led to commotion and stampede in banking halls across the country towards the end of the previous deadline.

But the CBN said that given the tradition of multiple accounts holding by the average Nigerian, which could be conservatively estimated at about two or three per account holder, therefore, it could be safely assumed that over 40 million accounts might have been enrolled to BVN.

Furthermore, some Nigerian banks’ customers in the Diaspora have taken advantage of more facilities provided for enrollment in more locations abroad.

“It is evident that there has been less pressure in banking halls across the country which goes to buttress the fact that a greater percentage of account holders have been enrolled with the exception of those yet to link their accounts to their BVN,” he said.

When The Nation visited some bank branches yesterday to monitor the project’s progress, only a few customers were seen trying to either register or link their BVN to their accounts.

At the Diamond Bank, Jibowu branch, in Lagos, only 10 customers were on the queue and one customer service officer attended to them. The bank officer divided the customers into two groups of those with BVN wanting to link their numbers to their accounts and those who were yet to enroll.

However, at the First Bank, Shomolu branch, in Lagos, about 30 customers were seated, waiting to enroll. A separate desk was created for those who wanted to link their BVNs to their accounts.

Same scenarios were observed at the GTBank, Zenith Bank, Ecobank and Fidelity Bank branches in Matori, Lagos..

But many customers had painful tales of the BVN exercise. Many of the customers who spoke with The Nation said they wanted the deadline to be further extended by at least six months.

Kelvin Okafor, a customer of one of the new generation banks, said all bank customers should be allowed to register.

He said customers should not be punished because there were many challenges that made it difficult for them to register.

“I visited my bank several times to register but they complained of poor network. I know that many other customers had similar experience. That is why it took me so long to enroll,” he said.

Mathews Abiodun, said she only got to know that the exercise was compulsory this week and had to rush to beat the final deadline.

“I think the banks and CBN should have done more in creating awareness for the project,” he said.

Another customer, James Chukwu, said he failed to register because the process was too tedious.

“What of all the data I provided in the course of registration?” he queried. “Why can’t the bank rely on those details? I only decided to do it because I understand they will suspend my account if it is not done.”

He urged banks to make things easier for their customers by asking only relevant documents that have not been supplied earlier.

CBN Director, Banking Supervision, Mrs. Tokunbo Martins insisted that bank customers who fail to meet the October 31 deadline to enroll on the BVN network will have their accounts frozen. She said there is no going back on the new deadline set by the CBN for customers to obtain their BVN.

“There will be no extension of the October 31 deadline. All efforts have been made by the Bankers’ Committee, the CBN and NIBSS for bank customers to obtain their BVN. The customers who fail to meet the deadline will not be able to operate their accounts until they comply,” she said.

October 31, 2015
Naira won’t be devalued further – CBN Governor

The Governor of Central Bank of Nigeria (CBN), Godwin Emefiele, on Friday ruled out the possibility of the Federal Government further devaluing or adjusting the Naira.

He spoke with State House correspondents at the Presidential Villa, Abuja.

According to him, the government would now rather focus improving and deepening the foreign exchange market by improving supply of foreign exchange into the market.

“There has been a lot of talk on whether or not we want to depreciate our currency again. The truth is that we had adjusted the currency by depreciating it from N155 to N197 in February this year.
There is no intention to depreciate or adjust the currency any longer.

“The President has been very clear on this The Vice President has been very clear on this and let me further reiterate our position at the Central Bank of Nigeria that we are not considering any further depreciation of the currency.

“What we are trying to concentrate on right now is how to improve and deepen the foreign exchange market by improving supply of foreign exchange into the market,” he said.

To do so, he said that the government will try to encourage people to export and earn export proceeds which should be use to import whatever they need to import.

However, he said that the government will also concentrate on how to reduce the import of items that can be produced in the country.

Speaking further, he said: “So that is our focus. I’m saying and very soon the CBN will be launching a campaign called PAVE, which means ‘Produce locally, add value and export your product and earn your foreign exchange for your imports’ because this is the only way we can support the efforts of CBN in intervening and providing foreign exchange in the market to meet the import needs of our people.

“It is very clear, what we need to do is reduce our propensity to import but we will not depreciate our currency. For now we will not,” he said.

On the list of banned items, he said: “First of all the CBN does not have the power to ban the import of any item. What we have done is to exclude certain items that are imported into the country from obtaining foreign exchange from the Nigerian foreign exchange market.

“Yes it is also true we held a stakeholders’ meeting with the organized private sector and prominent and leading private sector stakeholder were at that meeting. It was not meant for the press.

The purpose of that meeting was to engage the private sector to make the private sector understand that government realizes that they are engine of growth and we also used the opportunity to explain to them the basis and purpose of those policies that we have introduced and at the end of that meeting they were very happy, they saw our position and indeed at the end of that meeting some of them in fact provided us with the names of some items that should be included in the list that should be excluded from foreign exchange.

“And I must confess that at this stage given the determination of some of the organized sectors to say that yes, they produce these items and that we should exclude those items from foreign exchange we are reviewing that list and we may in due course include more items products that can be produced in Nigeria in the list of items that will be excluded from foreign exchange in the Nigerian foreign exchange market,” he stated

October 30, 2015
CBN urges Nigerians to access N220b MSMEs fund

Investors within the micro to medium categories have been urged to take advantage of the N220 billion facility set aside by the Central Bank of Nigeria (CBN) for the development of Micro Small and Medium Enterprises (MSMEs).

Central Bank Consultant and Managing Director, Kajaura International Consult Limited, Dr. Yakub Abdalla who spoke in Gombe, Gome State as part of his company’s sensitisation campaign on the Fund, said farmers, artisans, market men/women and any entrepreneur that is either financially excluded or under-served is entitled to the fund.

He said the fund would also trigger job creation for the private non-formal sector, adding that lending would be to only members of cooperative societies.

He said qualified Micro Finance Banks (MfBs) could also participate by borrowing for onward lending to others, adding that the apex associations would serve as vehicles for monitoring and evaluation of the funds.

Dr. Abdalla said: “The CBN governor recently expressed concern that more than 90 per cent of Nigerians are yet to hear about the fund.

“There is therefore need for proper sensitisation of the fund – people need to understand that the fund is available to qualified Nigerian entrepreneurs and that there is an easy way to access the fund.”

He therefore urged Nigerians to forward their applications, assuring that the CBN would receive and process them.

The Consultant also urged Gombe state government to help get the information to the attention of all its MSMEs, especially in the rural areas.

October 22, 2015
Counting cost of forex restrictions

The Central Bank of Nigeria (CBN) foreign exchange restriction policy has continued to have ripple effects on businesses across different sectors as stakeholders lament looming job loss, low productivity, undercapacity utilisation among other dire consequences, reports Ibrahim Apekhade Yusuf

FOUR months after the Central Bank of Nigeria (CBN) announced its foreign exchange restriction policy, many businesses have continued to rue the adverse implication of the policy on their businesses generally.

The CBN had in a circular dated June 23, 2015, The CBN had in a circular dated June 23, 2015, stated that the policy would help to conserve foreign reserves and facilitate the resuscitation of domestic industries as well as generate employment.

A cross-section of analysts who spoke with The Nation while stating that the objective of the forex restriction was not a bad idea on its own, however lamented that the implementation of the policy has far-reaching implication in the short, medium and long term.

Firing the first salvo, President of the Lagos Chamber of Commerce and Industry (LCCI), Remi Bello, while decrying the policy, warned that most manufacturers might be forced to shut down and move their operations to neighbouring countries due to their inability to access foreign exchange for raw materials and other critical inputs.

Specifically, he said, one of the downside of the policy is that it could lead to massive job losses as an estimated 40, 000 Nigerians who in the manufacturing sector may be laid off.

The CBN recently excluded some essential raw materials from the list of items valid for forex.

The policy, the apex bank explained, was intended to sustain the stability of the foreign exchange market, “resuscitate local manufacturing” of these items and change the structure of the economy.

According to Bello, “There is pressure on manufacturers to lay off their workforce before the end of the year. Most manufacturers affected have been unable to produce lately due to lack of foreign exchange, delays in the processing of Form ‘M’ to import raw materials in order to meet demands and this has adversely led to loss of market share. With this continuing, massive job loss is anticipated in no time from now.

“Also, the manufacturing sector using crude palm oil as raw material in their daily production of goods like biscuits, noodles, cosmetics etc., will be affected as the locally produced and supplied raw material cannot meet the required demand for production.”

The LCCI president expressed the regret that for an economy that is largely driven by the private investors, the government should source for alternative means rather than resorting to a total exclusion of certain items from the foreign exchange market.

He however urged the federal government to prevail on the CBN to review the policy in the interest of the impending danger to the workforce, the private sector and the economy at large.

Among the 41 items marked as ‘Not Fit for Forex’ also include: rice, cement, margarine, meat and processed meat products, vegetables and processed vegetable products, poultry chicken, eggs, turkey, private airplanes/jets, indian incense, tinned fish in sauce(Geisha)/sardines, cold rolled steel sheets, galvanised steel sheets, roofing sheets, wheelbarrows, head pans, metal boxes and containers, enamelware, steel drums, steel pipes, wire rods(deformed and not deformed), Iron rods and reinforcing bar, wire mesh and steel nails, wood particle boards and panels, wood fibre boards and panels, plywood boards and panels, wooden doors, toothpicks, glass and glassware, kitchen utensils, tableware, tiles-vitrified and ceramic, textiles, woven fabrics, clothes, plastic and rubber products, polypropylene granules , cellophane wrappers, security and razor wine, soap and cosmetics, tomatoes/tomato pastes and eurobond/foreign currency bond/ share purchases.

Echoing similar sentiments, LCCI’s Director-General, Muda Yusuf, said the chamber disapproved of the apex bank’s policy which restricted 41 imported goods from accessing foreign exchange from the bank.

He said the policy would serve as a disincentive to the Nigerian manufacturing sector and the economy.

The LCCI stated that the restricted items included critical elements of the manufacturing process of many firms, across sectors in the country.

According to LCCI: “The policy means that manufacturers who require any of the 41 restricted items as inputs and raw materials for their production may have to simply shut their operations once their existing stock is exhausted.

“The LCCI understands the CBN’s constraints and circumstances, as it drew up this policy. It, however, appears as if the formulation of the policy has suffered from the CBN’s limited understanding of the manufacturing process of many of the sectors affected by this policy.”

Although the CBN directive was aimed at encouraging local production of the items, the chamber maintained that the policy was ambiguous as the restricted items were not well-defined and specific.

The LCCI, therefore, urged the apex bank to amend the policy with full product definition, specification of all restricted items, including their HS Codes, and excluding items which are non-substitutable industrial raw materials from the list.

The chamber further called for appropriate time frames for items which required some interval before local substitutes can be created for imported raw materials.

It reminded the CBN and the federal government that manufacturers had yet to recover from the losses they suffered due to the recent currency devaluation.

The LCCI added that: “Compounding recent devaluation losses with higher costs and the complete inability to source critical raw materials may push many firms over the precipice.

“This may result in business closures, job losses, declined manufacturing sector production and greater social tension.”

Additionally, the LCCI called for increased engagement and consultation between the CBN and the private sector, for adequate understanding of the impact of its policies on the manufacturing sector.

No going back on forex restriction

For those still nursing the idea that the CBN may soon rescind its decision banning importers from accessing foreign exchange, the forex policy will remain in force.

The CBN governor, Godwin Emefiele reiterated this on Monday in Lima, Peru, while briefing journalists at the International Monetary Fund (IMF)/the World Bank Group meetings.

“The CBN will continue to deny access to forex to import goods that can be produced locally,” he insisted.

“We have not banned any items. What we just did was to exclude from accessing foreign exchange, items that can be produced in the country. We think that because of the problems we’ve had, the drop in commodity prices and revenue accruing to the nation, and because we know that these items have been produced in large quantities in this country in the past, that provision still stands. The CBN is not reconsidering the ban, the exclusion still stands,” Emefiele stressed.

The apex bank’s chief said in the course of the period that this policy has been in force, he has been prompted from various quarters to even elongate the ‘excluding items’ list, but he however said the CBN would confine itself to the items as presently indicated.

The CBN, Emefiele stressed, “has at different fora received the list of additional items which some section think should be included from receiving foreign exchange, but the CBN has for now limited the options to the existing ones.”

In defending the apex bank’s stance, Emefiele argued that if there’s global economic slowdown which has affected the growth and resilience of emerging and frontier markets, including Nigeria, and there is a drop in revenue receipts which has impacted negatively on everyone, “there’s abounding need for the regulator to intervene to restore stability in the exchange rate regime, look for ingenuous ways of increasing the sources of foreign exchange, such as encouraging exporters to repatriate their proceeds and make more foreign exchange available to the real sector, so as to grow the economy.”

He said the reforms that commenced about two years ago, with respect to economic diversification and taxation, will be vigorously pursued with a view to increasing the government’s revenue base.

He said since about two years ago, and even before, government has been on the path of reforms, focusing on how to increase the countries revenue base. He said the collaboration with Mckinze (a foreign Accounting Tax Consultant), resulted in the increase of revenue by about N75billion in 2014, pointing out that a N150billion revenue target is being expected from this engagement, this year.

Emefiele, who spoke on a wide range of issues, said investors are exiting from frontier and emerging markets on account of the uncertainty and insecurity that pervade the markets, saying that in the last quarter of this year alone, about $48billion capital outflows has been recorded in these markets. He said people are pulling funds out and are looking to more stable and safe zones to invest.

“This is why, he argued, “we are saying that we should be nationalistic in our approach, that we have to carry our cross by ourselves,” pointing out that there is need to prioritise, by making sure that “foreign exchange is made available to only those who are importing essential raw materials and goods we know cannot be produced within the country. That is the only way we can conserve our foreign exchange.”

He said the CBN will continue to intervene in the foreign exchange market and to ensure that forex is made available to meet the import needs of our people,” pointing out that is in this respect that the apex bank is appealing to exporters to make available their export proceeds to further boost available foreign exchange.

Emefiele said the slow down as a result of the drop in commodity prices, the anticipated rate hike by the US by the Federal Reserve Bank and the tension in the global arena, have affected some of the economies, to the extent that some have gone into recession.

October 18, 2015
TSA is magic pill for economic revival, says banker

An investment banker has described the Treasury Single Account (TSA) as a wonder pill that will boost the economy.

According to Mr Ike Chioke, Managing Director, Afrinvest West Africa Plc, an investment and research firm, TSA will boost short term liquidity and also compel banks to increase lending to the private sector.

He spoke at the launch of the Nigerian Banking Sector Report at Afrinvest’s 20th anniversary celebration in Lagos last weekend.

TSA, he said, would either stop the crowding out of private sector organisations from accessing credit or compel banks to increase lending to the real sector.

Chioke said in the last decade, banks had overcome macroeconomic regulations that shaped the industry.

Speaking on the theme: Looking ahead: Nigeria Banking in the next decade, Chioke said with the constraints on banks, the era of treasury-led banking was gradually transforming to credit-led banking.

“Total loans and advances grew by 26.6 per cent in 2014 as banks gradually increase their risk assets base while also strengthening their risk management framework,” he said.

He said an analysis of the lending structure within Nigeria’s Tier-1 and Tier-2 classifications showed that it is skewed towards the oil and gas sector with 27 per cent, followed by manufacturing 12.4 per cent and general commerce 10.2 per cent. A comparison across emerging market economies, however, reveals a lending structure favouring the manufacturing’s 16.9 per cent while the construction and real estate sectors remain at 11.5 per cent, he said.

Chioke said because of the challenges in the oil and gas sector, banks must redirect their lending towards the manufacturing and service sectors or risk higher non-performing loans in future.

He said before the banking consolidation of 2005, an average bank had a small capital base of about N2 billion. But after the recapitalisation, 25 stronger banks emerged from 89 – with a minimum capital of N25 billion each.

The Central Bank of Nigeria (CBN), he said, had continued to walk the tight path, since Mr Godwin Emefiele took over as governor, adding that Emefiele has outlined his plans to run the apex bank to serve Nigeria’s needs.

“While monetary policy co-ordination at the moment seems to be tailored around ensuring price and exchange rate stability, the unsympathetic impact on banks’ operational leverage and profitability has shaped the performance of banks in 2014 and so far in 2015,” he said.

Chioke said the CBN’s policy tightening on Cash Reserve Ratio (CRR) would make banks to be more efficient in deploying their assets towards higher interest- yielding risk assets while also reducing the allocation to investment securities. The CRR is a portion of banks’deposit kept with the CBN as reserves.

“We expect that banks will remain focused on creating additional risk assets to sustain the growth momentum in gross earnings,” he said.

He said the industry witnessed increased Cost of Funds (CoF), following the tightening on CRR, which quarantined cost-bearing deposits without corresponding interest yields.

“The implementation of the Basel II provision on Capital Adequacy Ratio (CAR) by most banks shows that these banks have adequate capital buffer. Against the threshold of 10 per cent, 15 per cent and 16 per cent for regional and national, international and Systemically Important Banks (SIBs), some banks have been able to meet the Basel II benchmark,” he said.

“Based on Basel II computations, GTBank emerged with the highest capital buffer with a CAR of 21.4 per cent within the Tier-1 category while Fidelity with a CAR of 23.2 per cent had the highest capital buffer among the Tier-2 banks.”

He said stricter regulations on commercial banks and the restraint they exercise in availing consumer loans is creating a huge market for shadow banking, urging lenders to brace to increase finance accessibility to this segment. He urgd them to devise less stringent requirements in meeting the opportunities.

October 14, 2015
BVN: Will CBN stick to October 31 deadline?

If the Central Bank of Nigeria (CBN) sticks to its October 31 deadline, over 32 million customers who have yet to obtain their Bank Verification Number (BVN) may have their accounts frozen. COLLINS NWEZE writes.

WHEN the Central Bank of Nigeria (CBN) and Bankers’ Committee came up with the Bank Verification Number (BVN) for two reasons: to tackle rising fraud cases and to protect transactions. After all, banking thrives on trust and security of customers’ funds.

But with 17 days to go, only 20 million customers have obtained their BVN, leaving over 32 million others at the risk of being excluded from the system if the CBN sticks to the October 31 deadline. Initially, the deadline was June 30.

According to CBN Director, Banking Supervision Mrs. Tokunbo Martins, customers who fail to meet the deadline would lose their accounts, adding that there is no going back on the deadline.

“There will be no extension of the October 31 deadline. All efforts have been made by the Bankers’ Committee, the CBN and Nigeria Interbank Settlement System for customers to obtain their BVN. The customers, who fail to meet the deadline will not be able to operate their accounts until they comply,” she said.

The bank chief, who spoke on behalf of the committee members, said Nigerians in Diaspora could enrol at various embassies in their countries of abode or get enrolled by the consultant involved in the contract at a fee. He said non-compliant customers still had up till month end to get their BVN or face the consequences.

She said the BVN registration was a directive from the CBN to Deposit Money Banks to register their customers’ fingerprints biometrically in furtherance of the Know Your Customer (KYC) policy.

The BVN was introduced in collaboration with the Bankers’ Committee on February 14, last year to ensure unique identity for all bank customers and other users of financial services in the country by the use of the customers’ biometrics as means of identification. Initially, it was estimated that all customers would, within a period of 18 months, complete enrolment in the new system of customer identification. The enrollment for the scheme can be done in banks across the country.

The Nigeria Interbank Settlement System (NIBSS), which guides the modalities of the project, is working on ensuring the success of the exercise by collaborating with telecoms firms to create a platform through which bank customers can confirm their registration status.

Already, NIBSS has collaborated with one of the country’s telecoms service providers, Etisalat to roll out the BVN Query Service.

Speaking on the service, the Managing Director of NIBSS, Ade Shonubi, said the initiative was in response to growing public demand for confirmation of BVN status by those, who have enrolled on the platform. He added that the BVN Query Service will boost such efforts like KYC for banks.

Chief Marketing Officer, Etisalat Nigeria, Francesco Angelone, said the partnership with NIBSS on USSD BVN Notification Service was in line with the telco’s commitment to continue to create value for the consumers across all sectors, including the banking and telecoms industries.

“We are happy to be the first to offer this product among the operators because we believe that innovation is the way the telecoms industry must lead,” Angelone said.

He said Estisalat believes that going in this direction of offering value to the banking public is another way it can show the telecoms industry the way to go. “The integration with the banking industry is a pillar for development. Etisalat subscribers can check their BVN registration status and number by dialing a dedicated code for an instant response at a cost of N10 per Query,” he said. The Query Service is based on instant request – instant response and aims at providing utility for those who have enrolled on the BVN platform of the CBN.

While the deadline looms, stakeholders, including banks, urged their customers to register. The Consumer Right Awareness Advancement and Advocacy (CRAAAI) also urged Nigerians to register for their BVN.

CRAAAI Chairman, Mr. Moses Igbrude, who spoke at a stakeholders’ forum on identity management in the economy, said identity management is a broad administrative area that deals with identifying individuals in a particular system.

He listed the system to include a country, a network, or an enterprise and controlling their access to resources within that system by associating, user rights and restrictions with the established identity.

He added that the role of technology in modernising the sector has witnessed a paradigm shift from the traditional methods of banking to digital channels which involve enormous levels of electronic data capture (EDC) of customer’s information. “Everybody needs security; if people are identified before they commit any crime, the person will be identified easily,’’ he said.

Sterling Bank Plc has deployed an innovative solution to enable customers who had previously enrolled for their BVN with other banks to upload same on its platform via their mobile phones.

With this development, customers are now able to comply with the regulatory requirement on BVN and save themselves the stress of having to come to the banking hall.

In a statement on how the development affects customers, the bank said its plan is to make the exercise seamless, easy and consistent with the move towards self-service that has become the order of the day. “Ultimately, it also enables the bank comply with the CBN’s position within reasonable time,” it said.

The lender said it would continue to improve customers’ experience at every touch point , which is in line with its brand promise. It disclosed that all BVN cards produced by NIBSS for its customers have all been distributed to all the customers who have registered.

Many of the bank customers, who spoke with The Nation, said they wanted the deadline extended by at least six months. Moses Abiola, said bank customers should be allowed to register. He said customers should not be punished because there are many challenges that made it difficult for them to register. “I visited my bank several times to register but they complained of poor network. I know that other customers had similar experience,” he said.

Michael Obi, a business woman based in Lagos, also said there were no nearby registration centres for her to register. She said bank should increase the number of registration centre to capture more customers. “I think the place where people can register are very few. Maybe, if there more registration centre, more people will register,” he said.

Another customer, James Chukwu, said he filed to register because the process was too tedious. “What of all the data I provided in the course of registration. Why can’t the bank rely on those detail? he asked. He said the bank should make things easier for their customers by asking only relevant documents that have not been supplied earlier.

CBN Governor Godwin Emefiele said the biometric technology involves the recording of a person’s unique physical traits, such as fingerprints and facial features. This record, he said, could then be used to identify the person later.

He said the BVN became exigent, following the increasing incidents of compromise on conventional security systems, such as password and Personal Identification Number (PIN) of bank customers which has led to loss of funds. There is therefore, a high demand for greater security for access to sensitive or personal information in the banking system.

Also, once a person’s biometrics have been captured, the person is given a BVN, which protects him.

He explained that fraud is reduced because no two persons have the same biometric information. “Banks will, therefore, be able to check the features of a person doing a transaction against the record which the bank has captured thereby correctly identifying the owner of an account,” he said.

A statement from the Bankers’ Committee insists that all bank customers in Nigeria are required to register or enroll for a BVN by June. However, to enrol, they must visit a branch of their bank, but the BVN given to a person by one lender will apply to that same person for any bank in the country.

The committee explained that since the BVN captures physical features, it is also very helpful for people who cannot read and write, thereby making sure that everyone is included in the financial system.

“It is expected to help the banking system identify customers who have been blacklisted by one bank and who move to other banks. There is also need to inspire confidence in the BVN registration process and use of information collected as well as helps public to distinguish between genuine BVN communication and requirements and the activities of fraudsters,” it said.

Why BVN?

Biometric security identification is a secure method of identification that eliminates issues with identity theft and fraud. Since it is unique to an individual, biometrics provides a strong link between the individual and the claimed identity.

“The process of enrolment is simple. Customers are to visit any branch of their bank; fill out and submit the BVN enrolment form; biometric information such as fingerprints and facial imagery is recorded; acknowledgment slip with transaction Identity is issued; BVN is created and customer is alerted to arrange for pick-up,” it said.

The committee said the project protect customer bank accounts from authorised access, as biometric information is not easily manipulated. It strengthens the financial system by reducing the risk of unauthorised access to customer bank accounts. It also increases the efficiency of the banking industry as it reduces incidence of fraudulent/duplicate bank accounts, and easily highlights blacklisted customers.

“Besides, full integration of BVN provides standardised efficiency of banking operation. This means that all banking operations will be verified using the same method, reducing cases of human error or inconsistency. Implementation of BVN means transaction authentication without the use of cards, but instead using only biometrics and a Personal Identification Number (PIN),” it added.

Dermalog/Charms Plc

For the CBN, the exercise is a continuation of the $50 million biometrics project it instituted with the Bankers’ Committee, Dermalog and Charms Plc.

However, not until May, last year, did banks begin issuing BVNs to their customers mainly at their headquarters. Managing Director, NIBSS, Mr. Ade Shonubi, said to ensure an efficient implementation, a phased roll-out approach was adopted beginning in Lagos.

The NIBSS provides the infrastructure for automated processing, settlement of payments and fund transfer instructions between banks, discount houses and card companies in Nigeria. The firm is owned by all licensed banks, and the CBN. Discount Houses operating in Nigeria also hold substantial shares in the firm.

Biometric Project Manager, NIBSS, Oluseyi Adenmosun, said BVN gives a unique identity that can be verified across the banking industry making it easier for customers’ bank accounts to be protected from unauthorised access. It is expected to address issues of identity theft, and reduce exposure to fraud in the banking sector.

The manager added that the purpose of the project is to use the biometric information to authenticate customer’s identity during transactions.

October 14, 2015
CBN’s restrictive forex policy stays, says Emefiele

The Central Bank of Nigeria (CBN) will continue to deny importers access to foreign exchange (forex) to bring in goods which can be produced locally, its Governor, Mr Godwin Emefiele, has said.

Emefiele, who made this known in Lima, Peru, said the policy was not up for review.

The apex bank has identified about 41 items which it denied eligibility to access forex from the its interbank window.

The CBN chief, while briefing with reporters from Nigeria at the International Monetary Fund (IMF)/the World Bank Group meetings, on the outcome of the Nigerian delegation’s engagement at the event, said contrary to insinuations, the regulator has not banned any goods from being imported.

“We have not banned any items. What we just did was to exclude them from accessing foreign exchange; items that can be produced in the country. We think that because of the problems we’ve had, the drop in commodity prices and revenue accruing to the nation, and because we know that these items have been produced in large quantities in this country in the past, that provision still stands. The CBN is not reconsidering the ban, the exclusion still stands,” he stressed.

The apex bank’s chief said since the policy has been in force, he has been prompted from various quarters to even elongate the ‘excluding items’ list, adding that he however said the CBN would confine itself to the items presently in the restriction basket.

He said: “The Central Bank has at different fora, even received the list of additional items which some section think should be included from receiving foreign exchange, but the CBN has for now limited the options to the existing ones.”

In defending the apex bank’s stance, Emefiele argued that if there’s global economic slowdown which has affected the growth and resilience of emerging and frontier markets, including Nigeria, and there is a drop in revenue receipts which has impacted negatively on everyone, “there’s need for the regulator to intervene to restore stability in the exchange rate regime, look for ingenuous ways of increasing the sources of foreign exchange, such as encouraging exporters to repatriate their proceeds and make more foreign exchange available to the real sector so as to grow the economy.”

He said the reforms that commenced about two years ago, with respect to economic diversification and taxation, will be vigorously pursued with a view to increasing government’s revenue base.

He said since about two years ago, even before government started the reforms, focusing on how to increase the country’s revenue base has been on the front burner. He said the collaboration with Mckinze (a foreign Accounting Tax Consultant), resulted in the increase of revenue by about N75billion last year, adding that N150billion revenue target is being expected from this engagement, this year.

Emefiele, who spoke on a wide range of issues, said investors are exiting from frontier and emerging markets on account of the uncertainty and insecurity that pervade the markets, saying that in the last quarter of this year alone, about $48billion capital outflows has been recorded in these markets. He said investors are pulling funds out and are looking to more stable and safe zones to invest.

“This is why we are saying that we should be nationalistic in our approach; that we have to carry our cross by ourselves,” he said. He said there is need to set priorities by making sure that “foreign exchange is made available to only those who are importing essential raw materials and goods we know cannot be produced within the country. That is the only way we can conserve our foreign exchange.”

He said the CBN will continue to intervene in the foreign exchange market and ensure that forex is made available to meet the import needs of our people.

The CBN chief said it is in this respect that the apex bank is appealing to exporters to make available their export proceeds to further boost available foreign exchange.

October 13, 2015