The Nation Newspaper

Tag: cbn

  • LCCI urges CBN to review discriminatory loan policy

    LCCI urges CBN to review discriminatory loan policy

    The Lagos Chamber of Commerce and Industry (LCCI), has urged the Central Bank of Nigeria (CBN) to rethink its policy that barred certain businesses and their promoters from obtaining fresh loans from the banks.

    Its President, Alhaji  Remi  Bello, who spoke when he led executives of LCCI on a visit to Origin Group Limited in Lagos over the weekend, said it was inappropriate for the banking sector regulator to criminalise those who approached banks for loans, or credit simply because their businesses had challenges and could not pay on the agreed terms.

    He said: “ There’s need to revisit some of the policies of the Federal Government, especially the CBN’s regarding outright ban of people who were given loans and could not meet up with the repayment, not because of failure on their part, but because of the challenges the nation is facing, inclusive of the  insurgency in the  north, and very recently, the Ebola issue. There is need for a review of some of these policies by the CBN Governor.

    “Some of these policies especially with the CBN with regard to some bad loans  and facilities which were as a result of the challenges the nation is facing, most especially the insurgency in the north,  the new CBN Governor will need to go back and look at some of these policies  as they affect businesses that are under one intervention fund or the other, that are not able to operate now, they should be given some special consideration.”

    He argued that an outright ban on people because they were involved in running  business and could not meet up with their facilities, which was not because of failure on their part, but because of the failure in the environment, needs to be addressed seriously.

    “Don’t criminalise people that are taking loans. It you are not taking loans and  you are not taking facility, you are not in business,” he said.

    The LCCI team, including its Director-General, Muda Yusuf, Otunba Dele Ajayi-Smith,  was received by the Group Managing Director of Origin Group, Prince S. J. Samuel, who said his vision for the Group is to transform it into an entity that would ensure food security for the country.

    He said the tractor hiring arm of the conglomerate is in the process of partnering with state governments to avail farmers the opportunities in the unit and help expand their yield per hectre, adding that some of their products, including  vegefresh, have already made appreciable inroad  into local and international markets.

    Alhaji Bello expressed satisfaction at what he saw during the visit.  “We have seen that this business is creating about 500 jobs as of now with the  potential  to grow job creation  to about 3,000 in the future. We believe that with the necessary  support and the right policies in place, it would be a lot better.”

    He said LCCI would invite the Origin Group to join chamber as a member.

    Also speaking,  its Director General, Muda Yusuf, while acknowledging the vibrancy of the West African sub-regional market, regretted that the outbreak of  the Ebola virus is a disincentive.

    He said: “With the Ebola issue now, you know it’s a sub-regional problem, so when you talk of sub-regional trade at the moment, especially going as far as Liberia, Guinnea and Sierra Leone, it’s not an area you want to encourage any trade for now,  But when you talk of normal circumstances, the prospects are good, there’re some progress with regards to the protocols on economic integration.

    “But the key issues to be addressed are actually  not tariff barrier, but the multiple check points that people face, infrastructure which has to do with transportation and the difficulty of moving goods around.”

    Yusuf said if one looks at the trade volume and the trade statistics and the number of imports that are being recorded against Benin Republic, it will be clear that those imports are far beyond the capacity of that country. “Those things are meat for Nigeria. This is one of the things  creating problems for this country and that is why businesses are closing down,” he said.

  • CBN, NERC meet to reconcile N25b gas debt

    CBN, NERC meet to reconcile N25b gas debt

    • Explains delays in new gas price implementation

    The Nigerian Electricity Regulatory Agency ( NERC) and  the Central Bank of Nigeria (CBN) has begun work to establish the authetic debt profile of the gas suppliers to the power sector.

    Meanwhile, the Federal Government has said its inability to meet with chief executive officers of gas firms to okay a commitment for increased gas capacity is responsible for the delay in the implementation of the new gas prices it announced on August 2 .

    NERC Chairman, Dr. Sam Amadi, who spoke to The Nation at the weekend in Abuja, said: “The policy has not had an impact because it has not been operationalised basically.”

    Minister of Petroleum Resources Mrs. Diezani Alison-Madueke promised that the CBN would settle the N25billion debt owed to gas suppliers, stressing that NERC had  approved a new benchmark price of $2.50/mcf of gas supply, and $0. 80/mcf as transportation costs for new capacity, effective this year.

    Explaining why the new price has not resulted in increased gas to power, Amadi added that to implement the new price policy, the apex bank and the Bankers Committee have started deliberations on how to create a process for the payment of the debt in the next two weeks.

    He said: “The commitment will be extracted and a new  contractive framework that will be committing the gas supplier to clear enforceable commitment to deliver gas molecules will be framed-up and signed up.

    “The next issue is that we are going to meet with the CEO of the gas companies to sign off for a commitment to increase capacity. In the last one week we have been working on establishing the real debt profile.

    “The CBN has also started discussing with the Bankers’ Committee and the bankers will create a process by which the payment can happen.

    “In the next one or two weeks, the payments will be made and then the commitment will be extracted and a new  contractive framework that will committing  the gas supplier to clear enforceable commitment to deliver has molecules will be frame-up and signed up.

    “So, what happened that day was a trigger and since then several meetings have been held and first -price is concluded. Two, debt is about to be signed off and paid in a matter of days or weeks, the new contract framework will be fully agreed upon and that will put the framework in total good shape.”

  • CBN pegs dollar exchange to pilgrims at N150

    CBN pegs dollar exchange to pilgrims at N150

    CHRISTIAN pilgrims to Israel, Rome and Greece will get foreign exchange (forex) from the banks at N150 to the dollar, a Central Bank of Nigeria (CBN) circular to all authorised dealers has said. This represents four naira hike from the N146 to dollar sold to the pilgrims last year.

    The apex bank advised banks participating in the dollar sales to always comply with the sales conditions to avoid sanctions.

    It said each pilgrim travelling to Israel is entitled to a maximum of $750, while those going to Israel/Rome or Greece are entitled to a maximum of $1,000.

    “The Federal Government has approved the purchase of a maximum of $1,000 at a concessionary rate of N150 to the dollar by each intending pilgrim as Personal Travel Allowance (PTA). Consequently, each pilgrim travelling to Israel is entitled to a maximum of $750, while those going to Israel/Rome or Greece are entitled to a maximum of $1,000,” it said.

    The apex bank advised that no pilgrim should be denied the travel allowance on the ground that he/she has no tax clearance certificate. It also said that given the time constraint associated with the pilgrimage exercise, the Chairman or the secretary of each State’s Pilgrims’ Board, after due identification , may be allowed to sign for and collect the PTA on behalf of the intending pilgrims in his/her state on presentation of the approved list and valid passports of the pilgrims listed against the state.

    “In accordance with the Israeli and Italian governments’ policies, visa shall only be issued to the pilgrims at the point of entry, that is, at Ben Gurion Airport, Tel Aviv, Israel and Fumichino Airport, Rome, Italy, on arrival. It should also be noted that the pilgrimage will be by chartered flights,” the apex bank added.

    Also, air ticket and visa requirements for the purpose of procuring the stipulated PTA have been waived even as endorsed copy of each pilgrim’s passport should be retained by the bank for record purposes.

  • CBN unveils portal for signature verification

    CBN unveils portal for signature verification

    •Apex Bank defends N65 ATM fee

    The Central Bank of Nigeria (CBN) has developed an online signature portal for banks.

    The process and upload of the authorised signatories to the portal should be completed on or before August 29.

    CBN Director, Banking & Payments System Department, ‘Dipo Fatoku, said the policy is in furtherance of its effort in the development of safe, reliable and efficient payments and in collaboration with relevant stakeholders, developed an industry portal for the verification of authorised signatories in the banking system.

    He said in a circular to banks and other stakeholders that the portal is expected to replace the printed signature booklets that banks distribute such that instructions/documents received from other banks can be verified electronically (online).

    The portal will be used by banks, registrars, insurance firms, embassies and any other user of the printed signature booklets, to avoid fabrication of letters as coming from the banks.

    The portal is meant to digitise the booklet and also ensure that updates can be made quickly, as staff change functions or move to other institutions.

    Fatokun said banks are to contact Nigeria Interbank Settlement System (NIBSS) for the needed training and access rights to the portal, amongst others.

    Also, the CBN said cash withdrawal at the ATMs of a customer’s bank is free. It said a ‘’Remote-on-us’’ transaction is when a card holder goes to the ATM machine of another bank other than his or her bank to make a withdrawal.

    It explained that in 2012, the CBN, in collaboration with the Bankers’ Committee, transferred the payment of N100 fee on ‘’Remote-on-us’’ ATM cash withdrawal transactions to issuing banks adding that N100 was never removed.

    The fee, it said, was only transferred to customer’s bank to pay, and this was intended to encourage/promote the use of ATMs nationwide.

    However, having sufficiently raised customers awareness, the first three ‘’Remote-on-us’’ transactions in a month are free for the card holder but paid for by the issuing bank.

    “The N65 charge only applies when a customer withdraws cash from another bank’s ATM other than that of his/her bank. The N65 starts to apply from the fourth transaction at another banks’ ATM in a month. The charge is not intended to discourage financial inclusion as the apex bank will not endorse any anti-customer policy,” it said. The CBN said charging of fees on interbank networks is a widely acceptable practice globally.

    The CBN said the new fee will ensure customers get better services, increase healthy competition among the banks even as transaction volumes at other banks’ ATM have increased astronomically due to the free Cash withdrawal at other banks’ ATM. The wear and tear as well as the frequency of servicing the ATMs has increased significantly.

  • How to avert financial instability, by CBN chief

    How to avert financial instability, by CBN chief

    Central Bank of Nigeria (CBN) Deputy Governor, Financial System Stability (FSS) Kingsley Moghalu has warned banks against relying “too much” on borrowed funds to avoid creating problems for the economy.

    Banks, he said, could destabilise the financial system by their reliance on such funds instead of equity.

    Moghalu, who spoke  on CNN, while commenting on a book, titled: “Reading for Leading”, said banking rests too much on leverage, or borrowed money or other people’s money.

    This practice, he said, is risky and should be discouraged.

    He said it is a very risky proposition for one to make profits on the basis of borrowed money. There should be more equity in banks, Moghalu said, arguing that shareholders should put more of their money in banks.

    “There are special mystiques that banks and banking are different from all other industries. It is a mistake. We in the developing world are trying to make banking an agent of development and not just using banks as a means of making money for people who are already wealthy,” he said.

    Moghalu said the problems were universal as they are developing countries and emerging markets.

    Part of the agenda of the current CBN management is to act as a financial catalyst by targeting predetermined sectors that can create jobs on a mass scale and significantly reduce Nigeria’s import bills.

    The CBN is also deploying developmental initiatives to create an enabling environment with appropriate incentives to empower innovative entrepreneurs to drive growth and development.

    Some of the Central Bank’s developmental functions include credit allocations and direct interventions in key sectors of the economy such as power, agriculture, Micro Small and Medium Enterprises (MSME), oil and gas, and health.

  • Access Bank awaits CBN’s approval for half-year results

    Access Bank Plc has sent its audited report and accounts for the first half to the Central Bank of Nigeria (CBN) for the regulator’s review and approval.

    A regulatory filing at the Nigerian Stock Exchange (NSE) indicated that the bank’s half-year report for the period ended June 30, 2014 would be released towards the end of this month.

    According to the report, the interim report was submitted to the apex bank last weekend, following approval of the financial statements by the board of the bank.

    Many analysts expected Access Bank to declare interim dividend, in line with its dividend policy. The board of Access Bank had in 2013 distributed N5.72 billion as interim dividends for the first half of 2013 in spite of substantial decline in the performance of the bank during the period.

    The interim dividend in 2013, similar to previous interim payouts in 2012, represented an interim dividend per share of 25 kobo. The dividend was paid on September 17, 2013 to shareholders in the book of the bank as at close of business on September 4, 2013.

    Access Bank’s share price rose marginally by 4.0 kobo to N9.78 per share at the Nigerian Stock Exchange (NSE) on Monday.

    Agusto & Co recently upgraded Access Bank’s credit rating from “A” to “A+” with a stable outlook. The rating reflects the full synergy of the merger with Intercontinental Bank Plc (ICB), which has propelled the bank to be one of the Systematically Important Banking (SIB) Institutions in Nigeria.

    The rating also recognises the bank’s good liquidity position, satisfactory capitalisation, as well as improved risk management framework and the positive impacts on assets quality.

    The rating agency stated in their report that the bank’s extensive branch network has created improved visibility among the banking population and has translated to good market share across the key market indicators. NPLs to gross loans ratio stood at 2.4 per cent, the lowest recorded in the last five years and compares favourably with the industry average of 3.6 per cent.

    Access Bank’s improved rating was attributed to its strong liquidity and funding position which is a clear affirmation of its position as one of Nigeria’s tier 1 banks. The rating upgrade further corroborates the Bank’s enhanced capacity to execute larger transactions as well as access long-term funding from local and foreign multilateral agencies and institutions. This was further confirmed in the successful tier II capital of $400 million Eurobond recently raised by the Bank. This will provide sufficient headroom for the bank to achieve its targeted 20 per cent asset growth in 2014.

  • CBN begins disbursement of N220b MSME cash

    CBN begins disbursement of N220b MSME cash

    President Goodluck Jonathan will today launch the disbursement of the N220 billion Micro, Small and Medium Enterprises Development Fund (MSMEDF) initiated by the Central Bank of Nigeria (CBN), last year.

    Speaking during the 8th MSME Conference and Entrepreneurial Awards, which commenced yesterday in Abuja, the Governor of the  CBN Godwin Emefiele, said the the CBN has instituted an ‘Entrepreneurship Clinic’ where aspiring young entrepreneurs will be trained and mentored and provided with required tool-kits to start and grow their businesses.

    To this end, Emefiele said that 60 enterprising graduates have been specifically invited to the programme to be trained and mentored on how to identify business opportunities and source finance.

    He explained that “the young entrepreneurs participating at the session will be monitored with respect to the progress and achievements recorded before the next Conference.”

    He said Nigeria has achieved remarkable economic growth and development in recent years as a result of the resilience of our people, the innovativeness of our enterprises and the programmes of our governments at all levels.

    He said in the last seven years, the Nigerian economy expanded by an average of seven per cent, while sub-Sahara Africa’s real Gross Domestic Product’s growth averaged 5.2 per cent, adding that in the first quarter of 2014, Nigeria’s real GDP grew by 6.2 per cent, mainly driven by an 8.2 per cent growth in the non-oil sector.

    He however said that sustaining this development, and economic growth, will depend largely on the provision of affordable and efficient financial services to the MSMEs, particularly the micro entrepreneurs who account for more than 90 percent of the MSMEs in Nigeria.

    “It is imperative that this segment of the financial system be strengthened in order to forestall the inevitable adverse socio-economic consequences of financial exclusion,” he stated, adding access to finance “has a significant multiplier effect on the economy because of its catalytic effect on job creation and poverty reduction.

    Emefiele, said it is in realisation of this fact that the CBN launched the N220 billion MSME Development Fund to provide financial resources to the entrepreneurs across the country through Participating Financial Institutions (PFIs).

    With the official flag off today, it is expected that full disbursement of the fund, launched last October would take off in earnest and many states have expressed interest in accessing the fund for their peculiar MSMEs.

  • N220b MSMEs’ Fund for launch today

    N220b MSMEs’ Fund for launch today

    •Women entrepreneurs to draw N132b 

    The N220 billion Micro, Small and Medium Enterprises Development (MSME) Fund designed by the Central Bank of Nigeria (CBN) to support entrepreneurs will be launched today by President Goodluck Jonathan in Abuja.

    CBN Director, Banking Supervision, Mrs. Tokunbo Martins, said the launch would hold at the MSMEs Finance Conference organised by the CBN.

    President Jonathan will declare the conference open and kick off the disbursement, which begins tomorrow.

    He would also award prizes to MSMEs, Deposit Money Banks and state governments, which distinguished themselves in Entrepreneurship Development last year.

    Participants at the conference include Micro, Small and Medium Entrepreneurs (SMEs), banks, MFIs, MFBs, deposit money banks, governors, federal ministers, heads of government agencies and departments, international development agencies and captains of industries.

    The guidelines for disbursement showed that a 80:20 ratio for on-lending to micro enterprises and  SMEs and request that 60 per cent of the fund, representing N132 billion, be earmarked for providing financial services to women-owned businesses.

    The banking watchdog said to ensure that productive sectors of the economy continued to attract more finance necessary for employment creation and diversification of the country’s economic base, a maximum of 10 per cent of the commercial component of the fund will be channelled to trading and commerce.

    CBN Governor, Godwin Emefiele said at the N220 billion MOU Signing Ceremony between the CBN and participating state governments that MSMEs are globally recognised as the critical engines of economic growth due to their potential to create jobs, boost production, generate income, and reduce poverty. Despite this recognition, MSMEs in the country do not have the adequate financing needed to play this pivotal role in its development trajectory.

    A joint report by the International Finance Corporation and McKinsey, the financing gap of this critical sub-sector of the country is about N9.6 trillion as at 2010.

    The N220 billion, he said, is meant to address this gap and unlock the potential of the MSMEs  as an innovative way of improving their access to finance, shoring up their potentials for job creation, and enabling them reduce poverty within the country.

    “This effort is in furtherance of the bank’s earlier endeavour at establishing six Entrepreneurship Development Centres (EDCs) in each geopolitical zone to support the mandate of the 23 Industrial Development Centres (IDCs) under the purview of the Small and Medium Enterprises Development Agency (SMEDAN),” he said.

    Emefiele said while the micro-loans will be administered through private or state-owned microfinance institutions, finance houses, and cooperative finance agencies, the SME loans will be disbursed through the DMBs. State governments will be able to access up to N2 billion each for lending to eligible beneficiaries through participating financial institutions in their states.

     

  • Mixed reactions trail CBN’s proposed reintroduction of ATM charges

    Mixed reactions trail CBN’s proposed reintroduction of ATM charges

    The planned reintroduction of ATM charges by the Central Bank of Nigeria (CBN) has been described as unnecessary.

    Speaking with The Nation at the weekend, a cross-section of respondents argued that the new policy was bound to affect the banking culture and also capable of jeopardizing the cashless policy.

    Emeka Ofoegbu, a financial expert said the reintroduction of ATM charges was not well-thought out. “The policy will affect the saving culture.”

    Echoing similar sentiments, Rotimi Oladejo, a capital market analyst said the reason adduced for the reintroduction of ATM charges was skewed towards the banks without recourse to the consumers.”

    The apex bank had announced that withdrawals would attract N65 per transaction to cover remuneration for the switches from Sept. 1

    The CBN in a circular signed by Dipo Fatokun, Director Banking and Payment System Department, said: `The reintroduction of “Remote-On-Us” ATM cash withdrawal transactions fee, which will be now N65 per transaction to cover the remuneration of the switches, ATM monitoring and fit-notes processing by acquiring banks.

    “The new charge shall apply as from fourth “Remote-on-us” withdrawal in a month by a card holder, thereby making the first three `remote on us’ transactions free for the card holders, but to be paid for by the issuing bank,” it said.

    According to the circular, Sept. 1, 2014 shall be the effective date for the implementation of the new fee.

    It stated that banks were expected to conduct adequate sensitisation of their customers on the introduction of the new fee.

    The circular stated that all ATM cash withdrawal on the ATM of issuing banks should be at no cost to the card holder.

    It recalled that CBN in collaboration with the Bankers Committee had in December 2012 transferred the payment of N100 fee on Remote-on-us ATM cash withdrawal transactions to issuing banks.

    “This fee was shared between the acquirers, issuers and switches. On the commencement of the arrangement in December 2012, banks decided to waive the issuer fee (N35) which should have ordinarily been an income to them.

    “Consequently banks only bore the cost of N65 each time their customers use another banks’ ATM,” it said.

  • New CBN policy may spur new fund raising as banks readjust capital

    A recent directive on exclusion of non-distributive regulatory reserve and other reserves in the computation of the capital base of banks and discount houses could quicken the pace of fund raising by banks and other financial institutions.

    Many banks have been raising funds in recent period. Diamond Bank is currently raising N50.4 billion new equity funds. Unity Bank had recently closed application list for a combined new equity issue of N39 billion. Wema Bank and Sterling Bank had earlier raised new equity funds.

    The Central Bank of Nigeria (CBN) last week in a circular to all banks and discount houses highlighted details on the exclusion of non-distributable regulatory reserves and other reserves in the computation of regulatory capital of banks and discount houses.

    The highlights of the circular indicated that the regulatory risk reserve will be excluded from the regulatory capital when computing the  Capital Adequacy Ratio (CAR), collective impairment on loans and receivables and other financial assets will henceforth not form part of Tier-2 capital, other comprehensive income reserves will be recognised as part of Tier-2 capital but limited to 33.3 per cent of total Tier-1 capital and while unaudited other comprehensive income gains will not be recognised as part of capital, unaudited other comprehensive income will be deducted from total qualifying capital.

    The circular, which implementation started immediately, was part of efforts to ensure more prudent assessment of the regulatory capital of Nigerian banks and in line with global efforts aimed at raising the quality and loss absorbency of the capital base of banks.

    Capital market pundits said the new policy would significantly impact on the capital adequacy ratios of banks and might spur them to seek additional equity funds to bolster their capital base.

    Increased fund raising by banks, which represent the most active block in the capital market and control nearly one-fifth of total market capitalisation at the Nigerian Stock Exchange (NSE), is expected to enliven the primary market.

    Analysts at Afrinvest (West Africa) noted that the new policy would further exert pressure on the banks’ capital adequacy ratios in the third quarter of 2014, when the policy will be used in calculating third quarter earnings and financial statements.

    The capital adequacy ratios of tier 1 banks had declined to 20.0 per cent by the end of 2013 as against 23.3 per cent in 2012.

    Analysts pointed out that the regulatory risk reserves accommodates the difference between the allowance for impairment losses on loans and advances based on CBN’s prudential guidelines compared with the loss incurred model used in calculating impairment charges under International Financial Reporting Standards (IFRS).

    A review of the banks’ capital adequacy ratios (CAR) as at first half 2014 showed that Ecobank Transnational Incorporated (ETI) has the lowest CAR at 16.0 per cent, at par with the 16.0 per cent regulatory requirement for systemically important banks (SIBs). FBN Holdings has 17.6 per cent, slightly above the requirement for SIBs. Among tier 2 banks, Diamond Bank has the lowest CAR with 17.3 per cent, which underlined the strategic importance of the bank’s ongoing rights issue.

    “The recently introduced 33.3 per cent Tier-2 ceiling of total Tier-1 capital, places a restriction on some of the banks that intend to raise further Tier-2 capital in the second half of 2014, hence, they may be forced to explore the Tier-1 capital’s equity raise option,” Afrinvest stated.

    Analysts noted that the new policy would increase confidence of foreign banks in Nigerian banks, based on the stringent capital requirement, which is in tandem with global counterparts, noting that in the light of Nigerian banks’ exposure to the Eurobond market, the prospects of volatility or depreciation in foreign exchange can be significantly absorbed.

    The new CBN policy comes in the wake of impending implementation of the Basel II by the Nigerian financial services authorities. The Nation had recently reported that Nigerian banks might raise some N400 billion in the current capital raising phase to strengthen their capital base in view of the impending implementation of the Basel II.

    Basel II seeks to strengthen banks’ risk and capital management through three main areas, otherwise known as pillars. The first pillar deals with minimum capital requirements, the second pillar deals with supervisory review process while the third pillar deals with processes relating to market discipline. The pillars generally ensure that the greater the risk to which a bank is exposed, the greater the amount of capital and required supervisory framework.

    After initial delay, Nigeria has set October 31, 2014 as the cut-over date for the implementation of Basel II.

    Market sources had noted that while the average capital adequacy ratio in the Nigerian banking industry is currently high and most banks are above regulatory benchmark, banks might need to support their adequacy ratios, which are expected to fall after the cut-over.

    Several analysts’ reviews on the banking sector have outlined capital raising as a major theme for the Nigerian banking sector citing new regulations and emerging business opportunities.