The Nation Newspaper

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  • Use experts in key posts, Sanusi tells banks

    Use experts in key posts, Sanusi tells banks

    Central Bank of Nigeria (CBN) Governor Lamido Sanusi has advised banks to use only qualified and competent hands in key positions.

    Speaking at the annual risk management conference in Lagos, he said banks should start assessing their staff in key roles, especially risk managers, auditors, compliance officers, treasurers, chief finance officers and others in controlled functions in line with the CBN’s competency framework.

    The framework shows that the recent global financial crisis exposed the inadequacy of skills and the dearth of executive capacity in the banking industry.

    The skill gap, it explained, manifested in, among others, the lack of indepth knowledge of core banking functions and poor understanding of basic banking operations; poor understanding of banking regulations and poor risk management and corporate governance practices.

    Sanusi said the CBN would soon send out questionnaires to banks for information on their staff competency.

    He advised the banks to begin to think of hiring new managers should the current ones fall below the CBN requirement. The CBN boss said this has become exigent following the regulator’s commitment to sustain the stability of Nigeria financial system.

    He said there is need to assess skills, qualifications, experience and competencies of staff currently occupying controlled functions in banks. This, in essence, implies that continuous strengthening of intellectual resources and capabilities must be undertaken to create a pool of talented and high calibre professionals in the banking industry.

    In a circular tagged: “Assessment of competencies in the Nigerian banking industry” signed by Y.B Duniya for Director, Financial Policy and Regulation, the CBN said the exercise would enable the Bankers’ Committee identify at the preliminary stages, gaps that would impede the effective implementation of the Competency Framework for the banking industry being appraised by the apex bank.

    It said the list of controlled functions was not exhaustive as other important roles and responsibilities may be added.

    The framework is expected to address the competency challenges in the industry, explore growth opportunities and facilitate improvement in the quality of human capital.

    “Under the framework, successful banks will be those that distinguish themselves by according high priority to continuous enhancement of human capital and lifelong learning,” the apex bank had said.

    The apex bank also said it will maintain a central database for approved persons. Banks are expected to update the database with details of approved persons and access it as part of their due diligence before the appointment of such persons.

    The framework leverages on the practices in other jurisdictions, such as Singapore, Hong Kong, Malaysia and Dubai, which provide a useful guide and template for the banking industry.

     

  • CBN promises hitch-free cash-less banking in Rivers, Abuja, others

    CBN promises hitch-free cash-less banking in Rivers, Abuja, others

    The Central Bank of Nigeria (CBN) is working towards making the introduction of cash-less banking in five states and the Federal Capital Territory (FCT) on July 1, hitch-free, its spokesman, Ugochukwu Okoroafor, has said.

    The states are Rivers, Kano, Anambra, Ogun and Abia.

    Speaking with The Nation, Okoroafor said with the Lagos experience, the roll out in those states would be successful. He said more publicity and Point of Sales (PoS) terminals would be deployed when the project takes off in those states.

    Okoroafor said: “Part of the arrangements made so far include; increasing the number  of Point of Sale (PoS) terminals in these states, making enough publicity to create awareness and the need to embrace the cash-less idea, among others. We have learnt our lessons and we do not want a repeat of what happened in Lagos when cashless was introduced early last year. I can say that we are ready for the take off of cash-less project in the seven states.”

    According to him, problems that marred the exercise in Lagos have been outlined, discussed and solutions adopted to make cash-less successful.

    CBN, he said, was working with banks on the deployment of PoS terminals, adding that wide consultation is going on to ensure prompt and adequate delivery.

    “The banks have the responsibilities to deploy PoS terminals, hence the decision of the CBN to involve them strongly in the exercise. We are seriously working with them on the issue. Also, CBN, banks and the Bankers’ Committee are putting in place measures to create enough awareness by way of educating people via various channels before and after July this year.”

    The Chairman, National Electronic Fraud Forum (NeFF), Mr Emmanuel Obaigbona, said the body was ready to ensure the success of electronic payment transactions.

    Obaigbona said  NeFF was charged with educating and informing banks on various electronic fraud issues and trends; proactive sharing of fraud data/information among stakeholders to ensure prompt responses and limit losses and formulation of cohesive and effective risk management strategies.

    The cash-less policy, whose implementation began in Lagos in January, last year, is aimed at reducing the dominance of cash in the system. The policy specifies penal charges for individuals and corporate organisations that want to withdraw or lodge cash above prescribed limits.

    Under the policy, the CBN pegged the daily cumulative cash withdrawal or deposit limit for individual accounts at N500,000 per day and N3 million per day for corporate accounts.

     

  • CBN shouldn’t rush to cut Rates, says Sanusi

    CBN shouldn’t rush to cut Rates, says Sanusi

    The Central Bank of Nigeria (CBN) shouldn’t rush to cut interest rates even as inflation is forecast to remain within its target this year, the apex bank’s Governor Lamido Sanusi has said. Rate reductions will depend on whether the government can control spending, Sanusi said in an interview in Marrakech, Morocco, where he is attending the annual meetings of the African Development Bank. The banking watchdog left its policy rate unchanged at a record high of 12 per cent on May 21, concerned by the threat of rising spending as the government battles Islamist insurgents in the northeast. Inflation has stayed under 10 percent for four consecutive months, meeting the bank’s target. “The central bank shouldn’t rush into cutting rates and then raising,” Sanusi said. “How much room we have to cut depends on what happens in the fiscal space.” Finance Minister Ngozi Okonjo-Iweala said last week the economy needs lower interest rates to help spur output.

  • CBN shouldn’t rush to cut Rates, says Sanusi

    CBN shouldn’t rush to cut Rates, says Sanusi

    The Central Bank of Nigeria (CBN) shouldn’t rush to cut interest rates even as inflation is forecast to remain within its target this year, the apex bank’s Governor Lamido Sanusi has said.

    Rate reductions will depend on whether the government can control spending, Sanusi said in an interview in Marrakech, Morocco, where he is attending the annual meetings of the African Development Bank.

    The banking watchdog left its policy rate unchanged at a record high of 12 per cent on May 21, concerned by the threat of rising spending as the government battles Islamist insurgents in the northeast. Inflation has stayed under 10 percent for four consecutive months, meeting the bank’s target.

    “The central bank shouldn’t rush into cutting rates and then raising,” Sanusi said. “How much room we have to cut depends on what happens in the fiscal space.”

    Finance Minister Ngozi Okonjo-Iweala said last week the economy needs lower interest rates to help spur output.

  • CBN refutes report on criticism of emergency rule

    The Central Bank of Nigeria (CBN) yesterday refuted a report insinuating that the Monetary Policy Committee (MPC), under the chairmanship of the CBN Governor, Mallam Sanusi Lamido, at its meeting on Tuesday condemned the emergency rule recently declared in three Northern states of Yobe, Borno and Adamawa.

    In a statement signed by director, corporate communications, CBN, Mr Ugochukwu Okoroafor, the banking watchdog expressed concern over a news report purportedly emanating from the communiqué of the MPC claiming that “Sanusi Condemns Emergency Rule”.

    The apex bank stated that the lead story of the Abuja-based newspaper was a complete misrepresentation of the content of the MPC Communiqué No. 89, issued on May 21, 2013.

    “The said MPC communiqué never, in any form, condemned the state of emergency in the affected states. For the avoidance of doubt, and in reviewing the likely factors that could influence economic dynamics in the coming months, the MPC communiqué, cited the fiscal implication of the state of emergency, which is a likely increase in government spending, thus making it imprudent to embark on monetary easing at this time,” the apex bank stated.

     

     

     

     

     

  • CBN boss Sanusi: I had surgery in France

    CBN boss Sanusi: I had surgery in France

    Central  Bank of Nigeria (CBN) Governor Sanusi Lamido Sanusi spoke yesterday on his health.

    He said he had his appendix removed in Paris, France during his annual vacation.

    There was a rumour that Sanusi was gravelly ill.

    He said: “I didn’t leave this country to get medical attention. I went on my annual vacation to Paris and then I had a crisis; the doctors call it peritonitis of the appendix, which basically is an infection that spreads in and destroys your organs and you die.”

    Sanusi said he was fortunate to have a friend in a part of the world with good hospitals and surgeons and “so the crisis came on April 30 and I had to go in for surgery on the 1st of May when an appendectomy was done and my appendix was taken out. The germs were drained out I had to have strong antibiotic treatment for a week in the hospital”.

    The CBN boss said he spent another week outside the hospital but that he had been “medically cured”. “I no longer have an appendix. The surgery has healed and I need a few weeks to get my energy levels back to normal, but I’m very fine I don’t know if you are happy about that,” he said.

  • CBN keeps rate at 12 per cent

    CBN keeps rate at 12 per cent

    For the 10th time, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) yesterday retained the Monetary Policy Rate (MPR) at 12 per cent with a corridor of +/-200 basis points around the MPR.

    The committee also decided to retain the Cash Reserve Requirement (CRR) at 12 per cent and Liquidity Ratio (LR) at 30 per cent, with the Net Open Position at 1.0 per cent.

    Addressing reporters at the end of the MPC meeting in Abuja yesterday, the Governor of the CBN, Mallam Sanusi Lamido Sanusi, said: “The Committee was convinced that in view of the successes achieved in all fronts -banking stability, low inflation, exchange rate stability, strong reserve buffers and recovery in the equities market, there is no rea son at this point to change a policy that has worked so well.”

    Sanusi said the MPC members were pleased with the prevailing macro-economic stability-moderation in all measures of inflation on month-on-month basis; stable banking system and exchange rate and robust external reserves.

    He said the committee specifically expressed satisfaction with the significant accretion to the external reserves which, according to him, stood at $49.13 billion as at May 16.

    He said the figure represents an increase of $5.3 billion or 12.1 per cent above the level of $43.83 billion at end-December 2012 as this level of reserves could finance approximately 13 months of import.

    The MPC was motivated to retain the interest rate at 12 per cent given some considerations.

    These considerations, Sanusi said, included the agreement reached between the CBN and the Asset Management Company of Nigeria (AMCON) on the settlement of outstanding obligations of the company to all private sector investors by December next year.

    The repayment of the N3.6 trillion debts held by the CBN under a new refinancing and restructuring arrangement within a period not exceeding 10 years at single-digit interest rate.

    “The repayments and refinancing arrangements would have no adverse monetary policy implications, but rather increase confidence in the financial system,” the CBN chief assured.

    Also, under the arrangement, Sanusi disclosed: “It is unlikely that banks will be required to contribute more than 0.5 per cent of their balance sheets annually to the sinking fund.”

    As a result of this agreement and refinancing initiative, the apex bank governor noted that “by October 2014, the CBN will be the sole creditor to AMCON, holding bonds guaranteed by the Federal Government of Nigeria”.

    “By implication, the Federal Government will, therefore, have no contingent liability to any party other than the CBN, which in turn will recover its debt from AMCON recoveries and contributions to the Sinking Fund by the banks. “

    Sanusi stated that since the CBN supervises and regulates the banks and AMCON, this exposure “is considered a fair risk”.

    The Committee also expressed concerns about the prospects for declining output if high output leakages, arising from oil theft continues, a development which the CBN governor feared might negatively affect the oil sector’s contribution to the Gross Domestic Product (GDP).

    The MPC said it noted the N1.02 trillion increase in claims on government and the N1.11 trillion drawdown on savings between January and April this year and particularly the monetization of $1 billion in April 2013, being proceeds of the Excess Crude Account.

    The combined effect of these new borrowings and reduced savings the CBN governor said, has resulted in “an increase in net credit to the central government of over N2 trillion in the first four months of 2013.” He said the development indicated an increase in the rate of government expenditure this year when compared with 2012.

    On the on-going military action in the Northeast the imposition of a state of emergency in three states, the governor said the action will frustrate to additional spending.

    Overall, the Committee, he said, was of the view that government spending will constitute a major risk to the inflation and exchange rate outlook, thus advising prudence in monetary policy action at this time.

  • Why deposit, lending rates fell, by CBN

    Deposits and lending rates fell between January and March this year because of improved liquidity in the banking sector, the Central Bank of Nigeria (CBN) has said.

    The total Standing Lending Facility (SLF), an overnight fund provided by the CBN to support banks’ sliquidity, granted during the period was N1.1 trillion, compared with N6.5 trillion in the previous quarter.

    A CBN Economic Report for the quarter indicated mixed developments in the banks’ deposit and lending rates. With the headline inflation rate at nine per cent per cent in January ending, most rates, with the exception of the lending and the average interbank call rates were negative in real term.

    Deposit rates of various maturities fell from a range of 5.16 to 11.88 per cent to 5.14 to 11.67 per cent. However, the average savings and one-month deposit rates rose by 0.03 and 0.28 percentage point to 1.69 and 8.43 per cent.

    The average term deposit rate fell by 1.33 percentage point to 7.66 per cent while the average maximum lending rate fell by 0.07 percentage point to 24.54 per cent. However, the average prime lending rate rose by 0.03 percentage point to 16.57 per cent during the review period. The spread between the weighted average term deposit and Interest rates also fell.

    Maximum lending rates widened by 1.25 percentage point to 16.88 per cent while margin between the average savings deposit and maximum lending rates narrowed by 0.1 percentage point to 22.85 per cent.

    At the interbank, the weighted average rate, which stood at 11.88 per cent at end of December 2012, fell by 0.21 percentage point to 11.67 per cent. Similarly, the weighted average rate, at the open-buyback (OBB) segment, fell by 0.11 percentage point from 11.73 per cent to 11.62 per cent at.

    Mixed development was also observed at the interbank funds market, as the Nigerian interbank offered rate (NIBOR) for seven-day declined by 0.13 to close at 12.36 per cent, while the 30-day closed at 13.14 per cent.

    The SLF is given at 14 per cent in line with the Monetary Policy Rate (MPR). It is available only to banks and discount houses that have executed the Nigerian Master Repurchase Agreement (NMRA) with the banking watchdog. The CBN had stipulated that discount window operations in overnight facilities will be backed by borrower-holdings of government debt instruments and other eligible securities approved by the bank.

    The report showed that banks, while computing their cost of funds, should employ the weighted average cost of funds computation framework.

    The applicable cost items will include banks’interest cost on the different types of deposit liabilities, borrowings from the inter-bank funds market, payments in respect of deposit insurance premium and costs due to reserve requirements. These restrictions have affected banks’ access to SLF in the last quarter.

    The Net Open Position (NOP) was also retained at one per cent, while money market indicators, particularly short tenored instruments were relatively stable. The bank’s discount window also remained open to authorissed dealers to access both the standing deposit facility (SDF) and SLF.

    The value of money market assets outstanding stood at N6.2 trillion, an increase of 3.1 per cent, compared with 3.6 per cent recorded at the previous quarter. The development was attributed to the 5.2 per cent increase in government bonds outstanding.

    At N1.6 trillion, currency in circulation rose by 21 per cent, in contrast to a decline of 1.1 per cent at the end of the preceding quarter. The development was attributed, largely, to the 21.6 per cent rise in currency outside the banking system.

     

  • AMCON to retire N2tr bonds

    AMCON to retire N2tr bonds

    The Asset Management Company of Nigeria plans to retire 2 trillion naira worth of its 5.7 trillion naira of bonds this year and next from bad loan recoveries and refinance what’s left with the central bank, it said on Monday.

    AMCON said it had made “great progress” on recovering bad loans and that after the refinancing, the CBN will be the sole holder of its bonds.

    It said retiring the 2 trillion naira worth of bonds will cut its liabilities by 35 percent.

    Reuters reports that AMCON will also start divesting its shares in three lenders nationalised by the CBN in the next 30 days, starting with Enterprise bank.

  • CBN’s unanswered questions

    CBN’s unanswered questions

    •If the apex bank cannot account for its expenses, we are in deep trouble

    THE encounter between officials of the Central Bank of Nigeria (CBN) and the Public Accounts Committee of the House of Representatives as reported in the media last week is intriguing. According to the reports, the committee had summoned officials of the bank to explain a number of audit queries raised against the Central Bank by the office of the Auditor-General of the Federation. The committee wondered how the CBN could expend N2.8 billion to renovate its Port Harcourt branch. It also demanded answers to the conflicting sums of N23 million and N50 million quoted as cost of renovating the residence of the Governor of the bank.

    The audit raised a number of other reckless and unaccountable expenditures, which the bank officials were unable to defend. Unfortunately, the media reports failed to name the Governor/s under whose tenure those reckless expenditures were incurred, as it covered several years audit of the apex bank. Indeed, the bank’s deputy governor, corporate services, Mr. Suleiman Barau, while promising to search for the documents to back the expenditures, claimed that he had not joined the bank when the expenditures were incurred. The director of procurement, Mr. I.O. Gbadamosi, on the other hand, reportedly claimed that if the documents were more than five years old, then they must have been destroyed, as the bank usually clears its shelves every five years.

    We recall the gratuitous battles that top officials of the bank waged last year to stop the legislators from amending the Central Bank Act, to make the bank accountable to the legislature. In their reaction to that controversy, many informed commentators had insisted that the bank needed its autonomy to guide the national monetary policy. While we support that the bank’s operational autonomy should be maintained, we call on the National Assembly to quickly put in place laws to ensure administrative oversight of the bank. As we had argued in the past, the legislature has overriding power of oversight on all incomes and expenditures made on behalf of the country.

    To show their indignation, the chairman of the committee, Mr. Solomon Olamilekan Adeola had insisted that the pattern of expenditure and the absence of documents gave indication that due process was not followed. While berating the officials of the bank, he asked them to either produce the requested documents or the legislature will demand that all the expended sums be refunded into the coffers of the Consolidated Revenue Fund of the Federation.

    We have no doubt that many Nigerians will be shocked and dismayed that its Central Bank is also accused of operating in the cesspit of corruption. Indeed, it should be unheard off that a country’s apex bank is unable to answer routine audit queries; and is reasonably accused of engaging in mindless expenses of the very national resources it is constitutionally empowered to guide and protect.

    While the legislative enquiry is going on, it is also necessary that law enforcement agencies wade in to find out the officials of the bank responsible for bringing the country to this miserable disrepute. If officials of our central bank cannot keep an account of the outrageous sums it claims to have expended to renovate the residence of its Governor, among other disgusting inaccuracies, many will genuinely doubt their capacity to keep appropriate account of the reckless infringements by the commercial banks under their supervision. We note the CBN’s denial of salient aspects of the committee’s proceedings. We can only hope the bank would be able to produce the appropriate documents at the committee’s next sitting.