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  • Shareholders mull legal action against CBN’s bank dividend policy

    Shareholders mull legal action against CBN’s bank dividend policy

    Minority and retail shareholders have called on the Central Bank of Nigeria (CBN) to rescind its newly amended dividend payment policy for deposit money banks (DMBs), threatening to take legal action against the apex bank if it failed to withdraw the policy.

    Minority and retail shareholders under the auspices of Pragmatic Shareholders Association (PSA) said the CBN’s dividend policy for banks runs contrary to the current efforts aimed at encouraging retail investors in the Nigerian capital market.

    In a communiqué issued at the end of their emergency meeting at the weekend, the shareholders said the apex bank was chasing a wild goose by shifting the blame of non-performing loans to shareholders rather than addressing the underlying causes of non-performing loans.

    Under the amended dividend policy, banks that do not meet the minimum capital adequacy ratio (CAR) will not be allowed to pay dividend. Also, banks with non-performing loans (NPLs) above 10 per cent will not be allowed to pay dividend. Banks that meet the minimum CAR requirement, but have NPL ratio of more than 5.0 per cent, but less than 10 per cent will be allowed to pay a maximum of 30 per cent of earnings as dividend. Banks with CAR of at least 3.0 per cent above minimum requirement and NPL ratio of more than 5.0 per cent, but less than 10 per cent will be allowed to pay up to a maximum of 75 per cent of earnings as dividends while banks that meet the minimum capital adequacy ratio and non-performing loan ratio have no regulatory restrictions and can pay dividend as wish.

    Shareholders said the apex bank should take the blame for the level of non-performing loans in the Nigerian banking industry, alleging that the bad debts were as a result of the failure of the apex bank to efficiently discharge its regulatory functions.

    They alleged that the board and management of the CBN cannot be absolved from the high level complicity and sabotage that have continued to fuel recurring bad loans.

    “The apex bank owes it a duty to Nigerians and the international community to publish profiles of loan defaulters and invoke operating laws through the banks on all bad loans,” the communiqué, signed by PSA’s National Coordinator, Mrs Bisi Bakare stated.

    They called on the National Assembly to intervene and protect the domestic retail shareholders from what they described as kill-joy policies of the apex bank.

    According to the association, the use of dividend payment as bad debt management tool will not only have negative impact on the domestic capital market and national capital accumulation, but may also encourage defaulters.

    The association also chided the Securities and Exchange Commission (SEC) “for abandoning and reneging on its corporate responsibilities to shareholders”.

  • Reps hail CBN’s intervention projects

    Reps hail CBN’s intervention projects

    The House of Representatives Committee on Banking and Currency yesterday applauded the intervention project of the Central Bank of Nigeria (CBN) at the Administrative Staff College (ASCON), Topo, Badagry Lagos.

    Speaking during the oversight visit of the Committee to CBN intervention projects in the South West geo-political zone, the Committee Chairman, Hon. Jones Onyereri, who led other members of the Committee, said that the Committee was impressed with the progress made in delivering on the project and the use of Nigerian  contractors in the project “We are impressed because we didn’t think we can get this kind of outcome judging from our first visit which shows that it will be indeed nice to patronize Nigerian contractors”. 

    Hon. Onyereri also commended the quality of job done by the contractors and noted that the CBN interventions at ASCON would create a conducive environment for learning, stating that they are worthwhile.

    Also in the inspection team were CBN’s Acting Director, Corporate Communications Department, Isaac Okorafor, and the Deputy Director in charge of the Projects, Oluwole Owoeye.

  • Bauchi approves purchase of 60 buses at N1.38bn

    Bauchi approves purchase of 60 buses at N1.38bn

    Bauchi State Executive Council on Wednesday approved the purchase of 60 buses at N1.38 billion to boost its Mass Transit Company, operators of “Yankari Express” and other agencies.

    Alhaji Ali Ali, the Special Adviser on Media and Strategy to Gov. Mohammed Abubakar, said this in Bauchi while addressing newsmen on the outcome of the State Executive Council meeting, presided over by the governor.

    Ali explained that the 18-seater, 2015 model buses would be supplied by Transfiguration Integrated Resource Ltd on loan.

    He further explained that 30 buses out of the figure would be allocated to the state-owned Mass Transist Company, operators of Yankari Express, to enable the company to boost its fleet.

    Ali said that 20 buses would be allocated to the 20 Local Governments in the state while the remaining 10 buses would be retained by the government.

    Read Also:  Bauchi gets 19 commissioners

    He said that the loan would be repaid in three years through an “irrevocable standing order of N190 million monthly and would be deducted at source.

    Ali said that the exco also approved for the state government to access credit facilities of N8 billion from the Central Bank of Nigeria (CBN) under the bank’s Commercial Agriculture Credit Scheme.

    He said that the state House of Assembly had earlier approved the loan while the EXCO, during its Wednesday’s meeting, approved the loan to improve agricultural activities in the state.

    The special adviser said that the state government would access the loan through United Bank for Africa (UBA) and would be used to encourage rice, fish and agro-allied production in the state.

    He said that government had started accessing the credit facilities since 2016 when it introduced its ANCHOR Farmers Borrowers’ Programme.

    NAN

     

  • RenCap: FBN Holdings not affected by CBN’s dividend payout rule

    Renaissance Capital (RenCap), a global investment bank, yesterday said FBN Holdings Plc will not be affected by the new dividend payout rule released by the Central Bank of Nigeria (CBN).

    The firm said that lenders operating holding company structures will not be restricted by the policy in dividend payment.

    In a report titled: ‘Nigerian Banks: CBN includes Additional Provision for Dividend Pay-outs’ the firm said: “Restrictions only apply to the banking entity, and not the group as FBN Holdings for instance paid out N0.20 kobo per share (51 per cent dividend pay-out) in fiscal year 2016, despite a Non-Performing Loans (NPLs) ratio of 24.4 per cent. This was paid out of the other non-banking subsidiaries within the group”.

    “Dividends paid to the shareholders are from the subsidiaries of the holding company of which the commercial banking group (FBN) currently retains in its business to build stronger capital buffers to execute strategic initiatives,” The Nation further learnt.

    The RenCap report said the CBN ban on dividend payout is not a new development as it was originally implemented on October 8, 2014 in a circular which stipulated that a bank’s ability to pay dividend is based on NPLs ratio. Banks with NPL ratios above 10 per cent shall not be allowed to pay dividend.

    It said capital position where banks which do not meet the minimum capital adequacy ratio shall not be allowed to pay dividend and Credit Risk Ratings (CRR) which are not typically disclosed by the banks.

    The revised circular however, includes an additional provision that banks that have capital adequacy ratios (CAR) of at least three per cent above the minimum requirement, CRR of “Low” and NPL ratio of more than five per cent but less than 10 per cent, shall have a dividend pay-out ratio of not more than 75 per cent of profit after tax.

    “Based on our conversations with management, we think that a 75 per cent pay -out ratio is highly unlikely.

    We note that the highest dividend pay-out ratio for the banks in our coverage universe in 2017 is 50 per cent (GTBank and Zenith). We expect the banks to take a conservative stance on dividend pay-out in light of IFRS 9 capital requirements, which could reduce CAR by as much as 150 basis points in a worst case scenario,” the report said.

    It said Zenith Plc, United Bank for Africa (UBA) and Fidelity Bank offer attractive dividend yields of seven to eight per cent based on our 2017 fiscal year estimates while GT Bank and Access Bank stand closer to five to six per cent. “Dividends will be declared with the release of fiscal year 2017 numbers, which we expect in about two weeks,” it said.

     

  • Six banks meet CBN’s dividend payout rule

    Six banks meet CBN’s dividend payout rule

    The Central Bank of Nigeria (CBN) circular on dividend payout by commercial banks and discount houses has been analysed based on the performances and balance sheet positions of all lenders.

    A report released yesterday by Afrinvest West Africa, an investment and research firm, showed that only six banks – Access Bank, First City Monument Bank (FCMB), Guaranty Trust Bank, United Bank for Africa, Wema Bank and Zenith Bank- met the CBN’s minimum requirement for Capital Adequacy Ration (CAR) and Non-Performing Loans. Hence these banks are excluded from the restrictions on dividend payment.

    The firm explained that many lenders will not be able to pay dividends based on their capital reserves as well as the proportion of Non-Performing Loans (NPLs) in a bid to forestall any threats to customer deposits in the system.

    On the criteria that require lenders to meet the minimum Capital Adequacy Ratio (CAR) before dividend payout, the research firm said all the banks under its coverage, save for Unity and Union, met the minimum requirement stipulated by the CBN.

    “For Unity, the current CAR (as at nine month 2017) is unavailable while Union Bank had a CAR of 13.3 per cent (below CBN requirement of 15 per cent in first half of 2017). We envisage Union’s CAR will improve by fiscal year 2017, adjusting for the capital raise of N50 billion via rights issue in 2017,” it said.

    On another requirement that banks and discount houses that have a Composite Risk Rating (CRR) of “High” or a Non-Performing Loan (NPL) ratio of above 10 per cent shall not be allowed to pay dividend, the report said only FBN Holdings has a non-performing loan ratio above 10 per cent which should disqualify the entity from paying dividend.

    “However, given the Holding company structure operated by FBN Holdings, analysts believe dividend can be paid from earnings of subsidiaries, other than the bank,” it said.

    Further analysis of the report showed that banks and discount houses that meet the minimum capital adequacy ratio but have a CRR of “Above Average” or an NPL ratio of more than five per cent but less than 10 per cent shall have dividend payout ratio of not more than 30 per cent.

    Under this condition, Ecobank Transnational Incorporated (STI) is the only Tier-1 bank restricted to a maximum payout ratio of 30 per cent on the basis of the fact that its NPL ratio stood at 9.6 per cent in nine months of 2016.

    Similarly, Diamond Bank, Fidelity Bank, Stanbic IBTC, Sterling and Union Bank are also restricted to a maximum of 30 per cent maximum payout ratio with respective NPL ratio above five per cent but below 10 per cent.

    On the provision that   banks and discount houses that have capital adequacy ratios of at least three per cent above the minimum requirement, CRR of “Low” and NPL ratio of more than five per cent but less than 10 per cent, shall save dividend payout ratio of not more than 75 per cent of profit after tax.

    Under this condition, ETI is the only Tier-1 bank that is restricted to 75 per cent maximum dividend payout ratio. Stanbic is the only Tier-2 bank eligible to pay up to 75 per cent as dividend payout.

    On the provision that there shall be no regulatory restriction on dividend payout for banks and discount houses that meet the minimum CAR, have a CRR of “low” or “moderate” and an NPL ratio of not more than five per cent, the report said it is expected that the Board of such institutions will recommend payouts based on effective risk assessment and economic realities.

    On the policy that no bank or discount house shall be allowed to pay dividend out of reserves, the analysis shows that no Nigerian bank breached this provision.

    On the requirement that banks shall submit their Board approved dividend payout policy to the CBN before the payment of dividend shall be permitted, analysts believe the CBN will ensure compliance with the set guidelines before approval of dividend payment by the banks.

    It said that in light of these new guidelines and based on our analysis of the banks using their nine month 2017 results, most of the banks, especially the Tier-1 banks, such as Access Bank, Guaranty Trust Bank, United Bank for Africa and Zenith Bank, save for FBNH, are not likely to be significantly impacted and are expected to sustain the historical dividend payment trend.

    “ETI meets the regulatory requirement for CAR, but has NPL above recommended maximum by the CBN; hence a maximum payout ratio of 30 per cent is placed on the bank. For the banks affected by the restrictions, we opine more attention will be turned towards improving NPL and shoring up capital buffers in order to ensure dividend payment,” it said.

    Diamond Bank has sold off its African operations for a consideration of $75.7 million (N27.3 billion) to improve its CAR buffers. Union Bank has concluded a N50 billion rights issue in order to improve its capital base.

    ”Furthermore, given the premium Nigerian investors place on dividend paying stocks, we believe banks will strive to improve on dividend payment. Nevertheless, we do not rule out the possibility of some kneejerk sell-off reactions by investors especially in stocks that are affected by the dividend payment restrictions. Hence, we advise that investors tread cautiously, especially ahead of the release of full year earnings,” the analysts said.

     

  • CBN boosts forex market liquidity with $210m

    CBN boosts forex market liquidity with $210m

    The Central Bank of Nigeria (CBN) yesterday injected $210 million into the foreign exchange market  to meet customers’ requests in various segments of the market.

    In its quest to meet customers’ needs in the various segments of the market, the CBN offered $100 million to authorised dealers in the wholesale segment of the market, while the Small and Medium Enterprises (SMEs) segment got the sum of $55 million.

    According to figures obtained from the bank, customers in need of foreign exchange for invisibles such as tuition fees, medical payments and Basic Travel Allowance (BTA), among others, were also allocated the sum of $55 million.

    The bank’s Acting Director, Corporate Communications Department (CCD), Isaac Okorafor, reiterated the bank’s commitment to continuous to intervention in the interbank foreign exchange market, in line with its pledge to sustain liquidity in the market and maintain stability.

    Okorafor said that the CBN would continue to strategically manage the forex with a view to reducing the country’s import bills and halting depletion of its foreign reserves.

    It will be recalled that last Monday, February 12, the CBN had intervened to the tune of $210 million to cater for requests in the various segments of the forex market. Meanwhile, the naira continued its stability in the forex market, exchanging at an average of N360/$1 in the bureau de change segment of yesterday.

  • Why we can’t provide information on Buhari’s UK treatment, by Emefiele, CBN

    Why we can’t provide information on Buhari’s UK treatment, by Emefiele, CBN

    THE Central Bank of Nigeria (CBN) and its governor, Godwin Emefiele, have explained why they cannot provide information on the money paid for President Muhammadu Buhari’s treatment in London, United Kingdom (UK).

    Emefiele and CBN also gave reason why they could not provide information about what it cost the country to keep a presidential aircraft and crew for 103 days at the Stansted Airport, UK while Buhari’s medical treatment lasted.

    They argued that it was not within their immediate responsibilities to provide such information.

    They spoke in reaction to a suit filed before the Federal High Court, Abuja by the Incorporated Trustees of Advocacy for Societal Rights Advancement and Development Initiative (ASRADI), led by Adeolu Oyinlola (executive director).

    ASRADI, in the suit, said the CBN and its governor refused to honour its Freedom of Information request contained in its letter of October 19, 2017 for information on the amount they released for Buhari’s medical treatment in London and the amount they paid on behalf of the Nigerian government as parking fees for keeping the presidential aircraft and crew in the UK.

    In the suit, with the CBN, its governor and the Attorney General of the Federation (AGF) as respondents, ASRADI seeks a declaration that the respondents’ inability to provide it with information sought through its letter of October 19, 2017 “amounts to a wrongful denial of information and is a flagrant violation of the provisions of the Freedom of Information (FOI) Act 2011.”

    It seeks an order compelling the respondents to furnish it with information sought and a further order mandating the CBN and its governor to pay the plaintiff N10million in damages “for the willful refusal of the first and second respondents to release information in respect of the applicant’s letter”.

    But, in their counter affidavit filed on February 13, the CBN and its governor urged the court to reject the applicant’s prayers and dismiss the suit.

    They urged the court to vacate an earlier ex-parte order granting leave to the applicant to apply for “a prerogative order of mandamus” compelling them to provide the requested information.

    They admitted receiving the October 19, 2017 letter from ASRADI, but forwarded it to the President’s Chief of Staff, who they believed was the proper person to provide the information sought by the applicant.

    The CBN and its governor accused the applicant of failing to inform the court that they wrote it, informing the group to resort to the President’s Chief of Staff for the information requested.

    At the last proceedings in the case on February 14, lawyer to the CBN and its governor, B. O. Durojaiye, said his client has responded to the suit by filing a counter affidavit and address. He sought the court’s permission to mark some of the exhibits attached to what his client’s had filed.

    Trial judge Justice John Tsoho granted Durojaiye’s request, following which he proceeded to mark the documents (which included letters relating to the transfer of ASRADI’s request to the President’s Chief of Staff and that informing the applicant about the transfer).

    Durojaiye later served copies of his client’s response on the applicant and the third respondent (the AGF), represented by Mrs. Linda Amego in the court.

    Amego, who indicated her client’s intention to file a notice of preliminary objection to the suit, sought time to enable her do so. She said the delay on their part was informed by the failure of the CBN to provide them with needed information, since the AGF was not really involved in what led to the institution of the suit.

    Justice Tsoho has, however, adjourned to April 17 for the hearing of the main suit along with any objection filed by any of the respondents.

  • Why we can’t provide information on Buhari’s treatment – CBN

    Why we can’t provide information on Buhari’s treatment – CBN

    The Governor of Central Bank of Nigeria, Godwin Emefiele, on Thursday explained why the apex bank cannot provide information on the funds used to defray the cost of President Muhammadu Buhari’s treatment in London.

    He also explained why CBN cannot provide information on how much it cost the country to keep a presidential aircraft and crew for 103 days at the Stansted Airport in the United Kingdom while President Buhari’s medical treatment lasted.

    Emefiele argued that it was not within the CBN’s immediate responsibilities to provide such information.

    He spoke in a reaction to a suit marked: FHC/ABJ/CS/1142/2017 filed before the Federal High Court, Abuja, by the Incorporated Trustees of Advocacy for Societal Rights Advancement and Development Initiative (ASRADI) led by its Executive Director, Adeolu Oyinlola.

    ASRADI said in the suit that the CBN and its Governor refused to honour its Freedom of Information request contained in a letter of October 19, 2017 for information on the amount released for Buhari’s medical treatment in London and the amount paid on behalf of the Nigerian government as parking fees for keeping the presidential aircraft and crew in the UK while the President’s treatment lasted.

    In the suit, with the CBN, its Governor and the Attorney General of the Federation (AGF) as respondents, ASRADI wants a declaration that the information the respondents provided it with through its letter of October 19, 2017 “amounted to a wrongful denial of information and is a flagrant violation of the provisions of the Freedom of Information (FOI) Act 2011.”

    It also seeks an order compelling the respondents to furnish it with information sought in the letter of October 19, 2017, and a further order, mandating the CBN and its Governor to pay the plaintiff N10million in damages “for the wilful refusal of the 1st and 2nd respondents to release information in respect of the applicant’s letter dated October 19, 2017.”

    In a supporting affidavit, Oyinlola contended that it was within the responsibilities of the CBN and its Governor to provide the requested information because they “are responsible for all foreign currency transactions of the Nigerian government or transactions involving the Federal Government of Nigeria and foreign institutions as it concerns transfer of money outside the shores of Nigeria.”

    But, in their counter affidavit filed on February 13 this year, the CBN and its Governor urged the court to reject the applicant’s prayers and dismiss the suit.

    They equally urged the court to vacate an earlier ex-parte order granting leave to the applicant to apply for “a prerogative order of mandamus” compelling them to provide the requested information.

     

  • CBN raises N176b in treasury bills on lower yields

    The Central Bank of Nigeria (CBN) has raised N176 billion ($576 million) worth of treasury bills at an auction held yesterday, traders said.

    The apex bank offered N6 billion of three-month paper, N30 billion of six-month bills and N140 billion of one-year notes.

    The bank issues treasury bills twice a month to help the government to finance its budget deficit, curb money supply growth and provide an avenue for lenders to manage liquidity.

    Total demand for the notes stood at N229.9 billion as investors were demanding as high as 20 per cent yields for the one-year paper, which sold for 13.7 per cent. It sold the one-year paper at 14.3 per cent in January.

    The bank auctioned the three-month bill at 11.95 per cent from 12.55 per cent last month and the six-month note at 13.65 per cent from 13.92 per cent.

    Reuters report said the government has been working to lower its borrowing costs, particularly as inflation fell for the 12th time in a row yesterday. The government also plans to refinance $2.5 billion worth of treasury bills from the proceeds of a planned Eurobond sale this first quarter.

     

  • CBN empowers 12m farmers with N55b loans

    CBN empowers 12m farmers with N55b loans

    The Central Bank of Nigeria (CBN) has so far spent N55 billion on the Anchor Borrowers’ Programme (ABP), a top official said yesterday.

    Under a new arrangement for the programme, CBN credit facility to farmers would be digitalised, Special Assistant to the CBN governor Mr. Tunde Akande told the Rice Farmers Association of Nigeria (RIFAN) in Abuja.

    Following a drop in demand for foreign exchange to import rice and other foods now produced locally, the foreign reserve has hit $42.8billion, he said, adding that the CBN was partnering with RIFAN to empower 12.2 million farmers under the fully digitalised second phase of the ABP.

    Of the N55 billion provided by CBN to farmers under the ABP, 80% representing N44 billion was given to rice farmers alone. The ABP, which entered its second phase yesterday, will now be a collaboration between private sector (small holder farmers) and the CBN.

    To guarantee the ABP’s success, CBN said it would partner with other commodity associations as well as staple food farmers to provide employment, reduce food import, boost export and earn foreign exchange.

    According to Akande, the partnership with RIFAN would help digitalise loan processes for smallholder farmers.

    He said the bank estimated that an additional two million tonnes of rice would be added into national rice production using digitalised mechanism which would be made available to RIFAN members.

    The collaboration with smallholder farmers and the digitalisation of the ABP, he said, would help in monitoring farmers closely by ensuring they get inputs, extension services and other incentives needed to achieve bumper harvests.

    The government and CBN, he said, had decided to collaborate with RIFAN because “they have structures at all levels. We want to provide mentoring, extension services, etc to farmers through them. We can now provide tractorisation and all that.”

    “It’s about the loan being well utilised. There is a guaranteed market for farmers under this programmme. We have deployed seamless technologies to them. We have taken their biometrics and we have their contacts. Days of taking loans and inputs without accounting for them are over. In no distant time, we will attain food sufficiency and even export to earn foreign exchange”, he said.

    Akande said all loans given to farmers under the ABP were mandatorily insured by the Nigeria Agricultural Insurance Corporation (NAIC).

    Each smallholder farmer gets N250,000 to cultivate one hectare of land for dry season farming and in multiples of land size.

    RIFAN president Alhaji Aminu Goronyo  said the new initiative would be private sector-driven unlike in the past when CBN and the states.

    He said under the ABP partnership between the CBN and RIFAN, 200,000 farmers would be given fresh funds to plant rice in dry farming season and another 500,000 farmers during wet farming season.

    Through the funding, Goronyo said, the farmers would employ a total of five million people to work on the rice production value chain during the period.

    “This collaboration is to put Nigeria on the right track in agribusiness. Before 2015, it was operating on an analogue model, thus making monitoring and compliance very challenging. So, all that was done in agriculture was not properly recorded. But with this, we have 500,000 farmers under this season’s farming. From this figure, we have 200,000 farmers for the dry season,” he said.

    Goronyo added: “With this new digitalised programme, I can, from my phone, reach all the farmers. It’s a global innovation. Farmers are now accessible, verifiable and the entire process reliable. Anyone coming to do business with us can access us and work with reliable data”.

    He said RIFAN had national working committees and six zonal offices and heads at both local government and ward levels.

    The RIFAN chief said 32 states were currently onboard the ABP, noting that Benue, Nasarawa, Enugu and Cross River could not join this year’s farming season because they could not tidy up their applications and documentation before the deadline elapsed.

    “They could not meet the time for applications and all that. So, we have defered their participation till next wet season”, he added.