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Tag: Citigroup

  • Citigroup predicts more investment flows to Nigeria, others

    Citigroup predicts more investment flows to Nigeria, others

    Citigroup Inc has predicted that Nigeria, Angola and Kenya will attract more foreign capital flows, despite  depreciation in their currencies.

    The naira yesterday exchanged at N915 per dollar at the parallel market and closed at N772 per dollar at the Investors and Exporters (I&E) window.

    Citigroup’s position comes barely a week after global financial service firm, JP Morgan, stated that Nigeria’s net foreign exchange (forex) reserve was estimated to be around $3.7 billion, much lower than the net figure of $14 billion that was reported, putting the country’s foreign exchange market under further pressure.

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    Bloomberg reported that Citigroup’s Head of Markets for Sub-Saharan Africa, George Asante, said countries with significant forex adjustments were clear winners from an investment perspective.

    According to him, countries where the bank has seen significant forex adjustments offer opportunities for good investments from a local market perspective.

    Asante said the removal of petrol subsidy was a very important reform for Nigeria, while moves to merge multiple exchange rates will also help to boost liquidity.

    He explained that the next task for the government is to make sure the official forex market can function smoothly in the wake of the changes.

    “I believe that this will be a significant catalyst for flows back into the Nigerian market,’’ Asante said, during an interview in Nairobi.

    A Bureaux De Change (BDC) trader based in Marina, central Lagos, Garuba Sarki, linked market crisis to inadequate or zero dollar supply and uptick of demand from multiple buyers.

    He said funding for BDCs or getting the banks to sale dollars to retail end buyers will bring greater mileage to the naira.

     ”The banks are not selling dollars and the BDCs have been incapacitated. Where do you expect dollar liquidity to come from? We expect the CBN to take immediate action and reverse the current trend to bring sanity to the market,” he said.

    Sarki said many companies, sourcing dollars to import goods for Christmas sales and those going on summer holidays have also put more pressure on the forex market.

    Former Registrar, Chartered Institute of Bankers of Nigeria (CIBN), Dr. Uju Ogubunka, called on economy managers to tackle the naira-dollar relationship headlong and entrench exchange rate stability, while boosting foreign reserves.

    He advised the Acting Central Bank of Nigeria (CBN) Governor, Folashodun Shonubi to tackle the volatility in the forex market.

    “It is not difficult to find what he should. Naira-dollar relationship is at its worst state, at least let’s get to where we were before and from there, move further forward. He needs to create jobs, and reserves which relates to the exchange rate should be boosted. H also needs to improve export and reduce import,” Ogubunka advised.

    Also speaking, President, Association of Bureaux De Change Operators of Nigeria (ABCON), Dr. Aminu Gwadabe, advised the Federal Government to enhance financial intelligence by tracking people with proceeds of corruption to sanitize the market.

    He said many of the people with proceeds from corruption are the ones putting pressure on the forex market through their manipulative actions.

    “The naira is depreciating not by forces of demand and supply, but by the collective action and impact of the people with illicit funds,” he said.

    The CBN had in June commenced currency reforms that  brought about exchange rate unification and abolishment of multiple multiple exchange rates.

    The exercise led to 40 per cent drop in naira rate at the official market, but dollar supply has continued to be a big challenge making it difficult for official and parallel market rates to converge.

  • $1.2b forex fine on Citigroup, Barclays may hurt correspondent banks

    Barclays, Citigroup, JP Morgan, MUFG and Royal Bank of Scotland were yesterday fined 1.07 billion Euros (about $1.2 billion) by the European Union for rigging the multi-trillion dollar foreign exchange market.

    All the five banks have correspondent banking relationship with local banks in Nigeria.

    Speaking on the fines, the President, Association of Bureaux De Change Operators of Nigeria (ABCON), Aminu Gwadabe, said the negative impact of the fines on the banks will also affect financial institutions that have correspondence banking relationship with them.

    “Yes, there are implications as all the indicted banks represent correspondence banking agents of many Nigerian banks that rely on them for the confirmation of their trade obligations abroad. Any wrong perception of the indicted banks will directly or indirectly affect our local banks’ positions,” Gwadabe said.

    The Central Bank of Nigeria (CBN) has set new rules  for banks planning to establish correspondent banking relationships with foreign lenders.

    The apex bank, in the Anti-Money Laundering/ Combating the Financing of Terrorism (AML/CFT) Policy and Procedure Manual insists that it will guard against establishing correspondent banking relationships with high risk foreign banks, such as shell banks, with correspondent banks that have historically allowed their institutions to be used for Money Laundering / Financing Terrorism (ML/FT).

    The European Commission said the banks formed two cartels to manipulate the spot foreign exchange market for 11 currencies, including the dollar, the euro and the pound.

    “These cartel decisions send a clear message that the Commission will not tolerate collusive behaviour in any sector of the financial markets,” European Competition Commissioner Margrethe Vestager said in a statement.

    The EU competition enforcer said most of the traders knew one another on a personal basis and set up chartrooms with names, such as “Essex Express ‘n the Jimmy”, because all of them, except “James”, lived in Essex and met on their train commute to London.

     

  • Citigroup, Standard Chartered, others to issue $1b Eurobond in Jan.

    Citigroup, Standard Chartered, others to issue $1b Eurobond in Jan.

    The Federal Executive Council (FEC) yesterday approved the appointment of transaction parties for the one billion dollars Eurobond to be issued next month.

    Minister of Finance Mrs Kemi Adeosun broke the news after the Federal Executive Council (FEC) meeting.

    With her were Minister of Information Lai Mohammed and Minister of the Environment Mrs Amina Mohammed

    The transaction parties are Citigroup, Standard Chartered Bank, Stanbic IBTC, Whiten case, Banwo and Ighodalo and Africa Practices Communications Advisers.

    Mrs Adeosun said: “The one billion Eurobond programme is part of the funding for 2016 budget and we hope to be able to commence the process in January. We obtained certificate of no objection from the Bureau of public procurement (BPP) for the appointment of those parties, having undertaken full competitive open tender process.

    She went on: “We are confident that we will be able to complete the transaction expediently with significant interest. The oil price stability obviously is helping us. Currently, there is a bit of demand for emerging market papers.”

    According to her, Nigeria’s paper is trading around seven to eight per cent mark.

    The minister added: “Angola came out in November with bench UAD I.56 and Gabon in June did 8.25 plus, Ghana in September did 9.25. We are expecting to get quite a competitive pricing on the issuance programme, which I said is to be used for the purpose of funding capital projects in the 2016 budget within the month of January.

    “The other thing to note is that these parties that have been appointed would run any Eurobond issuance programme that we do for the next three years so that we don’t have to keep on retendering, unless there is a major problem with any of them they will be our parties for the next three years.”

    The Environment Minister said the Council considered finalising the amendment of the gazette for the establishment of the hydrocarbon pollution restoration process/purchase.

    The gazette, she said, is the vehicle that is supposed to have all the government structures to clean up the Niger Delta, starting with Ogoni and the implementation of the UNEP report.

    “Why is this so important? Well, what we have said in the past, the past gazette did not put in place some of the government structures we need, such as the government board, like the board of trustees or a structure that would be held accountable for the enormous amount of money that is already available to be spent and additional monies that we can leverage from the money that we have that is being offered by different partners.

    “This now will enable us to put more structure to the board of trustees who require a legal entity to put the resources in and then we hope that in the new year we will begin to roll out, to begin with the building of the centre of excellence. The integrated soil treatment centre will also go up and then we’ll begin training, but in this case we’ll start training many of the women on the livelihood side in the many of the contaminated areas.

    “Of recent, you would have heard that in Ogoni land itself we have pipelines …. I’ve visited there…those that are most affected there are the women farmers. So we have to find better ways of speaking with communities but also ensuring that livelihoods of women are not affected.

    “We are also speaking to many of the young people there; we have a good feedback from those who are interested in being a part of the rollout of the clean-up Ogoni land in the new year.”

  • Citigroup sees investment decline on naira devaluation fears

    Citigroup sees investment decline on naira devaluation fears

    Citigroup Inc. said deals in Nigeria have

    plummeted because foreign investors are too scared to spend money when it is expected that the naira will have to be devalued.

    “I see this as a year of pause,” Miguel Melo Azevedo, Citigroup’s head of Investment Banking for Africa, who helped sell dollar debt for countries, including Nigeria and Morocco, said in an interview in Cape Town.

    “You will look very stupid if you buy something in Nigeria and tomorrow it gets devalued. There’s an embarrassment factor,” he added.

    Nigeria’s government is shielding the naira after the 42 per cent decline in the price of Brent crude in the past year has decimated state revenues. The currency has been pegged at 197-199 per dollar since March last year, while in the unofficial parallel market, the naira is 34 percent weaker, and traded at about 300 per dollar on Wednesday.

    The number and the size of mergers and acquisitions is showing the strain. So far this year there have been 12 deals valued at $1.45 billion compared with a year ago when there were 19 deals worth $5.62 billion, according to data compiled by Bloomberg.

    “The drop-off in mergers and acquisitions could get worse,” said Ronak Gadhia, a research analyst at London-based Exotix Partners LLP. “The level of foreign direct investment has also dropped off a cliff and it’s not going to recover any time soon until policies around the naira change.”

    Nigerian President Muhammadu Buhari came to power in May last year, promising to fight corruption, fix the economy and tackle terrorism.

     

  • Consumer banking viable, says Citigroup

    Citigroup Inc. said Nigeria’s efforts to crack down on identity theft are making it more attractive to start a consumer banking business in Africa’s most-populous country.

    More banks are rolling out consumer banking in Nigeria because individuals dealing with banks in are increasing “who they say they are,” Akinsowon Dawodu, chief executive officer of Citibank Nigeria Ltd., said. A lack of security around identification has been an impediment to personal banking in the country in the past.

    The Central Bank of Nigeria (CBN) is requiring customers to provide fingerprint identification, a system it started introducing with commercial lenders in February 2014. A deadline for customers to get bank verification numbers has been extended to October 31 so that Nigerians living abroad can enroll. People who don’t comply will lose access to their accounts, the regulator says on its website.

    The system, combined with a growing network of credit bureaus that collect information on customers, “makes the consumer proposition fairly viable,” Dawodu said.

    An entry into consumer banking would enable lenders to market products like personal loans and mortgages in Nigeria which has 170 million people, where the New York-based bank provides corporate banking services. The economy in Nigeria, Africa’s biggest oil producer, is forecast by the government to grow 3.9 per cent this year.

    Citi itself doesn’t plan to enter consumer banking in the country, Jeffrey French, a London-based spokesman, told Reuters.

    The Central Bank said in June last year that the absence of a unique identifier had curbed growth in credit cards and credit-related products. The bank verification number system is intended to combat cybercrime and identity theft, among other offences, it said.

    The credit bureaus were conceived to strengthen risk management at banks after a debt crisis caused by loans to stock speculators and fuel importers threatened the industry with collapse in 2008 and 2009.

  • Citigroup can plead guilty to settle forex probe’

    citigroup Inc said it could plead guilty to an antitrust charge to resolve a United States Department of Justice investigation of its dealings in foreign exchange markets.

    In a regulatory filing on Monday, the company also said the Justice Department had advised that it did not intend to prosecute the bank in a separate investigation into the setting of interest rates between banks.

    Citigroup is one of the six major banks that have been under investigation over the past year by global authorities, including the DOJ, for trying to manipulate rates in the $5trillion-a-day foreign exchange market.

    The banks have been accused of sharing confidential information about client orders and coordinating trades from 2008 until October 2013 to boost their own profits.

    Bloomberg, citing sources, reported last month that the DOJ had been pressing Citigroup’s main unit to plead guilty to criminal charges. It said Citigroup had countered with an offer that the plea come from a subsidiary that is smaller than the Citibank NA unit.

    Bloomberg said the related fine would likely not exceed $1 billion.

    Citigroup left its estimate of potential unreserved litigation costs unchanged from year-end at $4 billion.

     

  • Citigroup can plead guilty to settle forex probe’

    citigroup Inc said it could plead guilty to an antitrust charge to resolve a United States Department of Justice investigation of its dealings in foreign exchange markets.

    In a regulatory filing on Monday, the company also said the Justice Department had advised that it did not intend to prosecute the bank in a separate investigation into the setting of interest rates between banks.

    Citigroup is one of the six major banks that have been under investigation over the past year by global authorities, including the DOJ, for trying to manipulate rates in the $5trillion-a-day foreign exchange market.

    The banks have been accused of sharing confidential information about client orders and coordinating trades from 2008 until October 2013 to boost their own profits.

    Bloomberg, citing sources, reported last month that the DOJ had been pressing Citigroup’s main unit to plead guilty to criminal charges. It said Citigroup had countered with an offer that the plea come from a subsidiary that is smaller than the Citibank NA unit.

    Bloomberg said the related fine would likely not exceed $1 billion.

    Citigroup left its estimate of potential unreserved litigation costs unchanged from year-end at $4 billion.

  • Citigroup to exit consumer banking in 11 markets

    Citigroup to exit consumer banking in 11 markets

    Citigroup Inc, the U.S. lender that derives most of its revenue from overseas markets, has announced plans to exit consumer banking in 11 markets as Chief Executive Officer Michael Corbat seeks to simplify the firm and boost returns.

    The sale of the businesses, a majority of which already are under way, are expected to be completed by the end of next year, the bank said yesterday in a statement. The units will be moved into the lender’s collection of unwanted assets for reporting purposes in the first quarter of next year.

    “I am committed to simplifying our company and allocating our finite resources to where we can generate the best returns for our shareholders. While we have made progress optimizing these 11 consumer markets, we believe our global consumer bank will achieve stronger performance by focusing on those countries where our scale and network provide a competitive advantage,” Corbat, 54, said in the statement.

    The actions come two years after Corbat was named CEO to replace Vikram Pandit, who made expanding into emerging markets one of his central strategies. Since taking over, Corbat has announced plans to fire 11,000 workers and pull back from consumer banking in markets with low returns including Spain, Greece and Turkey.

    With yesterday’s announcement, New York-based Citigroup will exit consumer banking in Costa Rica, El Salvador, Guatemala, Nicaragua, Panama, Peru, Japan, Guam, the Czech Republic, Egypt and Hungary, as well as the consumer-finance business in Korea, according to the statement. It will continue to work with institutional clients in those places.

  • Nigeria ‘may pay’ 6% yield for Eurobond

    Nigeria ‘may pay’ 6% yield for Eurobond

    Nigeria will likely have to pay around six percent for a 10-year maturity on its $1 billion Eurobond if it goes ahead with the issue after a debt meeting with investors next week, an analyst and a fund manager have said.

    Senior Nigerian government officials led by Finance Minister Ngozi Okonjo-Iweala started a one-week roadshow to Britain, Germany and the United States on Wednesday with book-runners for the Eurobond, with a view to issuing it this year.

    The timing of the bond and its maturity have not been decided yet and will depend on the market, a London-based fund manager who attended the roadshow told Reuters, asking not to be named.

    Nigeria’s debt office had said it wanted to sell the bond by end-September and that it was increasing the amount it borrows overseas to lower funding costs.

    Deutsche Bank and Citigroup are acting as book-runners for the Eurobond.

    “If they went for a 10-year they could get one in the region of six percent,” said the fund manager, adding that Nigeria may hold back on the sale to minimise the yield.

    Yields on emerging market debt have risen sharply over the past six weeks owing to lingering concerns that major central banks may start to back off loose monetary policies that kept global markets awash with cash.

    Yields on Nigeria’s 10-year domestic bond spiked nearly three percent this month while stocks and the naira tumbled last week, as foreign investors dumped frontier market assets.

     

     

  • Citigroup, five others fined $4.48m over bond lobbying costs

    Citigroup, five others fined $4.48m over bond lobbying costs

    Citigroup Incorporated is among five firms that will pay $4.48 million to settle regulatory claims they used funds from municipal and state bond deals to pay lobbyists.

    Underwriters that fund bond-authorisation campaigns and then collect fees from approved debt sales are among unresolved pay-to-play issues in the $3.7 trillion municipal market.

    Hiring an underwriter based on whether it supports a campaign rather than its ability to market bonds can lead to mispricing, which can hurt investors, as well as higher fees and borrowing costs.

    “The script remains the same,” said Marilyn Cohen, founder of Envision Capital Management Inc. in Los Angeles, which oversees about $210 million of munis.

    “I’m not surprised; my surprise is that they found it. That’s just the cost of doing business. It’s all pay-to-play.”

    The banks, also including Goldman Sachs Group Inc. (GS), JPMorgan Chase & Co. (JPM) and Morgan Stanley, agreed to pay $3.35 million in fines and reimburse certain California bond issuers $1.13 million, according to the statement. Citigroup’s $1.28 million in sanctions were the largest, followed by Merrill’s $1.07 million.

    The five banks violated the Municipal Securities Rulemaking Board’s fair-dealing and supervisory rules, according to the statement. The Alexandria, Virginia-based MSRB, a self- regulatory body that sets guidelines for the muni market, has banned would-be underwriters from giving to most campaigns for elected officials who could influence the award of bond sales.

    Making such contributions is more widespread among smaller underwriters, according to disclosure filings with the rulemaking board.

    Banks have been divided over whether they should be allowed to support drives in favor of referendums authorising debt issues that they later underwrite. Some say it creates the appearance of undue influence, while others say it merely helps issuers win the votes and finance needed projects.

    The lobbying payments that resulted in today’s sanctions spanned 2006 through 2010, according to Finra. The companies didn’t admit or deny wrongdoing.

    Goldman Sachs “discontinued the longstanding industrywide practice of seeking reimbursement for such fees” in California last year, the bank said in a statement. It also refunded the lobby-group fees that had been charged on state-level issuances in which the firm was lead underwriter.

    Morgan Stanley (MS) is “pleased to have resolved this issue in a satisfactory manner,”Mark Lake, a spokesman for the New York-based company, said in an se-mailed statement. Spokesmen for New York-based Citigroup and Charlotte, North Carolina-based Bank of America also said the firms were pleased to resolve the issue. A spokesman for New York-based JPMorgan didn’t immediately respond to messages seeking comment.

    “Issuers are entitled to know what they are paying for and why,” Brad Bennett, Finra’s chief of enforcement, said in the statement. “It was unfair for these underwriters to pass along the costs of their Cal PSA membership to the municipal and state bond taxpayers, neglecting to disclose that these costs were unrelated to the bond deals.”