A heated blame game is trailing the suspension of nine banks from the foreign exchange market as a result of non remittance of NNPC fund into the Single Treasury Account TSA. While banks are issuing statements absorbing themselves of culpability stating that the members of the NNPC Management Team have been kept fully in the picture on the funds in their possession, the NNPC is claiming credit for the suspension accusing banks of holding back the funds.
CBN had listed the suspended banks as United Bank for Africa (UBA) $530m; First Bank of Nigeria (FBN) $469m; Diamond Bank Plc. ($287m); Sterling Bank Plc. ($269m); Sky Bank Plc. ($221m); Fidelity Bank ($209m); Keystone Bank ($139); First City Monument Bank (FCMB) $125m; and Heritage Bank ($85m).
The CBN on its part has said it is not ready to join issues with any of the parties saying it would rather let sleeping dogs lie as the process is an ongoing administrative routine. An official said CBN does not want to join issues with those running to the media. This is an administrative thing; it should not be harped to heat up the market. Every body is trying to defend himself, now who is right and who is wrong. For some of the banks issuing statements why did they hold the money back in the first instance?
At the foreign exchange market yesterday the naira suffered a loss in value as it depreciated at the parallel market to trade at N402 per dollar, weaker than N397 it traded at its previous session as dollar shortages gripped the official market. The naira, which hit fresh record low since the central bank floated the currency on the official inter-bank market in June, first touched N400 on the black market this month. On the inter-bank market yesterday, no trades were posted until three minutes before the end of the session, when the central bank which has been reducing its dollar sales, intervened, traders said. Only three deals worth $0.75 million were traded at 305.50 per dollar, a level the market has closed at since Monday.
Why we reported non remitted fund to presidency -NNPC
The Group General Manager, Public Affairs Division of the NNPC Mallam Garba Deen Muhammed claiming credit for the suspension of banks from foreign exchange market said that the corporation realised that some money were stashed in the banks which were not remitted to TSA that was how they quickly alert the authorities concern to take the necessary action. Muhammed said NNPC management discovered the delay and prompted the President on the issue. He said the management of NNPC beliefs in transparency and due process in the remittance of government funds.
FCMB
However, FCMB one of the banks affected by the suspension in a note to its customers yesterday said “the Central Bank of Nigeria announced a temporary suspension of FCMB along with eight other commercial banks from access to the foreign exchange market. This suspension is based on the Treasury Single Account Directive, which stops banks from holding funds on behalf of government entities and instead, effect daily remittances to the CBN. For our bank, this suspension is based on our non-payment/transfer of the remaining $125million NNPC fund with us to TSA.
“As a financial institution with strong corporate governance rules, we have always fully disclosed the outstanding TSA funds in our books and have continued to work assiduously to fulfill our outstanding obligations. The members of the NNPC Management Team have been kept fully in the picture on the funds. This scenario is really because of lack of foreign exchange availability and the prevailing fall in oil prices rather than concealment or willful non-compliance by FCMB. It is actually a widespread industry issue.
“We also think it is very important to proactively reach out to our customers and explain what this means for them, and hence, this mail for you. This development will have no impact on most of our customers. While there might be minimal impact on the establishment of new lines of trade through the foreign exchange market, your relationship officer will be able to provide guidance on this. This scenario will not affect your deposits, both local and that in foreign currency. Transactional services such as payments, local and international will continue seamlessly wherever and whenever they are initiated.
“Remittance services will not be hindered in any way and you can continue to transact in any part of the world, at any time, either on our mobile application platform or via internet banking. As an institution, our fundamentals remain strong, our franchise is still growing and we remain firmly committed to our professional values”.
UBA
UBA in a statement yesterday said “The CBN had earlier on Tuesday announced the suspension of 9 banks from all foreign exchange transactions until they remitted into the TSA over $2 billion in various NNPC/NLNG accounts in the banks as ordered by President Muhammadu Buhari last year”. Further to our press statement of yesterday, we are pleased to inform our valued customers, stakeholders and business partners as well as the general public that the CBN has re-admitted us into the Foreign Exchange Market following our remittance of all NNPC/NLNG dollar deposits. UBA wishes to thank you all for your continued support and patronage”
It had said on Tuesday “UBA, one of Nigeria’s and Africa’s top tier banks has remitted into the Single Treasury Account (TSA) domiciled at the Central Bank of Nigeria (CBN) all dollar deposits belonging to the Nigerian national Petroleum Corporation (NNPC)/Nigerian Liquefied Natural Gas Company (NLNG). The bank in a statement Tuesday said, “Our attention has been drawn to report of the ban of UBA from the foreign exchange market by the CBN over the non-remittance of NNPC/NLNG dollar deposits.
“We wish to state very categorically that UBA has completely remitted all NNPC/NLNG dollar deposits.” We thank all our numerous customers, business partners and other stakeholders who have reached out to us on account of this report,”
Diamond Bank
Diamond Bank reacting to the suspension reassured its customers of enhanced quality service delivery and commitment to meet its banking obligations despite the announcement by the CBN that nine commercial banks (inclusive of Diamond Bank) have been barred from foreign exchange transactions for alleged infringement on the Treasury Single Account (TSA) directive last year.
The Bank stated that as a financial institution built on a foundation of sound corporate governance, full disclosure of the outstanding TSA funds were made to the CBN. We are currently engaging with relevant stakeholders, with the support of the Regulator, to resolve this industry-wide issue quickly. “Our primary responsibility is to our customers. This development does not affect customers own deposits, both local and those in foreign currency. It also means that services such as payments – local and international, will go through as normal whenever our customers need to make them. Remittance service will continue as normal and customers can transact anywhere in the world, any time of the day, on their mobile application or internet banking”.
Nigeria Stock Market
Yesterday at The Nigerian Stock Exchange All Share Index (NSE ASI) and the Market Capitalisation increased by 0.25 per cent, while the Year-to-Date return stood at -2.66 per cent. The All Share Index closed at 27,880.46 against the previous close of 27,810.28 while Market Capitalisation closed at ₦9.576 trillion against previous close of ₦9.551 trillion. Volume traded increased by 26.36 per cent from 182.247 million to 230.294 million, while the total value of stock traded increased by 0.73 per cent from ₦2.934 billion to ₦2.955 billion in 3,002 deals. 4:16:44 PM The Financial Services sector led the activity chart with 195.442 million shares exchanged for ₦1.721 billion. Oil And Gas came next with 13.193 million shares traded for ₦0.104 billion, Consumer Goods, Conglomerates, Industrial Goods sectors followed in that order on the activity chart
This implies that the suspension of some banks from foreign exchange market had no effect on the market.
Vetiva Capital
Commenting on the effect of the suspension on banks shares at the Nigerian Stock Exchange yesterday said “With the exception of a few, the decline in banks that were implicated in the CBN FX ban was marginal, leading us to believe the market is prepared to look past this issue. We expect the NSE ASI to sustain mild gains in the session ahead.
Cowry Asset Management
On its part Cowry Asset Management said “The overall performance measures, NSE ASI and market capitalisation, revved by 25.2 bps each, driven by banking, consumer goods, oil & gas, and industrial stocks which were highly sought after. Elsewhere, NIBOR moved in mixed directions across the tenor buckets. NITTY also moved in mixed directions across the tenor buckets. Meanwhile, OTC FGN bond prices moved in mixed directions across maturities; however, Nigeria’s Eurobond prices increased across all the maturities on buy pressure.
