Nigerialog.com - Nigeria's Premier Online Forum - CBN sanctions nine banks over $2.334 billion NNPC funds
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CBN sanctions nine banks over $2.334 billion NNPC funds: Business : Nigerialog.com - Nigeria's Premier Online Forum (138 views)

CBN sanctions nine banks over $2.334 billion NNPC funds

By dayan (M)August 24, 2016, 07:11:02 AM
By Clara Nwachukwu, Business Editor   |   24 August 2016   |   4:50 am


Central Bank of Nigeria’s (CBN) governor Godwin Emefiele. AFP PHOTO / PHILIP OJISUA

• ‘Why we can’t pay at once’
• ‘CBN owes us $3b in unfunded LCs’

Nine of the deposit money banks in the country have been banned from further foreign exchange transactions for their refusal to remit outstanding $2.334 billion Nigerian National Petroleum Corporation (NNPC) funds in their coffers.

The Central Bank of Nigeria (CBN), that wielded the big stick said it was forced to impose the ban for the refusal of the banks to remit the outstanding sum into its Treasury Single Account (TSA), as directed by the Federal Government last year.

The banks affected include United Bank for Africa (UBA), $530m; First Bank of Nigeria (FBN), $469m; Diamond Bank Plc, ($287m); Sterling Bank Plc, ($269m); Skye Bank Plc, ($221m); Fidelity Bank, ($209m); Keystone Bank, ($139); First City Monument Bank, (FCMB) $125m; and Heritage Bank, ($85m).

But in a swift reaction, the banks accused the CBN of trying to de-stabilise the market, claiming that the apex bank already owed Nigerian banks up to $3billion from unfunded letters of credit (LCs), since last year, before the TSA regime.

The Guardian exclusively reported yesterday about the CBN conducting stress tests on the banks to determine the strength of each of the financial institutions after the withdrawal of public funds from the banks.A top official of one of the affected banks, told The Guardian in a telephone: “We didn’t do anything wrong, we (banks) have been negotiating on this since last year because the dollar is not available to remit all the funds. We told the (CBN) that we can’t pay off in one go because the monies have been given out for loans and other investment purposes.”

The source, who spoke in confidence, blamed the CBN for inability to remit the funds, as the apex bank “Is owing banks about $3billion in outstanding Lcs, which they have not paid for over one year. They have only paid us $1billion from that amount yesterday, (Monday), and will pay another tranche next week.”

A top manager in another bank said: “We banks are working on an amicable resolution with CBN,” adding: “But harassing us will not solve the problem because this will cause an upheaval in the market.”

With regard to the unfunded LCs, another bank official said: “The amount came up to $3billion because CBN sold forex forward for the money they were owing us instead of using the spot market.”He expressed suspicion that CBN now needs the NNPC money “to shore up their dollar reserves,” which was down to about $26.4billion as at July 2016.

He continued: “When you create a problem like this and you know we don’t have the capacity to pay, you will only cause panic in the system because before we can pay back, we will have to borrow from the international banks. But right now, because of our current economic crises, even the international banks are not willing to help until we have resolved our problems.”

The sudden ban, analysts believe, will not only see a spike in the dollar against the naira in forex trading today and the future until there is a resolution, but cause a bearish run at the stock market.

http://guardian.ng/news/cbn-sanctions-nine-banks-over-2-334-billion-nnpc-funds/


Nigerialog.com - Nigeria's Premier Online Forum

CBN sanctions nine banks over $2.334 billion NNPC funds
« on: August 24, 2016, 07:11:02 AM »

Re: CBN sanctions nine banks over $2.334 billion NNPC funds

By dayan (M)August 24, 2016, 07:11:59 AM
Omo see UBA and First Bank. Chei!  :o


Re: CBN sanctions nine banks over $2.334 billion NNPC funds

By GideonAugust 24, 2016, 08:46:46 PM
Thank goodness, my bank is not among them


Re: CBN sanctions nine banks over $2.334 billion NNPC funds

By dayan (M)August 24, 2016, 10:49:46 PM
Thank goodness, my bank is not among them

 ;D


Re: CBN sanctions nine banks over $2.334 billion NNPC funds

By dayan (M)August 24, 2016, 10:50:40 PM
Well, these banks are the one with "systemic" reach and cannot be barred from that market for long, else they take the entire economy with them. Sad but true.


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