Banks’ CEOs Intervene On Ban Of Nine Banks From Forex Trading

Banks’ CEOs Intervene on Ban of Nine Banks from Forex Trading The Body of Banks’ Chief Executive Officers on Thursday met in Lagos to review the current developments in the industry, especially issues around the ban imposed on nine commercial banks by the Central Bank of Nigeria (CBN), barring them from participating in the foreign exchange market.

At the end of the meeting, which was presided over by the chairman of the body and CEO of Access Bank Plc, Mr. Herbert Wigwe, the body agreed to work closely with the CBN to address the issue that led to the ban in a manner that would protect the stability of the industry, as well as to ensure proper conduct in the optimisation of the foreign exchange market.

The Central Bank of Nigeria (CBN) on Tuesday barred nine banks from participating in the forex market for not remitting a total of $2.334 billion Nigerian National Petroleum Corporation (NNPC)/Nigerian Liquefied Natural Gas (NLNG) Company dollar deposits to the federal government’s Treasury Single Account (TSA).

It enforced the sanction by not selling dollars to the financial institutions when it intervened on the interbank foreign exchange market on Wednesday.

The affected banks were: the United Bank for Africa (UBA) Plc – $530 million, First Bank of Nigeria (FBN) Ltd. – $469 million, Diamond Bank Plc – $287 million, Sterling Bank Plc – $269 million, Skye Bank Plc — $221 million, Fidelity Bank Plc – $209 million, Keystone Bank Ltd. – $139 million, First City Monument Bank (FCMB) Ltd. – $125 million, and Heritage Bank Limited – $85.5 million.

But UBA was re-admitted into the forex market by the CBN yesterday, having complied with its directive.
But the nine banks still face the prospect of further financial fines, which shall be communicated to them by the CBN in the coming days.

The CBN governor met with CEOs of the affected banks in Abuja yesterday, media gathered. The crucial meeting forced some of the bank executives that were on vacation outside the country to cut short their leave as it was gathered that they all were in attendance.

The body of bank CEO, however, in a statement stressed that as professionals who understood what was at stake, they would work towards ensuring that the concerned banks complied with the directive of the central bank as soon as possible to avoid negative impact on the economy.

While clarifying that there was no concealment in any form as the banks had always disclosed the fund in their returns, the meeting which held at the Bankers House noted that the situation arose out of the maturity mismatch of funds found in certain strategic sectors to ensure the growth of the economy.

“The consensus in the meeting was that there is no crisis in the industry as it is strong and stable. The bank chief executives have also resolved to continue to collaborate with the CBN and other stakeholders to forestall this and other issues that may impact on the growth of the banking industry,” the statement signed by the Registrar/CEO, CIBN, Seye Awojobi, added.

Meanwhile, the naira depreciated to N408 to the dollar on the parallel market yesterday, compared with the N402 to the dollar it closed the previous day as customers of the nine banks that were banned from foreign exchange transactions have resorted to the parallel market for dollar purchases to meet their pressing obligations.

Also, on the interbank forex market, the spot rate of the naira fell to N316.84 to the dollar, lower than the N315.93 to the dollar it closed the previous day.

A reliable industry source disclosed to media yesterday that the situation put further pressure on the parallel market which had been experiencing liquidity squeeze in recent times.
The source said the mismatch between dollar demand and supply in the market had widened, adding that this would continue to hurt the performance of the naira.

“Dollar is now king in the market because of the ban of the eight banks. What that means is that their customers would have to go to the parallel market for dollars. As you are aware, since the ban of 41 items from the interbank market, the parallel market has been under pressure, and the ban of these banks has further increased the pressure. We hope that the situation is resolved this week,” the source said.

On his part, the President, Association of Bureau De Change Operators of Nigeria (ABCON), Alhaji Aminu Gwadabe, said most of the BDCs have their accounts with the banks suspended by the central bank.
This, according to him, had affected access to forex to his members, thereby resulting to the depreciation of the nation’s currency.
He added: “The suspension of the banks has really increased pressure on the market.”


Check Also

SEC Approves Chiemeka’s Appointment As NGX CEO

SEC Approves Chiemeka’s Appointment As NGX CEO

  The Securities and Exchange Commission has approved the appointment of Jude Chiemeka as the …

Leave a Reply

Your email address will not be published. Required fields are marked *

× Get News Alert