₦airaland Forum

The net domestic credit of the banking system to the economy grew by 11.1 per cent to N21.4tn at the end of the first half of this year, according to statistics obtained from the Central Bank of Nigeria.

The figure, which is contained in the financial stability report for the first half of this year, represents a decline when compared with the growth of 32.6 per cent and 14.8 per cent at the end of the preceding and corresponding period of 2014.

The CBN said the development reflected an increase in net claims on the Federal Government and the private sector credit.

The report explained that within the period, net credit to the Federal Government rose by 118.45 per cent to N2.51tn, compared with growth of 169.44 per cent or N1.15tn recorded at the end of the second half of 2014.

It stated, “The development reflected, wholly, the rise in investment in treasury securities by the banking system, particularly Nigerian Treasury Bills, which grew by 10.4 per cent.

“Persistent increase in credit to government deprives the private sector of needed credit to boost economic growth.”

The report added that consumer credit fell by 9.6 per cent to N768.67bn at the end of June below the level at the end of second half of 2014.

It attributed the decline to increased risk aversion for consumer credit.

Analysts have said that last week’s reduction of the Monetary Policy Rate from 13 per cent to 11 per cent would stimulate lending.

The Monetary Policy Committee of the CBN had on Tuesday reduced the MRR from 13 per cent to 11 per cent.

The decision was announced by the CBN Governor, Mr. Godwin Emefiele, while addressing journalists shortly after the MPC meeting in Abuja.

That was the first time in about six years that the committee would be reducing the MPR, which is the anchor rate at which the CBN lends money to Deposit Money Banks.

Adesiji77:
It is not too late...

Cc lalasticlala

The Central Bank of Nigeria on Tuesday said it could have removed the chief executive officers and executive management teams of banks that recently violated the Federal Government’s directive on the Treasury Single Account.

The CBN said it chose rather to impose heavy monetary fines on the affected banks because the removal of their CEOs and directors could lead to a major systemic crisis in the financial services sector and the economy in general.

The Deputy Governor, Corporate Services, CBN, Mr. Bayo Adelabu, made the disclosure during the annual business forum of the Bank Directors’ Association of Nigeria in Lagos.

The CBN had a few weeks ago imposed over N8bn fines on First Bank of Nigeria Limited, United Bank for Africa Plc and Skye Bank Plc for failing to adhere to the TSA directive.

The banks were found to have concealed several billions of naira belonging to the Federal Government, especially funds belonging to the Nigerian National Petroleum Corporation.

It imposed a penalty of N1.877bn on First Bank; UBA was fined N2.942bn; while Skye Bank was fined N4bn.

Adelabu said the CBN chose to impose the heavy monetary fines on the banks because it knew that the lenders’ directors would ask questions from the CEOs as to the gravity of the offences committed.

According to him, the central bank now has zero tolerance for rendition of false returns and will not in any way condone such an act.

The CBN deputy governor told the bank directors present at the meeting that they should seek to know the reason why the central bank imposed the heavy fines on the banks that violated the TSA directive.

While First Bank reportedly concealed N37.548bn belonging to the NNPC, UBA was alleged to have concealed N58.843bn of NNPC funds; Skye Bank was alleged to have concealed N40bn.

Adelabu said, “I know that the huge penalty that the CBN has levied on a couple of banks has been a source of concern and subject of discussion. Bank directors need to take interest in this. Nothing stops you from securing a date or appointment with the CBN governor or the Committee of Governors and ask: why this huge penalty?

“All we were used to were the recommendations by the Bank and Other Financial Institutions Act’s N2m fine and all that. This fines has become a chicken change to the banks; all they will say is: let us break the law and we will pay them N2m later on. We are now in the era of zero tolerance.

“Some of the offences committed actually warrant the CEOs being removed; not only the CEOs, but the CFOs, the treasurers, even the entire executive management; but we know the systemic implication of this on the industry at this crucial time in our economy.

“This is why some of them were even converted to financial penalties and we know that the boards will ask questions: why have you incurred these billions as penalties? What is the gravity of the offences you committed? The boards can then decide in their own business that you are not fit to head this bank.

“We know the implication of the regulator sacking an MD; it has a systemic impact. So, when we imposed the penalties, the directors ought to find out the nature of the offences committed by the banks. There is no amount of penalty that is too much for a bank that renders false returns. Why that? So, this is to ensure that the TSA policy has come to stay just as the BVN has come to stay.”

Adelabu, who represented the CBN governor, Godwin Emefiele, had earlier read the governor’s speech to the bank directors present at the forum.

He also said that series of circulars from the CBN were meant to stabilise the economy and the currency, adding that the Bank Verification Number project was good for the country.

“We are in a very difficult situation in this country. Whether we like it or not, we have become poorer than we used to be. I never believe we were rich anyway. Our external reserves are a bit lower than $30bn. We have to protect it. The BVN and other circulars will help in this regard,” he added.

Earlier, the President, BDAN, Dr. Sonny Kuku, had advised the members to build good relationship with their organisations’ internal and external stakeholders.

Speakers at the event included a former CEO of Guaranty Trust Bank Plc, Mr. Fola Adeola, and a management consultant, Mr. Adedotun Sulaiman.

Kuku said the theme of this year’s BDAN forum was apt in view of the recent challenges being faced by many banks and other financial institutions.

Skye Bank has confirmed that it was fined to the tune of N4 billion by the CBN for failing to render appropriate returns on some public sector funds as required by the CBN.

The bank however, provided more clarification on the issue which it called a mixup, saying that it did not at any time conceal any information from the CBN as adjudged.

Skye Bank clarified by saying;

The sum of N40 billion for which the bank was penalized consists of various NNPC account balances, NNPC Pension Funds Accounts, and National Assembly Legislative Aides account balances.
On October 7, 2015, the bank rendered returns on all remitted and unremitted amounts to the CBN, including the balances in the above accounts.
On October 9, 2015, the bank received a communication from the NNPC forwarding a letter from the Accountant General of the Federation on the treatment of NNPC funds. By the communication, the bank was advised that an 18 business day window had been granted by the Vice President within which a plan for the orderly withdrawal of the NNPC funds would be implemented. In rendering the returns requested by the CBN via its directive of October 14, 2015, the bank relied on the letter from the Office of the Accountant General of the Federation as advised by the NNPC, and backed out the NNPC monies from those that were required for the immediate implementation of the TSA arrangement.
The bank however continued to render daily returns of all MDA moneys in its custody to the CBN, including those whose status under the TSA were not yet clear. W e continue to render all due returns daily.
The foregoing shows that the Bank did not at any time conceal information from the CBN in relation to the amounts in question.

It is also important to note that a significant portion of the moneys for which the penalty was applied are NNPC Pension Funds and National Assembly Legislative Aides account balances. These organs have since been confirmed by the CBN that they are not Federal Government agencies and amounts erroneously transferred to the CBN on them by some banks have been refunded.

Kimoni:
Why? Pls explain the bolded

Bubewilson:
Hmmmm so I have read it all up to this point and really it's discouraging even though no better option exists now and considering the fact that the banking sector is one of the highest employers of Labour outside the civil service currently.

But please ex-bankers and bankers is there no body or organization that can stand up on behalf of bankers to address these anomalies bankers are passing through in this country as you have rightly lamented, and pls the hardship currently doled out to bankers here, is it commensurate to what obtains to bankers in other countries?

Delafruita:
what is this one saying?law isn't about common sense,its about the spirits and letters of the constitution.saraki's lawyers erred ab ibitio by going to the high court to seek an injunction against a tribunal of coordinate jurisdiction .next they erred by failing to produce their client in court leaving the justice to issue a warrant for his arrest.I don't see how the tribunal has erred but since you do,please educate us

MKO4ever:
And out of the N5m you will now use N2m for rent?
My father told me never to spend more than 10% of my income on rent

Bevista:
The policy will no doubt have unintended consequences. However, thats the nature of most fiscal & monetary policies.

The banks have depended so much on public sector funds at the expense of the real sector.

Hehehehe1:
wats d impact,?

Unsad:
This wouldn't be good

Deposit money banks in the country may soon face liquidity challenges in their operations, as the federal government’s Treasury Single Account (TSA) implementation take full force, Daily Trust on Sunday can reveal.
This is even as financial experts have predicted that the implementation of the TSA may lead to mass sack in the banking sector.
President Muhammadu Buhari gave the order for the immediate commencement of the policy early this month. The directive was backed by a circular from the Head of the Civil Service of the Federation (HoS), Barrister Danladi Kifasi, which provided the details of the account, domiciled at the Central Bank of Nigeria (CBN).
The circular also listed the Ministries, Departments and Agencies (MDAs) that are affected by the directive and ordered them to follow the implementation strategy, including paying their revenues into the TSA, except union dues.
Many bankers and economic analysts believe that the policy will not go down well with the banks because majority of them rely on the public sector funds for their daily transactions.
For instance, the about N3 trillion public sector funds in the system will now leave the banking system to CBN. This, experts, highlighted will surely create liquidity issues in the banks.
Before now, the banks mostly depend on the public sector fund. The last Monetary Policy Committee pegged the Cash Reserve Ratio (CRR) of public funds at 31 percent.
Dr Kelekume Ikechukwu, an economist with Pan Atlantic University, Lagos said the implication for the commercial banks would be grave.

“Most commercial banks will go down. The ones that will survive are those whose businesses are not based on government funds,” he said, adding, “It is huge, the ones that will be affected are definitely going to downsize.”
Kelekume cautioned that the banks can no longer seat back and continue to do business the way they were used to. Noting that they need to begin to look at untapped sectors of the economy, the development economist said: “Because these banks have been getting easy money, they are not lending to the sectors they are supposed to lend to.”
Some bankers told Daily Trust on Sunday that the TSA was going to push up the cost of borrowing due to shortage of fund in the system, translating to lower investments in other sectors of the economy.
Andrew Ayabam, of First City Monument Bank (FCMB) and one time chairman of Benue State Internal Revenue Service (BIRS), said the policy has its good and bad sides. It’s good, according to him, because it will make the banks sit up and chase local businesses that will grow their earnings and impact positively on the economy.
He also noted that the policy is bad because it would affect the business relationships between states and government agencies.

“Some took loans, thus servicing these loans when the accounts are off may be difficult as the banks may not have access to the funds. Some of the banks usually make deductions at source but that won’t happen again and those agencies may not willingly service the debts. But for now, it’s unclear how the CBN would manage these relationships,” he said.

Mr Manz Denga, a former Managing Director of Transnational Corporation (Transcorp) and former regional managing director of UBA, East Africa, explained that the background of TSA was the total abuse of the funds for personal gains by banks and government officials.

MR Denga, who is currently the chairman of AfriBusiness ExpertEase (AfBEE) in Johannesburg, South Africa, added that there would be illiquidity in the system that would increase the cost of funds and lending rate. Interbank rates that have been up to 50 percent in the last few days may hit the roof, as obligors borrowing rates would also triple, according to him.
“The central bank needs to put aside bailout plans for the vulnerable banks, including direct market intervention. Traditionally, pooling is used to get higher returns on interest rates, reduce borrowing costs, and build confidence in lenders.” he said.

He suggested that to overcome this, the CBN should consider using the advised account only as a control account, while it opens subsidiary accounts for all individual MDAs, both for performance review and funds administration
He said, “A good move but needs careful implementation, to avoid systemic backlash or collapse. This, especially with the open wound of refusing dollar cash deposits.
“TSA at CBN is not a good business decision, as it shaves off potential income on the line of RFI or Reserve for International Interest. For instance, if a state has 100m with a bank for a year, it earns interest as negotiated, in addition to being entitled to return of the principal, as well as collateralizing the deposit to borrow a billion or more, he explained .

“I will say that if 30 states including Lagos do a TSA at CBN, banks would collapse, again, with the dollar cash deposits ban. Lastly, on the question of blocking leakages, the ultimate silver bullet is in the operatives. My over two decades experience here and abroad tells me that once collusion enters the room, the best of plugs give way.”

Moses Azege, a ‘former banker and Economic analyst’ said if CBN holds the account then that will amount to the same impact as if the CRR for Public sector deposit is 100%. “Also, the banks balance sheet will shrinks in line with liability outflows to CBN and the corresponding credit asset constriction,” he said, adding, “However, if a single commercial warehouses government funds, your guess is as good as mine on how it will unfairly benefit vis-a-viz other commercial banks.

Dindondin:
There new method of depositing cash in Banks is either the use of ATM.
I witnessed this last week Friday at a GTBank and the practice has not stopped.
But I don't think other banks have started this.

How it works:
* You can use it to deposit N10,000 and below. The denominations must be in N500 or N1,000.

* To deposit, you have to type the banks general pin of 0000 and press the action. eg: deposit. Then you ll type the account number to deposit the cash, the phone number of the depositor. The machine will open its deposit hole and instruct you to place in your cash and you ll type the amount you are sending.

* It will notify you by showing you the full names and account number of the recipient which you ll v to confirm with the yes or no buttons.

* After this, the machine will credit the account of the receiver.

Note:
You must arrange your cash in a straight way so that it can enter the machine. Failure to do this will result in cash ejection. During this process, your cash may get rough or torn.
Last Bullet
The process is fast but can be risky because aside the security camera that records when someone was depositing, no one else is there to witness the day the machine malfunctions. Also, it may be risky to use it at odd hours like early in the morning, late at night or during quiet times like environmental sanitation day or curfew times.

Nigeria’s total debt stock now stands at N12.12tn ($63.81bn), the Debt Management Office has said.

Statistics obtained from the organisation on Sunday showed that the domestic debt stock of the Federal Government as of June 30 stood at N8.39tn or $42.63bn.

The domestic debts of the 36 states of the federation and the Federal Capital Territory Administration, on the other hand, stood at N1.69tn ($10.86bn) at the end of June.

On the external sector, the country’s debt stock was put at $10.32bn (N2.03tn) at the end of June.

The DMO gave a hint that the actual domestic debt of the states could be higher because the figure only reflected the position of the indebtedness of the states as of December 31, 2013.

It added that the compilation of the 2014 debt stock for the states and the FCT was in progress.

In the first quarter of the year, the country’s total debt stock stood at N12.06tn. This shows a marginal increase of 0.5 per cent or an addition of N60bn within the period of three months.

As of March 31, the domestic debt of the Federal Government stood at N8.51tn. This shows a decline of N120bn or 1.41 per cent.

There was no difference in the domestic debts of the states and the FCT as the DMO has been working with the figures of December 2013.

The external debt of the country stood at $9.46bn as of March 31. This means that the external debt increased by $860m or 9.09 per cent within the period of three months.

A year ago (that is, June 30, 2014), the country’s total debt stock stood at N10.43tn. This means that within a 12-mong period, the country’s debt stock had increased by 16.2 per cent, adding N1.69tn.

Similarly, the country’s external debt stood at $9.38bn as of June 30, 2014. This means that within the period of one year, the nation’s external debt rose by $940m. This shows an increase of 10.02 per cent.

On the domestic scene, the Federal Government’s domestic debt stood at N7.42tn as of June 30, 2014. This means that within the one year period, the domestic debt of the Federal Government rose by N970bn or 13.07 per cent.

By instrument, the Federal Government Bonds accounted for N5,300,418,821,000 or 63.13 per cent of its domestic debt.

The Nigerian Treasury Bills accounted for N2, 824,952,245,000 or 33.64 per cent of the Federal Government’s total domestic bill, while Treasury Bond accounted for N271,220,500,000 or 3.23 per cent of the Federal Government’s domestic bill.

In the external sector, multilateral donors accounted for 70.11 per cent of the country’s external debt, while bilateral sources accounted for 15.35 per cent. Commercial debts accounted for 14.54 per cent of the nation’s external debt.

Given the nation’s dwindling resources as a result of falling oil prices, there is an indication that borrowing will continue to play a major role in the funding of both the federal and state governments.

During his recent visit to the United States, President Muhammadu Buhari sealed a $2.1bn funding from the World Bank for the rebuilding of the North-East region devastated by Boko Haram insurgents.

As the DMO continues to borrow for the government on monthly basis through the instrument of the FGN Bonds, experts have advised the government not to borrow to pay salaries or any other recurrent expenses.

Following protests by Nigerians living in the United Kingdom (UK) over the £30 Bank Verification Number (BVN) registration fee, the Nigerian Inter Bank Settlement System (NIBSS) have explained that the amount which roughly adds up to about N11,000 is the cost of the service rendered.

According to the managing director and chief executive of the NIBSS, Mr Ade Shonubi, the company had contracted the gathering of data for the BVN to the company which processes Nigerian Visa applications and passport renewal outside the country, Online Integrated Services (OIS).

He explained that the law in some countries which prevents the data of their nationals from being captured and stored outside their borders makes it hard to gather the necessary data for the BVN.

“Even Nigerian banks in the UK are not allowed to share the data of their customers with their parent banks that are here. It is part of the data privacy rules and laws that they have. So just setting up a desk in any country can get you locked up. So the first thing we considered was what can be done legally and by whom. We did some research to find out who supports the Nigerian embassy in gathering data for visa applications and passport renewal application because by law they are covered and allowed to gather data. It is only under that premise that we can then get them to help us with the BVN and that is how OIS came into being,” he said.

Shonubi noted that the £30 cost, which would be the base cost across the countries, is the cost of service paid to OIS. He explained that “they are not using the same network that they use to capture visa request; they had to set up a separate and secure one for us. They are the ones incurring this cost; there is nothing that comes to us in terms of money. We just told them to recover their cost and they have agreed to go to countries where we don’t even have Nigerian banks.”

OIS is currently situated in eight locations: London, Leicester, Dubai, Beijing, Shanghai, New Delhi, Washington and Guangzhou, according to information on its website. Although the deadline for the BVN registration had been moved to October 31, 2015, by the CBN to allow Nigerians in diaspora register, Shonubi said the NIBSS contract with OIS extends till the end of the year.

He, however, noted that Nigerian banks’ customers who wish to register with OIS will have to book an appointment with the company to do so and explained that this has become necessary after the London Metropolitan Police intervened to restore public peace which was disrupted by customers at the OIS office. A look at the appointment dates on the website of OIS revealed that all the weekends from August till October have already been booked and the only dates available are during the week. He also said that two banks, Diamond Bank and Ecobank, have been given the go ahead to set up desks at their affiliate banks outside the country to gather data. Shonubi noted that Ecobank will be gathering data in the West African region while Diamond Bank will collate data from its affiliates.

Some Nigerian banks’ customers, sad over their plight, had earlier stormed the Nigeria High Commission in London to protest against the directive of the apex bank while some others took to the social media to vent their anger.

Denn:
The moment a bank expects young grads to get in funds at any cost, integrity and professionalism is sacrificed.

The most promoted bankers are not the best bankers....they are people who can meet set targets.

Overtime, we get people who can just bring in deposits or roll over term loans in higher positions. The real professionals are frustrated out.

Banking is more than just getting in deposits or booking loans.

That is why we have a lot of bad loans in the system. The real intelligent bankers have been frustrated out. Cowboys now reign supreme.

I look at some products developed by banks and can only laugh. Where is the innovation?

I attend MPRs and listen to the jumbles being read by the unit heads. Deposits....deposits....deposits....

Some jackal will even abuse parents of low deposit scavengers.

A paradigm shift is required. Focus should be on profit via professional service and not on vacuuming all the deposits in the country just to play at the interbank market.

What is zenith bank doing to help the SMEs for example. How many dark skinned girls do you see in Zenith Bank? Is banking excellence dependent on your skin colour and skirt lenght? Must I look sexy to be a banker ?

What is diamond bank doing to reduce the enormous visa credit card bad debts booked from relentless 'marketing'. Did they not learn from ecobank's mistake using the same template?

Why is Stanbic focused on temporary makeshift branches with very few relationship officers? Relationship is key and should constitute the main workforce....not expatriates in the head office.

Why should a banker earn 25k monthly. Should he even be a temporary staff? A bank thrives on fiduciary relationships. At least your worker must trust that he will have his job permanently. Else, he uses your internet access to search for job. DSA my foot

The whole cauldron of ineffective 'marketing' must be thrown away and new processes must be adopted.

matilda02:
Please i really wan't know those companies that take their workers abroad for training...(no insults please)...thanks