Banks banned from forex deals allege cover-up by CBN


CBN GovBanks accused of not remitting the $2.3 billion belonging to the Federal Government into the Treasury Single Account (TSA) have alleged a cover-up by the Central Bank of Nigeria (CBN).

They alleged that the apex bank is shielding some of their peers, which they claim are equally guilty of the same offence.

The affected banks, which have been banned from further foreign exchange transactions, include United Bank for Africa (UBA), $530million; First Bank of Nigeria (FBN), $469million; Diamond Bank Plc, $287million; Sterling Bank Plc, $269million; Skye Bank Plc, $221million; Fidelity Bank, $209million; Keystone Bank, $139million; First City Monument Bank, (FCMB) $125million; and Heritage Bank, $85million.

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According to a source from one of the indicted banks, there are at least six others that the authorities are shielding. According to him, those banks were also present when the parties first negotiated the terms of repayment last year and earlier this year.

The source says there is no way banks can have possession of such an amount, no matter who owns the money, and not spend it. “The problem is that the foreign exchange (forex) challenges caught up with it and that is why it is open now.”

The source said that almost all the banks’ chiefs were on their way for an emergency meeting with officials of the CBN.

In its reaction to the ban, UBA stated that it had “completely remitted all NNPC, NLNG dollar deposits.” The bank claimed yesterday that it had been readmitted into the forex market by the CBN following remittance of all NNPC, NLNG dollar deposits.

Diamond Bank Plc, in a message to stakeholders, rationalised the punishment for refusal to remit the government’s fund as industry-wide, while it is currently engaging the regulator to resolve it.

A source from Fidelity Bank said the status of the funds in its possession was well reported to CBN, including the agreed timeline for its remittance to the TSA.

The source also affirmed that the repayment plans had always been complied with, even before the takeoff of the TSA and remained ongoing before CBN placed the ban on the bank.

It noted that if there was any change in remittance plans, it was because NNPC had invited banks earlier this year, where they were asked to submit a revised repayment plan for the balance of the funds.

First Bank also said that the now controversial dollar accounts belonging to the NNPC were fully disclosed to the CBN, and were being operated in line with the regulatory requirements.

It said that a tripartite documented discussion had been ongoing among the CBN, NNPC and the bank, on the need for domestic retention of those balances as part of measures to ameliorate challenges posed by the lack of foreign exchange, and customer’s inability to source it for their trade finance obligations to the bank.

Reiterating that the non-remittance of funds to the TSA “is actually a widespread industry issue,” FCMB, in a statement yesterday, clarified that the ban on future forex transactions was based on its “non-transfer of the remaining $125million of NNPC fund with us to TSA.”

Meanwhile, the CBN’s action is already taking its toll on the banking stocks, as shares of the affected banks have plunged significantly.

At the close of transactions yesterday, the demand for banking stocks reduced significantly with a free fall in the share prices. For instance, shares in Diamond Bank fell the most, shedding 8.94 percent to close at N1.12 per share from N1.23.00 at which it opened for the day’s transactions. FCMB followed, shedding five per cent to close at N1.14 per share.

Sterling Bank dropped 2.91 per cent to close at N1.00 per share. Access Bank depreciated by 2.59 per cent to close at N5.65 per share. United Bank for Africa lost 1.55 per cent to close at N4.46 per share, just ass Skye Bank shed 1.54 per cent to close at N0.64 per share from initial N0.65.00.

Also, Zenith Bank lost 1.08 per cent to close at N15.59 per share while Fidelity Bank dropped 0.99 per cent to close at N1.00 per share. FBN Holdings also lost 0.32 per cent to close at N3.16 per share.Guardian.