Eight Banks Readmitted into FX Market

•  Submit credible repayment plan on NNPC funds

Ndubuisi Francis in Abuja and Obinna Chima in Lagos

Following the plea by the Body of Banks chief executives and other sectoral groups, the Central Bank of Nigeria (CBN) wednesday lifted its suspension of eight banks from participating in the foreign exchange market.

The eight banks were suspended after failing to return a total of $1.8 billion Nigerian National Petroleum Corporation (NNPC)/Nigerian Liquefied Natural Gas (NLNG) Company dollar deposits to the Treasury Single Account (TSA) as directed by the federal government.

The banks affected by the sanction are First Bank of Nigeria, Diamond Bank Plc, First City Monument Bank, Fidelity Bank Plc, Keystone Bank, Skye Bank Plc, Sterling Bank Plc and Heritage Bank.

The United Bank for Africa (UBA) Plc was also suspended alongside the eight banks from the FX market last week Tuesday, but was able to refund NNPC/NLNG funds in its custody. UBA was subsequently readmitted into the market by CBN two days after it returned the funds.

CBN’s Director of Banking Supervision, Mrs. Tokunbo Martins, who announced the readmission of the eight yesterday, after a meeting with the Body of Banks CEOs at the Chartered Institute of Bankers of Nigeria’s (CIBN) office in Abuja, said the defaulting banks had submitted a credible repayment plan to warrant lifting of the suspension.
“We just held a meeting with the Body of the Bank CEOs at the Chartered Institute of Bankers of Nigeria. To my right is the President of the Charted Institute of Bankers, to my far left is the Registrar and the Managing Director of Access Bank.

“You will recall that a while ago, a number of banks where suspended from the foreign exchange market and all of you guys went to town reporting all sorts of stories and all that. And since then, I have received some inquires; some of you have sent me text messages asking what is going on.

“Well, we had engagements with the Body of Bank CEOs and they have been interacting among themselves and I’m happy to tell you today that the banks that where suspended have been readmitted into the foreign exchange market.

“The reason is because all of the banks, after discussions and engagement under the office of the Body of Bank CEOs at the CIBN have all submitted a credible repayment plan, which we the central bank found acceptable.
“So, as a result, all those banks have been reinstated in the foreign exchange market,” Martins said.

Also briefing journalists on the development, the Managing Director of Access Bank Plc, Mr. Hebert Wigwe, said the Body of Bank CEOs, under the CIBN serves to get banks to work together each time there is a serious issue in the market such as the one involving the suspended banks.

He corroborated Martins that they held meetings with the central bank in the past couple of days, adding that the matter had been largely resolved.

In the same vein, the CIBN President, Prof. Segun Ajibola, said the institute is very interested in what happens among all the banks in the country.

According to him, under the enabling Act, the Body of Bank CEOs is now a communicable platform for the bank chief executives to look at issues that concern the banking industry and the economy.

Commenting on the readmission of the eight banks, the Deputy Managing Director, Aquila Asset Management Limited, Oyelami Adekola, said the developments would help rebuild confidence in the system.

“This would help to stabilise the banks and boost confidence in their customers. This is because with the suspension, their customers were not able to do transactions and that affected their business.

“But as we are all aware, the economy is in recession and anything the regulators can do, not necessarily for these eight banks, but to create confidence in the system would be helpful. We need to ensure that we don’t add to the problems the economy is currently facing,” he added.

Also, a bank analyst who pleaded to remain anonymous, anticipated that the decision to lift the suspension of the banks would lead to increased dollar supply in the market and strengthen the naira which has been under pressure since last week.

Yesterday, the naira fell to N423 to the dollar on the parallel market from N418 the previous day.