Nigeria: CBN suspends 19 banks from forex sale to BDCS

*Central Bank of Nigeria.

*Central Bank of Nigeria.

15 October 2016, Abuja — The Central Bank of Nigeria (CBN) has suspended all the banks, with the exception of First Bank, from selling dollar proceeds of International Money Transfer Services, IMTS, to Bureaux De Change, BDCs.

Two months ago, the CBN had directed banks to sell proceeds of their international money transfer services to BDCs. This was in a bid to address the steady and sharp depreciation of the naira in the parallel market.

Vanguard investigation, however, revealed that most of the banks were not complying with this directive, preferring to do brisk business with the proceeds.

This generated several complaints from the BDCs, with the Association of Bureaux De change Operators of Nigeria, ABCON, calling for a review of the policy measure.

It was reliably gathered that the CBN decided to sanction the banks, following an investigation which revealed that most of them were either not complying or circumventing the directive.

A top CBN official confirmed this development to Vanguard yesterday.

Speaking on condition of anonymity, the source said: “We discovered that all the banks were not selling to the BDCs, while a few that did so occasionally short-changed them by selling at a higher margin.

“The only exception was First Bank, which had 500 BDCs and sold to them on regular basis. So we decided that since the bank was selling the dollars as directed, we would allow it to continue to do so.

“But we have stopped the other banks and directed them to give up 25 percent of the dollars received through international money transfer services to us.”

This development was also confirmed by ABCON President, Alhaji Aminu Gwadabe.

In a message to BDCs, he said: “This is to inform members of the directive of CBN to deposit money banks with the exception of First Bank Plc, to suspend the sales of the proceeds of international money transfer to BDCs till further notice. Please be guided when buying through the bank window.

“Members should please note that the reason for the stoppage of other DMBs except First Bank in selling proceeds of IMTSOs is to mop-up the held dollar position by non-compliant banks and make it available to all BDCs nationwide soon.

“Please, we advise members to be patient and to await ABCON’s further directives soon.”

CBN suspends 195 BDCs from forex market
In another development, the apex bank suspended 195 BDCs from the foreign exchange market over sundry offenses.

Confirming this development, Acting Director, Communication Department, CBN, Mr. Isaac Okoroafor, said some of the suspended BDCs did not render returns as required, while others had not renewed their operating licenses.

BVN limit on annual dollar withdrawals
Meanwhile, the Bankers Committee, yesterday, said Biometric Verification Number, BVN, would now be a criterion for determining the $50,000 annual limit on overseas dollar withdrawal via Naira denominated cards per cardholder.

Director, Banking Supervision Department, CBN, Mrs. Tokunbo Martins, disclosed this at a press conference after the 329th Bankers Committee meeting held, yesterday, in Lagos.

She spoke in the company of Deputy Managing Director, Guaranty Trust Bank, Mrs. Cathy Echeozo; Managing Director/Chief Executive, Skye Bank Plc, Mr. Tokunbo Abiru; Managing Director/Chief Executive, Stanbic IBTC, Mr. Yinka Sanni and Acting Director, Communication Department, CBN, Mr. Isaac Okoroafor.

Martins said that last year, the CBN imposed an annual limit of $50,000 on overseas dollar withdrawal via Naira denominated cards per cardholder.

She said: “We discovered that people have been breaching this limit, and we have now decided to take action against it. Since every bank account is linked to a BVN, we have decided that the $50,000 annual limit will be limited to each BVN, irrespective of the bank accounts or cards linked to the BVN.

“We have also decided to impose sanctions on anybody found to have breached this limit. This includes barring such individuals from the foreign exchange market.

CBN debunks report over undercapitalization of banks
MD/CEO, Skye Bank Plc,Tokunbo Abiru also dismissed a report which said that seven Nigerian banks were undercapitalised and that Nigeria’s banking industry was experiencing a “full-blown financial crisis” due to increasing non-performing loans.

She said: “That certain banks are undercapitalized is certainly not true. That is not to say that the banking sector is not feeling the economic headwinds, so is every other jurisdiction, so non-performing loans at 11 percent are not what we need to focus on.

“What we need to focus on is to ask if the banks have the capacity to absorb all the losses that will arise from those loans? And the answer is yes.

“They have very strong capital buffers. The banks have a huge capacity to generate income, apart from the capital buffers that they already have.

“They have a huge capacity to generate income to absorb those losses if they do arise. And those NPLs (Non-Performing Loans) can they perform? Yes, they can, because the underlying assets are still there and they are good.

“I think we should totally dispel or ignore this kind of story; it’s not one that we should take seriously at all.”

*Babajide Komolafe – Vanguard

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