Connect with us

Markets

$2.3bn NNPC funds: CBN Bars 9 Banks From Forex Market

Published

on

NNPC

The Central Bank of Nigeria on Tuesday wielded the big stick as it barred nine Deposit Money Banks from the nation’s foreign exchange market for failing to remit the sum of $2.334bn belonging to the Nigerian National Petroleum Corporation to the Treasury Single Account.

President Muhammad Buhari had last September ordered all the DMBs in the country to remit all Federal Government funds to the TSA.

The banks are: First Bank of Nigeria Limited ($469m); Diamond Bank Plc ($287m); Sterling Bank Plc ($269m); Skye Bank Plc ($221m); Fidelity Bank ($209m); United Bank for Africa ($530m); Keystone Bank ($139); First City Monument Bank (FCMB) $125m; and Heritage Bank ($85m).

Officials of the CBN officials told our correspondent that the sanction would remain until the DMBs could remit the funds to the CBN.

The officials further said the further disciplinary actions awaited the errant banks after remitting the funds in full to the Federal Government’s coffers.

As of time of filing this report, it was learnt that some bank executives were meeting with the CBN Governor, Mr. Godwin Emefiele, over the development.

However, the Head, Corporate Communications, UBA, Mr. Charles Aigbe, said the bank was not among the banks sanctioned by the CBN.

In a statement issued on Tuesday, Aigbe said, “Our attention has been drawn to report of the ban of UBA from the foreign exchange market by the CBN over the non-remittance of the NNPC/NLNG dollar deposits.

“We wish to state very categorically that UBA has completely remitted all the NNPC/NLNG dollar deposits. We thank all our numerous customers, business partners and other. stakeholders who have reached out to us on account of this report.”

The spokespersons for First Bank, Mr. Babatunde Lasaki, said the lender would issue a statement on the development.

But as of the time of filing this report, he had yet to do so.

Spokesperson for FCMC, Mr. Diran Olojo, in a terse response, said, “We are working with the CBN on an amicable resolution. This is really a function of the dire macroeconomic situation and illiquidity in the FX markets, rather than concealment or wilful non-compliance by banks.”

Spokesperson for Diamond Bank, Mr. Mike Omeife, did not respond to telephone calls and text messages seeking their reaction on the development.

The Skye Bank spokesperson, Mr. Ndumechi Ezurike, could not be reached for comments.

Spokespersons for Fidelity Bank, Sterling Bank and Heritage Bank could not comment immediately.

However, sources in the banks said their managements were working with the CBN to resolve the matter.

It was learnt that Fidelity Bank had been following a payment plan agreed with the CBN on the funds.

Following the President’s directive on the TSA last September, majority of the banks had complied by remitting all the Federal Government funds including that of the NNPC to the TSA.

However, the CBN reportedly fined First Bank, UBA and Skye Bank for failing some billions of naira to the Federal Government coffers in line with the TSA directive.

Further investigations by our correspondent revealed that following the presidential directive on the TSA, most of the DMBs remitted all naira-denominated funds in their possession including that of the NLNG/NNPC to the CBN.

However, the dollar components of the NLNG/NNPC funds in the banking system, estimated at about $5bn, could not be remitted immediately due to scarcity of forex in the country.

However, the banks reached an agreement with the CBN to start remitting the funds on monthly basis.

The monthly payment plan submitted by the banks to the CBN, it was learnt, was being followed by the some banks while other defaulted.

Following the compliance of some of the banks to the payment plan, the dollar component of the NLNG/NNPC funds was reduced to $2.3bn.

The failure of some banks to comply with the payment plans and the dire need for the CBN to shore up the nation’s fast-depleting external reserves, it was learnt, forced the regulator to adopt a measure.

This, findings revealed, forced the CBN to bar the banks from the forex market.

A top bank executive close to the development, who spoke under the condition of anonymity, said, “We need to admit we have a national problem. The NLNG deposit in the banking system was about $5bn. The banks have been paying and what is remaining now is just about $2bn. The banks have submitted a payment plan and they are following it. The banks have the naira equivalent of the outstanding amount. The challenge is that they cannot get dollar to buy to settle the money.”

Some top bankers said the approach the CBN was adopting was capable of compounding the problem.

“This could affect the banks image and their ability to get foreign investors; we need to admit we have a national problem and seek for ways to resolve it,” one of the bankers said.

The NLNG was paying dividends from the investment of the government in the company (NLNG) to the NNPC.

The dividends had accumulated to about $5bn; the

NNPC was investing this dividend payment in a dedicated account as fixed deposits with commercial banks.

It was learnt that when the Federal Government raised the issue that the dividends should have been paid into the Federation Account, the CBN governor invited the CEOs of all the banks that had the funds to Abuja for a reconciliation of the amount in each bank with the records of the CBN/NNPC, and agreed to a repayment time table of the funds with the banks

As of the time the TSA Implementation commenced in September 2015 some of the banks had paid back over 50 per cent of the funds based on the repayment timetable

This repayment by the banks was the bailout of $2.1bn (N414bn) that was shared by the FGN and state governments in July/August 2015.

When the TSA commenced, the banks reported these funds as part of government deposits they had but it was not remitted like other TSA funds because of the remittance timetable that had been agreed with the CBN.

The NNPC invited banks earlier this year to submit a revised repayment plan for the balance of the funds offers.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Markets

Oil Rises to $43.76 Despite Falling Oil Demand

Published

on

Oil price

Brent Crude Rises to $43.76 Per Barrel on Friday

Oil price extended its gain on Friday despite OPEC and other experts predicting a further decline in demand for the commodity.

The Brent crude oil, against which Nigerian oil is priced, rose from $39.44 per barrel on Tuesday to $43.76 per barrel on Friday before pulling back to $43.42 per barrel.

The oil surged after reports showed that US oil producers were shutting down due to hurricanes and also that crude oil inventories dropped by over 9 million barrels in the week ended September 11, 2020.

The commodity started its bullish run a day after OPEC lowered its demand outlook for the year through the first half of 2021, saying recovery without COVID-19 remained slow.

“Once again, OPEC+ meets against a worrying backdrop of soft global oil prices and an uncertain demand outlook,” Cailin Birch from The Economist Intelligence Unit told CNBC via email on Thursday.

“We maintain our view that Brent crude prices will average just over $42 a barrel in 2020, assuming that OPEC+ partners reconfirm their commitment to output cuts at their September meeting,” Birch said.

Another expert, Tim Bray, a senior portfolio manager at GuideStone Capital Management, through an email said “I do not believe we should expect any material change of course out of the OPEC meeting this week when they review market fundamentals, in part because compliance with previously agreed production cuts has been high,” Tim Bray, senior portfolio manager at GuideStone Capital Management, told CNBC via email.

“It might set the stage for action at future meetings, however,” Bray said.

Continue Reading

Markets

Coronavirus: European Investment Bank (EIB) Approves € 12.6bn Financing for Transport, Clean Energy, Urban Development and COVID-19 Resilience

Published

on

Outgoing President of the European Central Bank, Mario Draghi and incoming Christine Lagarde.

€ 3.1 billion for COVID-19 public health and business financing; € 3.5 billion for private sector investment and working capital schemes; € 3 billon for clean energy and energy efficiency investment around the world; € 2 billion for Naples-Bari high speed train link largest loan in EIB history.

The European Investment Bank (EIB) today approved € 12.6 billion of new financing for projects across Europe and around the world.

New financing agreed today includes more than € 3.1 billion of COVID-19-related investment to improve public health, strengthen public services and back investment by companies in sectors hit by the pandemic.

Since the start of the COVID-19 crisis, the EIB has approved € 20.1 billion to enable public and private partners around the world to better tackle health, social and economic challenges.

The EIB Board, meeting by video conference, also backed investment in agriculture, water, housing, telecommunications and urban development across Europe, as well as in Africa, Asia and Latin America.

“Fighting climate change and tackling the COVID-19 pandemic must go hand in hand to achieve a green recovery. The EU Bank is working around the world to help mitigate the impact of the pandemic on lives, jobs and businesses; and to ensure that investment focuses on sustainability, innovation, and on reducing the devastating impact of climate change. The 12.6 billion Euros of new EIB financing approved today show how we are working with thousands of local partners to make a long-term difference to people’s lives during these challenging times”, said Werner Hoyer, President of the European Investment Bank.

Largest ever EIB loan to transform travel in southern Italy

Passengers travelling between Rome, Naples and Bari will from 2027 benefit from reduced journey times, a quicker and environmentally friendly alternative to car transport, and improved connections thanks to the largest loan the EIB ever approved.

The EIB board gave the green light for a EUR 2 billion loan to support the construction of the new high-speed train link that will cut journey times by 1 hour and forty minutes between Naples and Bari. More than 2000 jobs will be created during construction and 200 once construction of the high speed line across a European cohesion region is complete.

The new green transport link, part of the Italian government’s “Unlock Italy” decree, will increase the competitiveness of raid transport, reduce carbon emissions and support social and economic development in southern Italy. It is part of the Scandinavia-Mediterranean Trans-European Network (TEN).

€ 3.6 billion to help businesses to better withstand COVID-19 challenges

Ensuring that entrepreneurs and employers can continue to invest and adapt to new challenges posed by COVID-19 is crucial.

Companies in the Baltics, Benelux, Cyprus, France, Italy, Spain, Ukraine, Moldova and Georgia as well as East Africa, Morocco, the Middle East and the Pacific will benefit from new targeted COVID-19 financing initiatives approved by the EIB today.

The new schemes, managed by local financial partners and banking intermediaries, will help reduce economic shocks, unlock new investment and enable targeted financing for sectors most vulnerable to COVID-19 uncertainties.

€ 3 billion for renewable energy and energy transition

Today’s board meeting agreed to support energy investment that will reduce energy use and increase generation of clean energy across Europe and around the world.

€ 1.6 billion will be used to finance small-scale local climate action projects in France, Italy and across the EU, managed by experienced financing partners.

Financing to support construction of new windfarms off the Dutch coast and in Bosnia, improve energy efficiency in Austria and Ukraine, renovate hydropower in Georgia, roll out smart meters in Lithuania and modernise electricity networks in Madeira and Hungary was also approved.

Millions of people across Africa and Latin America will be able to access reliable clean energy for the first time following EIB support for new off-grid solar schemes and energy transition.

€ 2.9 billion to improve urban and national sustainable transport

Rail transport in Italy is set to be transformed by EIB backed investment to upgrade rolling stock on the national network, alongside today’s approval of EUR 2 billion financing for the new high-speed line between Naples and Bari.

The EIB Board also agreed to support new investment to upgrade public transport in Sarajevo and Krakow, and to help improve a key motorway link in Bosnia and Herzegovina.

Improving urban development and social housing

Thousands of families will benefit from new large-scale social housing investment across France and in Germany under new financing programs approved today.

The EIB Board also agreed to support the New Slussen urban development project that will transform of the heart of the Swedish capital Stockholm.

Hospital patients will benefit from EIB support for construction of a new regional hospital in Tournai and approval of a national scheme to improve mental health facilities across Belgium.

A new scheme to support long-term healthcare investment in French regions underserved by medical services was also agreed.

Continue Reading

Markets

Crude Oil Rises Despite Demand Concerns as Hurricane Sally Disrupts Further Production

Published

on

Oil

Oil Prices Surge as Hurricane Sally Disrupts Oil Production

Oil prices rose on Wednesday despite weak demand after strong hurricane sally threatens to disrupted operations of US oil producers amid a big drop in oil inventories.

Brent crude oil, against which Nigerian crude oil is measured, rose from $39.34 barrel on Tuesday to $41.58 per barrel on Wednesday.

Accordingly, the US West Texas Intermediate crude oil gained 1.8 percent to $38.96 per barrel.

American Petroleum Institute (API), a weekly oil projection report, on Tuesday reported that US crude oil inventories declined by 9.5 million barrels in the week ended September 11, 2020. This, experts at ING Research said if close to the real number due later today, could provide support for global oil prices.

The experts said, “If we see a number similar to the drawdown the API reported overnight, it would likely provide some immediate support to the market.”

This coupled with the fact that with reports that 25 percent of US offshore oil and gas output was halted and export ports were shut as the storm crawled offshore along the US Gulf Coast bolstered oil prices on Wednesday.

Oil prices gained despite OPEC lowering demand for the year, saying weak global recovery amid rising cases of COVID-19 will impact demand for the commodity through the first half of 2021.

Continue Reading

Trending