Connect with us

Finance

CBN Stops Forex Sale to BDCs, Cash Deposit Allowed

Published

on

CBN

The Central Bank of Nigeria (CBN) has formally announced that it would no longer sell dollars to Bureau de Change (BDC) operators.

Since over 70 percent drop in the price of crude oil, which contributes the largest share of national Foreign Exchange Reserves, the country foreign earnings has dropped from US$3.2 billion to US $1 billion, which made it hard to meet the increasing demands for foreign exchange by domestic importers.

According to the apex bank, in 2005 when oil prices was US$50 a barrel, average import bill was N148.3 billion per month but in 2015 average import bill for the first nine months of 2015 alone was N917.6 billion per month, even at lower oil prices of US$32.60 as at today.

This has depleted foreign exchange reserves which stood at about US$37.3 billion as of June 2014, but currently around US$28.0 billion.

In order to avoid further depletion in the reserves, the central bank of Nigeria has decided to provide forex services for payments of school fees, BTA, PTA, and related expenses. Importation of petroleum products and matured letters of credit from commercial banks will be honoured.

Despite difficulties the bank is facing, some Bureau de Change (BDC) operators across the country are said to have become wholesale dealers in foreign exchange, selling to the tune of millions of dollars per transaction instead of the original directive to only serve retail-end users who need US$5,000 or less.

Thereafter, using fake documentations like BVNs, boarding passes, flight tickets and passport to render weekly returns to the CBN. These operators sell to ordinary Nigerians as high as N282 per dollar while CBN sells dollar at 197.

In spite of the financial burden being placed on the bank’s limited foreign exchange, the bank has decided to stop selling foreign exchange to bureau de changes operators. However, they can source for their foreign exchange from autonomous sources but should conform to the anti-money laundering laws.

People with ordinary domiciliary accounts can now deposit foreign currency cash into their accounts with effect from today, the report showed.

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.

Finance

FG Borrowed $5.9B To Fight COVID-19 and Implement Budget – Minister of Finance

Published

on

Zainab Ahmed

The federal government borrowed about $5.9 billion in 2020, to tackle the COVID-19 pandemic and implement its budget. The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, revealed this yesterday.

A statement issued by her Special Adviser, Media and Communications, Mr. Yunusa Abdullahi, yesterday, indicated that the minister told the Collaborative Africa Budget Reform Initiative (CABRI) General Assembly during a webinar, that the federal government had to move quickly to save the economy.

Speaking on Nigeria’s fiscal response – short term interventions and impact on public finances, as an immediate fiscal response, Mrs. Ahmed said: “We did the following: Procured a $3.4 billion loan from the International Monetary Fund (IMF) and about $2.5 billion in local currency from the domestic capital market to support the 2020 budget implementation), among others.”

She noted that the government then packaged a N500 billion for COVID-19 Crisis Intervention Fund in the 2020 revised budget, as part of a N2.3 trillion Economic Sustainability Plan.

Mrs. Ahmed said that the government had begun the process of moving the economy away from its primary dependence on oil for revenues and foreign exchange, and making steady gains in addressing infrastructure and human capital challenges before the pandemic hit the global economy.

With COVID-19, Nigeria’s Bonny Light crude oil price fell from a peak of US$72.2 per barrel on January 7, 2020 to below US$20 by April 2020.

She said, “In effect, the US$57 crude oil price benchmark approved in the 2020 budget became unrealistic triggering the need to adjust the following variables: reduction of crude oil benchmark price from US$57 per barrel to US$28 per barrel; reduction of daily crude oil production benchmark from 2.18 million barrels per day (mbpd) to 1.9 mbpd; adjustment of the official exchange rate to N360/US$1 from N305/$.”

Mrs. Ahmed revealed that part of the federal government Supplementary Budget on COVID-19 would be spent on the procurement of 29. 588 million doses of the Johnson & Johnson vaccine.

Continue Reading

Banking Sector

Union Bank CEO, Godson Chukwuemeka Okonkwo Acquires 2.4 Million Shares in the Bank Ahead of Acquisition

Published

on

Union bank - Investors King

The Chief Executive Officer, Union Bank Plc, Godson Chukwuemeka Okonkwo, has purchased 2,431,917 ordinary shares of the bank, according to the latest disclosure filing from the lender.

The CEO acquired the 2,431,917 shares of Union Bank at N4.90 per share on Thursday 6th May 2021 from the floor of the Nigerian Exchange Ltd.

Okonkwo’s N11.916 million investment was after Investors King reported a possible acquisition of the bank by Zenith Bank or Access Bank following sources cited by Bloomberg.

Bloomberg said, “Atlas Mara Limited, the London Stock Exchange-listed pan-African banking group started by Mr. Bob Diamond has received a number of approaches for its 49.97 per cent holding in Lagos-based Union Bank of Nigeria.”

It also stated that Atlas Mara received interests from Nigerian and Middle Eastern lenders for its remaining assets on the continent, according to Bloomberg sources.

The sources claimed the banks in talks with Atlas Mara asked not to be identified as talks are private. But they mentioned Nigeria’s Zenith Bank Plc, Access Bank Plc and Morocco’s Attijariwafa Bank as some of the banks that have so far expressed interests in acquiring Union Bank.

Continue Reading

Banking Sector

Zenith Bank, Access Bank, Others Express Interest in Acquiring Union Bank

Published

on

Atlas Mara - Investors King

Zenith Bank and Access Bank are some of the financial institutions in talks to acquire Atlas Mara Ltd.’s 49.97 percent stake in Union Bank Plc.

Bloomberg said, “Atlas Mara Limited, the London Stock Exchange-listed pan-African banking group started by Mr. Bob Diamond has received a number of approaches for its 49.97 per cent holding in Lagos-based Union Bank of Nigeria.”

It also stated that Atlas Mara received interests from Nigerian and Middle Eastern lenders for its remaining assets on the continent, according to Bloomberg sources.

The sources claimed the banks in talks with Atlas Mara asked not to be identified as talks are private. But they mentioned Nigeria’s Zenith Bank Plc, Access Bank Plc and Morocco’s Attijariwafa Bank as some of the banks that have so far expressed interests in acquiring Union Bank.

Middle Eastern banks and private equity suitors have also shown interest, according to the people. Some potential buyers have indicated they may acquire all of Atlas Mara’s remaining assets in Africa, which would include its Zimbabwe unit, the people said.

Atlas Mara has been working with Rothschild & Co. to consider options for its Union Bank stake. No final decisions have been made, and there’s no certainty the deliberations will lead to a transaction, the people said.

Representatives for Atlas Mara and Zenith Bank didn’t immediately respond to requests for comment. Attijariwafa Bank Managing Director Ismail Douiri and a representative for Access Bank declined to comment.

Speaking on the matter, Frontier and Sub-saharan Africa Banks’ Analyst, Renaissance Capital, Adesoji Solanke, on Thursday said this is good for Atlas Mara.

He said “Good for Atlas Mara if they’re able to exit successfully, as they’ve been selling a bunch of assets over the past year, to KCB and Access Bank respectively across different markets. Whether they get a good valuation for Union Bank is another thing.

“We don’t think it’ll be a transformational deal for Access or Zenith (Return-on-Equity dilutive for both), but could be a good way for the Middle Eastern banks to get a decent foothold in the market. We suspect getting the other private equity investor block to sell will be critical as we wouldn’t expect a strategic bank investor to desire a minority shareholding.”

Continue Reading

Trending