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Yellen Growth Outlook Change on Weak Job-Market

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Janet Yellen

By offering a subtle change to her outlook from less than a week ago, Federal Reserve Chair Janet Yellen pushed the prospect of additional interest rate increases further into the future.

The head of the central bank said she and her colleagues were on watch for whether, rather than when, the U.S. economy would show clear signs of improvement, acknowledging the possibility that growth would be slow to pick up.

“Proceeding cautiously in raising the federal funds rate will allow us to keep the monetary support to economic growth in place while we assess whether growth is returning to a moderate pace, whether the labor market will strengthen further, and whether inflation will continue to make progress toward our 2 percent objective,” Yellen said in testimony Tuesday before the Senate Banking Committee in Washington.

Just six days ago, Yellen said a cautious approach to interest-rate hikes “will allow us to verify” that growth, jobs and inflation are improving.

Yellen, 69, opened two days of semiannual monetary-policy hearings saying that despite her own optimism about the economy’s longer-run prospects, “we cannot rule out the possibility expressed by some prominent economists that the slow productivity growth seen in recent years will continue into the future.”

Yellen’s remarks move her closer to the argument made for some time by former Treasury Secretary Lawrence Summers that forces holding down growth and interest rates may be long-lasting. St. Louis Fed President James Bullard, who until recently had taken a more hawkish stance on policy, also shifted his views in a paper published last week suggesting the U.S. economy is stuck in a rut for at least the next two to three years.

Responding to questions from lawmakers, Yellen said the odds of a U.S. recession were low. She also said the central bank stood ready to act if needed in the event U.K. voters decide later this week to leave the EU, causing financial-market turmoil.

“We will closely monitor what the economic consequences will be and are prepared to act in light of that assessment,” she said.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Banking Sector

Fidelity Bank Plc Promotes 11% of Staff Following Record Financial Performance

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Leading financial institution, Fidelity Bank Plc has announced the promotion of 11% of its workforce, a testament to the exceptional performance and dedication of its employees.

This significant move follows the release of the bank’s 2023 full year Audited Financial Statements, which reported an impressive 131.5 percent growth in Profit Before Tax (PBT) to N124.26 billion.

The recent promotions span every level within the bank, reflecting Fidelity Bank Plc’s commitment to recognizing and rewarding excellence across its entire organization.

This strategic initiative has garnered positive reactions from staff members, who see it as a validation of their hard work and contribution to the bank’s remarkable financial achievements.

In addition to the promotions, Fidelity Bank Plc has also concluded arrangements to raise a total of N127.1 billion through a Rights Issue to existing shareholders and a Public Offer. This move is part of the bank’s broader strategy to strengthen its capital base, support future growth, and enhance shareholder value.

Fidelity Bank Plc’s impressive financial performance and the subsequent employee promotions highlight the bank’s robust operational strategy and its commitment to fostering a rewarding work environment. By investing in its people and ensuring their career growth, the bank continues to build a motivated and high-performing workforce.

Ranked as one of the best banks in Nigeria, Fidelity Bank Plc is a full-fledged customer commercial bank with over 8.5 million customers serviced across its 251 business offices in Nigeria and the United Kingdom as well as on digital banking channels.

The bank has won multiple local and international awards including the Export Finance Bank of the Year at the 2023 BusinessDay Banks and Other Financial Institutions (BAFI) Awards, the Best Payment Solution Provider Nigeria 2023 and Best SME Bank Nigeria 2022 by the Global Banking and Finance Awards; Best Bank for SMEs in Nigeria by the Euromoney Awards for Excellence 2023; and Best Domestic Private Bank in Nigeria by the Euromoney Global Private Banking Awards 2023.

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Finance

Nigeria to Receive $2.25 Billion from World Bank for Economic Growth

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world bank - Investors King

The World Bank has approved a $2.25 billion funding package aimed at stabilizing the economy and assisting the most vulnerable segments of the population.

The Washington-based lender announced this approval on Thursday.

The fresh infusion of capital is designed to bolster Nigeria’s efforts to stabilize its economy, which has been plagued by years of foreign-exchange shortages and economic instability.

The funding will also focus on enhancing non-oil revenue streams and safeguarding oil revenues to ensure fiscal sustainability.

This, in turn, will help deliver quality public services and support the poor and economically at-risk communities.

Ousmane Diagana, the World Bank’s Vice President for Western and Central Africa, emphasized the importance of this financing package.

“Nigeria’s concerted efforts to implement far-reaching macro-fiscal reforms place it on a new path which can stabilize its economy and lift its people out of poverty,” Diagana said.

“This financing package reinforces the World Bank’s strong partnership with Nigeria, and our support towards reinvigorating its economy and fast-tracking poverty reduction, which can serve as a beacon for Africa.”

Since assuming office in May 2023, President Bola Tinubu has initiated a series of reforms aimed at addressing the chronic foreign-exchange shortages and stimulating economic growth.

Key measures include allowing the naira to trade more freely, significantly increasing interest rates, and phasing out a costly fuel subsidy by adjusting gasoline prices.

Also, the Central Bank has taken steps to clear a $7 billion backlog of unmet foreign-exchange obligations to industries and foreign investors.

These reforms are part of a broader strategy to attract foreign investment and diversify the economy, which has traditionally relied heavily on oil production.

Despite Nigeria’s status as Africa’s largest oil producer, low crude production levels and a lack of economic diversification have contributed to ongoing fiscal challenges and foreign-exchange shortages.

The World Bank’s funding is expected to provide much-needed support for these reform efforts, helping to stabilize the economy and improve the overall economic outlook.

The injection of $2.25 billion will not only address immediate fiscal needs but also lay the groundwork for sustainable economic growth and poverty reduction.

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Banking Sector

A Failed Attempt to Trigger a Run on Banks

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Fidelity Bank
As market sentiment remains highly volatile and driven by news flow, banks liquidity levels can become vulnerable due to spread of inaccurate information.
As Nigerian banks put finishing touches to their recapitalisation plans as directed by the Central Bank of Nigeria (CBN), industry watchers have seen how social media mercenaries and their hirelings are deliberating distorting the truth and pushing campaigns that spread false information which could result in deposit outflows from their targeted banks.
Earlier this month when the Central Bank of Nigeria (CBN) revoked the banking licence of Heritage Bank, it gave reasons for the decision.
The reason was clearly stated! “This action has become necessary due to the bank’s breach of Section 12 (1) of BOFIA, 2020. The Board and Management of the bank have not been able to improve the bank’s financial performance, a situation which constitutes a threat to financial stability,” CBN noted.
The CBN said Heritage Bank had continued to suffer and had no reasonable prospects of recovery, thereby making the revocation of the license the next necessary step.
A statement by Hakama Sidi Ali, acting Director, Corporate Communications of the CBN, said the apex bank acted in accordance with its mandate to promote a sound financial system in Nigeria and in exercise of its powers under Section 12 of the Banks and Other Financial Act, BOFIA, 2020.
Many market watchers, particularly those following developments in the banking industry did not think the CBN should have done otherwise and subsequent appointment of the Nigeria Deposit Insurance Corporation, NDIC, as the liquidator.
Mischievous ‘list’ of other banks
Shortly after the apex bank hammer fell on Heritage Bank, social media mischief makers released their own ‘list’ of other banks they felt will go the Heritage way – not minding the illegality of assuming such a regulatory position.
Thanks to Central Bank of Nigeria (CBN) for quickly debunking the fake news which had mentioned the names of other banks – Fidelity Bank, Wema Bank, Polaris Bank and Unity Bank.
“The attention of the Central Bank of Nigeria (CBN) has been drawn to some information circulating in the public domain, suggesting that the CBN is set to revoke the licenses of three additional banks following its regulatory action against Heritage Bank Plc on Monday, June 3, 2024.
“The CBN unequivocally states that these allegations are false and intended to trigger panic in the financial system. The Nigerian financial system remains safe, sound, and resilient. Our banks have begun submitting implementation plans for the Banking Sector Recapitalisation Programme in compliance with the CBN Circular reviewing the minimum capital requirements for Commercial, Merchant, and Non-Interest Banks (CMNIBs).
“These plans are currently being reviewed by the Bank. In addition to enhancing buffers to withstand economic shocks, this proactive measure by the CBN to require CMNIBs to recapitalise will result in increased capital for Nigeria’s banks, enabling them to provide much-needed credit to critical sectors of the economy. This will increase the financial system’s contribution to the growth and development of a $1 trillion Nigerian economy.
“The CBN would like to reassure all stakeholders of its unwavering commitment to ensuring the financial system’s stability. Our financial system remains on a solid footing, and the CBN will continue to take all necessary steps to maintain its safety and soundness,” said CBN’s Sidi Ali said in a June 4 statement in response to the false allegations of license withdrawals.

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