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Banks Shun CBN’s $50,000 Sale Directive

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Recession bites

Deposit Money Banks have yet to comply with the Central Bank of Nigeria’s directive asking them to sell $50,000 from Diaspora remittances to Bureau De Change operators on weekly basis, the President, Association of Bureau De Change Operators of Nigeria, Aminu Gwadabe, has said.

In a statement on Monday, the ABCON boss said only 10 per cent of the BDCs from the Lagos market had accessed dollars from the DMBs since the CBN gave the directive about three weeks ago.

According to him, the banks that have been involved in the dollar sales so far include First Bank of Nigeria Limited, Ecobank Nigeria, Fidelity Bank Plc, United Bank for Africa Plc and Unity Bank Plc.

Others are Diamond Bank Plc, Zenith Bank Plc and Stanbic IBTC Bank.

Gwadabe regretted that the BDCs in Port Harcourt, Kano, Abuja, Onitsha, Maiduguri, Benin and Enugu had yet to get dollars from the banks.

He said that the BDCs were also selling the dollar between N345/dollar and N355/dollar, far above the interbank rate of N305 to the dollar on Monday.

The banks, he added, were supposed to sell to the BDCs on the same day within the week, but had failed to do so.

He said, “Instead of staggering the payment, the banks should sell to the BDCs on the same week’s day, so that the impact will be felt in the market. We also want the CBN to license new International Money Transfer Operators to deepen the market

“Our members across the country have funded their accounts since two weeks ago but the banks are not selling to them. The BDCs that met the CBN’s policy guidelines on the disbursement and cleared by the banks have still not received a dime from the banks.”

Gwadabe therefore called on the CBN to outsource the dollar distribution role to an independent distributor since the banks had failed in their assigned role.

“I think the banks are compromising the policy and CBN’s directive on the matter. And like I said earlier, since the banks are not cooperating, I expect the CBN to take that role from them and assign it to a reputable independent distributor,” he said.

The CBN had directed, through a circular to authorised dealers, that all agents to approved IMTOs sell foreign currency accruing from inward money remittances to licensed BDCs.

The directive was meant to ensure stability of the exchange rate and encourage participation of critical stakeholders in the foreign exchange market.

Speaking further on the Diaspora remittances, Gwadabe said, “The proceed of the international money transfer fund, is not the CBN money. It is not from the foreign reserves of the CBN. This is money that Nigerians in Diaspora are sending into the economy. Before, this money comes through unofficial means, some sending through hands, and at the end of the day, the beneficiary will not even get the money”.

According to him, the CBN is trying to increase liquidity, and deepen the market. “Before the circular on Diaspora remittances, the proceeds were exclusive reserve of the banks. And in other climes, it is not like that. That kind of money is exclusive to the BDCs in other countries. But what we have here is the reverse case. It became monopolised by the banking sector,” he said.

“This money should all go to the BDCs. But we want the banks to give us part of it, so that we begin to see activities in the market. And based on that submission, the CBN saw reasons in what we are saying. And they issued circular directing banks to sell part of the funds to the BDCs so that we can ensure that the demands of the critical retail sector are being serviced.”

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.

Banking Sector

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

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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.

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Banking Sector

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

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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.”

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Finance

Nestle Nigeria Reports N12.4 Billion Profit After Tax in Q1 2021

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Nestle Nigeria - Investors King

Nestle Nigeria Plc, a food and beverage specialty company headquartered in Lagos and majorly owned by Nestle S.A of Switzerland, grew revenue to N87.258 billion in the first quarter (Q1) of 2021 from N70.329 billion filed in Q1 2020.

The company disclosed in its unaudited financial statement released in late April.

Gross profit stood at N34.743 billion in the quarter, up from N31.658 billion achieved in the same quarter of 2020.

Results from operating activities rose from N17.538 billion in Q1 2020 to N20.314 billion in Q1 2021.

While finance income contracted from N335.242 million in Q1 2020 to N123.340 million in Q1 2021. Finance costs rose to N1.435 billion in the quarter, up from N417.928 million recorded in Q1 2020.

Net finance income/cost stood at N1.312 billion, up from N82.686 million in Q1 2020.

Profit before tax rose to N19.002 billion in the quarter under review, better than the N17.455 billion achieved in the corresponding quarter of 2020.

Nestle Nigeria paid N6.602 billion as income tax for the period, slightly higher than the N6.259 billion paid in Q1 2020.

Profit after tax expanded to N12.400 billion in the quarter, up from N11.195 billion filed in Q1 2020.

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