The Body of Banks’ Chief Executive Officers on Thursday met in Lagos to review the current developments in the industry, especially issues around the ban imposed on nine commercial banks by the Central Bank of Nigeria (CBN), barring them from participating in the foreign exchange market.
At the end of the meeting, which was presided over by the chairman of the body and CEO of Access Bank Plc, Mr. Herbert Wigwe, the body agreed to work closely with the CBN to address the issue that led to the ban in a manner that would protect the stability of the industry, as well as to ensure proper conduct in the optimisation of the foreign exchange market.
The Central Bank of Nigeria (CBN) on Tuesday barred nine banks from participating in the forex market for not remitting a total of $2.334 billion Nigerian National Petroleum Corporation (NNPC)/Nigerian Liquefied Natural Gas (NLNG) Company dollar deposits to the federal government’s Treasury Single Account (TSA).
It enforced the sanction by not selling dollars to the financial institutions when it intervened on the interbank foreign exchange market on Wednesday.
The affected banks were: the United Bank for Africa (UBA) Plc – $530 million, First Bank of Nigeria (FBN) Ltd. – $469 million, Diamond Bank Plc – $287 million, Sterling Bank Plc – $269 million, Skye Bank Plc — $221 million, Fidelity Bank Plc – $209 million, Keystone Bank Ltd. – $139 million, First City Monument Bank (FCMB) Ltd. – $125 million, and Heritage Bank Limited – $85.5 million.
But UBA was re-admitted into the forex market by the CBN yesterday, having complied with its directive.
But the nine banks still face the prospect of further financial fines, which shall be communicated to them by the CBN in the coming days.
The CBN governor met with CEOs of the affected banks in Abuja yesterday. The crucial meeting forced some of the bank executives that were on vacation outside the country to cut short their leave as it was gathered that they all were in attendance.
The body of bank CEO, however, in a statement stressed that as professionals who understood what was at stake, they would work towards ensuring that the concerned banks complied with the directive of the central bank as soon as possible to avoid negative impact on the economy.
While clarifying that there was no concealment in any form as the banks had always disclosed the fund in their returns, the meeting which held at the Bankers House noted that the situation arose out of the maturity mismatch of funds found in certain strategic sectors to ensure the growth of the economy.
“The consensus in the meeting was that there is no crisis in the industry as it is strong and stable. The bank chief executives have also resolved to continue to collaborate with the CBN and other stakeholders to forestall this and other issues that may impact on the growth of the banking industry,” the statement signed by the Registrar/CEO, CIBN, Seye Awojobi, added.
Meanwhile, the naira depreciated to N408 to the dollar on the parallel market yesterday, compared with the N402 to the dollar it closed the previous day as customers of the nine banks that were banned from foreign exchange transactions have resorted to the parallel market for dollar purchases to meet their pressing obligations.
Also, on the interbank forex market, the spot rate of the naira fell to N316.84 to the dollar, lower than the N315.93 to the dollar it closed the previous day.
A reliable industry source disclosed yesterday that the situation put further pressure on the parallel market which had been experiencing liquidity squeeze in recent times.
The source said the mismatch between dollar demand and supply in the market had widened, adding that this would continue to hurt the performance of the naira.
“Dollar is now king in the market because of the ban of the eight banks. What that means is that their customers would have to go to the parallel market for dollars. As you are aware, since the ban of 41 items from the interbank market, the parallel market has been under pressure, and the ban of these banks has further increased the pressure. We hope that the situation is resolved this week,” the source said.
On his part, the President, Association of Bureau De Change Operators of Nigeria (ABCON), Alhaji Aminu Gwadabe, said most of the BDCs have their accounts with the banks suspended by the central bank.
This, according to him, had affected access to forex to his members, thereby resulting to the depreciation of the nation’s currency.
He added: “The suspension of the banks has really increased pressure on the market.”
Oil Prices Slide as U.S. Crude Stockpiles Surge, Heightening Demand Concerns
Oil prices declined on Thursday as concerns over demand intensified due to a larger-than-anticipated build in U.S. crude stockpiles.
Brent crude oil, against which Nigerian oil is priced, dropped by 0.5% to $83.25 a barrel while U.S. West Texas Intermediate crude oil fell by 0.3% to $78.28 a barrel.
The Energy Information Administration’s report revealed a substantial increase in U.S. crude oil stockpiles by 4.2 million barrels to 447.2 million barrels for the week ending February 23rd.
This surge surpassed analysts’ expectations and marked the fifth consecutive week of rising inventories.
While gasoline and distillate inventories witnessed a decline, concerns regarding a sluggish economy and reduced oil demand in the U.S. were amplified.
Satoru Yoshida, a commodity analyst with Rakuten Securities, highlighted that the significant stockpiles have heightened investor worries.
Moreover, the anticipation of delayed U.S. interest rate cuts further weighed on market sentiment, potentially undermining oil demand.
Traders have adjusted their expectations for rate cuts, with an easing cycle predicted to commence in June rather than March as previously anticipated.
Market participants await the U.S. personal consumption expenditures price index for insights into inflation trends, while the possibility of an extension of voluntary oil output cuts from OPEC+ looms over price dynamics, amid lingering uncertainty in the demand outlook and geopolitical tensions in the Middle East.
Crude Oil Shortage Threatens Dangote, Government Refineries, Minister Raises Alarm
The Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, has sounded a clarion call over a looming crude oil shortage that threatens the operations of the newly inaugurated Dangote Petrochemical Refinery and government-owned refineries in Nigeria.
Addressing stakeholders at the seventh edition of the Nigeria International Energy Summit in Abuja, Minister Lokpobiri expressed concerns that unless deliberate efforts are made to increase investments and crude oil production, these refineries may struggle to obtain enough feedstock for petroleum product manufacturing.
The Dangote refinery, a colossal project spearheaded by Dangote Industries Limited, has a daily requirement of up to 650,000 barrels of crude oil, while government-owned refineries could need approximately 400,000 barrels.
However, the current pace of crude oil production and investment in Nigeria falls short of meeting these demands.
Minister Lokpobiri highlighted the need to ramp up production and attract investments in the upstream sector to ensure adequate feedstock supply for the refineries.
He emphasized the importance of efficiently utilizing Nigeria’s abundant oil and gas reserves to enhance domestic energy security and economic prosperity.
Furthermore, the minister underscored the significance of investing in energy infrastructure and transitioning towards more environmentally friendly practices to address Nigeria’s energy needs effectively.
The alarm raised by Minister Lokpobiri underscores the urgency for strategic interventions and collaborative efforts to mitigate the impending crude oil shortage and secure the future of Nigeria’s refining industry amidst evolving global energy dynamics.
NNPCL Pledges End to Nigeria’s Energy Scarcity Within a Decade
The Nigerian National Petroleum Company Limited (NNPCL) has announced a bold initiative aimed at ending Nigeria’s persistent energy scarcity within the next decade.
Mele Kyari, the Group Chief Executive Officer of NNPCL, revealed this ambitious plan during the opening ceremony of the seventh Nigerian International Energy Summit in Abuja.
Kyari’s announcement comes as a beacon of hope for millions of Nigerians grappling with chronic power shortages and energy deficiencies.
In his statement, Kyari expressed confidence that all issues related to energy scarcity in the country would be resolved within the next 10 years.
Assuring stakeholders of NNPCL’s unwavering commitment, Kyari emphasized the company’s dedication to collaborating with partners to bridge the energy deficit gap and foster prosperity for all Nigerians.
He highlighted NNPCL’s pivotal role as a key partner to oil-producing companies in Nigeria, facilitating the divestment of international oil companies from onshore and shallow water assets in the country.
Furthermore, Kyari underscored NNPCL’s statutory mandate as the enabler of national energy security, emphasizing the importance of sustainable production from divested assets to ensure energy security for Nigerians.
In addition to addressing domestic energy challenges, NNPCL is also exploring avenues for sustainable energy investment across Africa.
Kyari revealed the company’s intention to invest in the proposed African Energy Bank, aiming to secure funding for energy projects on the continent and guarantee regional energy security.
The event, attended by prominent stakeholders including government officials and representatives from international organizations, marks a significant step towards reshaping Nigeria’s energy landscape and fostering economic development through improved energy access.
As NNPCL charts its course towards energy abundance, Nigerians remain cautiously optimistic about the prospects of a brighter energy future.
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