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.”
Gold Gained Ahead of Joe Biden Inauguration 2021
Gold price rose from one and a half month low on Tuesday ahead of President-elect Joe Biden’s inauguration on Wednesday.
The precious metal, largely regarded as a haven asset by investors, edged up by 0.2 percent to $1,844.52 per ounce on Tuesday, up from $1,802.61 on Monday.
He said, “The key factor appears to be the (U.S.) currency.”
As expected, a change in administration comes with the change in economic policies, especially taking into consideration the peculiarities of the present situation. In fact, even though Biden, Janet Yellen and the rest of the new cabinet are expected to go all out on additional stimulus with the support of Democrats controlled Houses, economic uncertainties with rising COVID-19 cases and slow vaccine distribution remained a huge concern.
Also, the effectiveness of the vaccines can not be ascertained until wider rollout.
Still, which policy would be halted or sustained by the incoming administration remained a concern that has forced many investors to once again flee other assets for Gold ahead of tomorrow’s inauguration.
Crude Oil Holds Steady Above $55 Per Barrel on Tuesday
Brent Crude oil, against which Nigerian crude oil is priced, rose from $54.46 per barrel on Monday to $55.27 per barrel as of 9:03 am Nigerian time on Tuesday.
Last week, Brent crude oil rose to 11 months high of $57.38 per barrel before pulling back on rising COVID-19 cases and lockdowns in key global economies like the United Kingdom, Euro-Area, China, etc.
While OPEC has left 2021 oil demand unchanged and President-elect Joe Biden has announced a $1.9 trillion stimulus package, experts are saying the rising number of new cases of COVID-19 amid poor vaccine distribution could drag on growth and demand for oil in 2021.
On Friday, Dan Yergin, vice-chairman at IHS Markit, said in addition to the stimulus package “There are two other things that are going with it … one is of course, vaccinations — in the sense that eventually this crisis is going to end, and maybe by the spring, lockdowns will be over.”
“The other thing is what Saudi Arabia did. This is the third time Saudi Arabia has made a sudden change in policy in less than a year, and this one was to announce (the) 1 million barrel a day cut — partly because they are worried about the impact of the surge in virus that’s occurring,” he said.
Also, the stimulus being injected into the United States economy could spur huge Shale production and disrupt OPEC and allies’ efforts at balancing the global oil market in 2021.
Crude Oil Pulled Back Despite Joe Biden Stimulus
Crude oil pulled back on Friday despite the $1.9 trillion stimulus package announced by U.S President-elect, Joe Biden.
Brent crude oil, against which Nigeria’s oil is priced, pulled back from $57.38 per barrel on Wednesday to $55.52 per barrel on Friday in spite of the huge stimulus package announced on Thursday.
On Thursday, OPEC, in its latest outlook for the year, said uncertainties remain high in 2021 with the number of COVID-19 new cases on the rise.
OPEC said, “Uncertainties remain high going forward with the main downside risks being issues related to COVID-19 containment measures and the impact of the pandemic on consumer behavior.”
“These will also include how many countries are adapting lockdown measures, and for how long. At the same time, quicker vaccination plans and a recovery in consumer confidence provide some upside optimism.”
Governments across Europe have announced tighter and longer coronavirus lockdowns, with vaccinations not expected to have a significant impact for the next few months.
“The complex remains in pause mode, a development that should not be surprising given the magnitude of the oil price gains that have been developing for some 2-1/2 months,” Jim Ritterbusch, president of Ritterbusch and Associates, said.
Still, OPEC left its crude oil projections unchanged for the year. The oil cartel expected global oil demand to increase by 5.9 million barrels per day year on year to an average of 95.9 million per day in 2020.
But also OPEC expects a recent rally and stimulus to boost U.S. Shale crude oil production in the year, a projection Investors King experts expect to hurt OPEC strategy in 2021.
News3 weeks ago
Heartbroken American Mistress Displays Dangote’s Buttocks in a Viral Video
News3 weeks ago
FCMB Group MD Links to Death of Tunde Thomas, Husband of Married Staff He Fathered Her Kids
Crude Oil4 weeks ago
Crude Oil Rose to Almost $52 Per Barrel After Trump Signs Stimulus Package
Finance3 weeks ago
President Buhari Increases Npower Budget by N365 Billion
Investment2 weeks ago
London Real Estate Company for African Investors Announces its Launch
News3 weeks ago
Tunde Thomas: FCMB Commences Review Into Allegations of Unethical Behavior Against MD Nuru
Technology4 weeks ago
Chinese Government Goes After Jack Ma and Empire
Brands3 weeks ago
Prada’s Profits Drop by $219 Million, Sales in China Up by 60%