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Two CBN Directors Arrested for Forex Manipulation

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  • Two CBN Directors Arrested for Forex Manipulation

The Economic and Financial Crimes Commission has arrested two directors of the Central Bank of Nigeria for alleged forex manipulation and economic sabotage.

Impeccable sources at the EFCC told one of our correspondents on Wednesday that the directors were still in custody as of press time at 7.30pm.

It was learnt that the investigation into the CBN officials activities sent shockwaves round the apex bank.

The detective said the houses of the directors had been searched while incriminating evidence had been recovered.

A source at the EFCC, who wished to remain anonymous said, “We have arrested two directors of the CBN in connection with forex manipulation. We believe that it was the activities of these individuals that contributed to the dollar scarcity and the weakening of the naira.

“Ironically, immediately we started investigating these chaps a month ago, the CBN reeled out a new forex policy which sought to flood the market with excess dollar and strengthen the naira.

“Already, we have searched their houses and recovered some sensitive documents. We have reason to believe that they may not have acted alone. We expect to make more discoveries as investigations continue.”

When contacted, the Acting Director, Corporate Communications Department, CBN, Mr. Isaac Okoroafor, said no director of the apex bank had been arrested by the EFCC.

He said, “This is not true. No director of the bank (CBN) has been arrested by the EFCC. The current activities of the CBN in the forex market is a result of months of study, monitoring and planning to tackle the activities of black marketers.

“We are succeeding and Nigerians are happy with us. No amount of false rumours and concoctions to ridicule and sabotage the success we have achieved will make us lose our focus at this time.”

Meanwhile, the EFCC has dispatched letters to several aides and persons linked to Senate President Bukola Saraki for their alleged role in the N19bn illegally deducted from the N522bn Paris Club refund.

About N3.5bn out of the stolen N19bn was said to have been traced to Saraki and several persons close to him, an EFCC report had said.

A top source at the EFCC told one of our correspondents that letters had been dispatched to the indicted persons and some were billed to report at the EFCC office on Thursday (today).

A detective said, “I can confirm to you that letters have been dispatched to aides to the Senate President. Some will appear on Thursday (today) while others will appear on subsequent days depending on the outcome and pace of investigations.”

Some of the persons invited by the anti-graft agency included Saraki’s Deputy Chief of Staff and a former lawmaker, Gbenga Makanjuola; Obiora Amobi and Oladapo Joseph Idowu.

Others are Mr. Kolawole Shittu, and a former Managing Director of Saraki’s defunct bank, Societe Generale Bank of Nigeria, and current boss of Melrose General Services Limited, Mr. Robert Mbonu; and the Relationship Manager to the Senate President in Access Bank, Kathleen Erhimu.

Melrose General Services is one of the companies hired as consultants by the Nigeria Governors’ Forum.

The firm got N3.5bn as consultancy fees while other companies shared about N15.5bn.

When asked why Saraki was singled out for investigation, the source said, “No one is victimising the man. He is an easier target because he has no immunity unlike the governors most of whom still have immunity till 2019.

“The investigation is holistic and in due course everyone found culpable will face justice.”

Recall that the Federal Government had in December 2016 approved the sum of N522.74bn to be paid to the 36 states of the federation as part of the reimbursement for the over-deduction on the Paris Club loan from 1995 and 2002.

The EFCC had sometimes in January discovered that the Paris loan refunds were illegally routed through the account of the NGF by the CBN.

Upon receiving the funds, the NGF in an alleged connivance with Saraki, began remitting huge sums to private consultants who then laundered about N19bn.

The EFCC report sent to the Presidency states in part, “Suffice to apprise that all payments received by Melrose General Services Company from the NGF have hitherto been diverted directly via cash withdrawals and indirectly through transfers by Hon. Gbenga Peter Makanjuola, Kolawole Shittu and Oladapo Joseph Idowu who are principal aides of the Senate President.

“Furthermore, other payments from Melrose General Services Company have also been linked to companies that Dr. Bukola Saraki has interest in and carries out transactions with.

“This includes the sum of $183,000 which was transferred to Bhaska Devji Jewellers, Dubai, a company Dr. Bukola Saraki had repeatedly made payments to.

“Also, the sum of N200m was transferred to Wasp Networks Limited that subsequently transferred the sum of N170m to Xtract Energy Services Limited, a company that routinely made deposits into Dr. Saraki’s Access Bank US dollar Domiciliary account.

The reports concludes that a prima facie case of conspiracy to retain the proceeds of unlawful activities and money laundering contrary to Sections 15(3) and 18(9) of the Money Laundering Prohibition Act 2004 can be established against the aforementioned suspects.

The Special Adviser to the Senate President on Media and Publicity, Mr. Yusuph Olaniyonu, however, rubbished the report, adding that the acting Chairman of the EFCC, Mr. Ibrahim Magu, was on a revenge mission having been rejected by the Senate two weeks ago.

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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Finance

Financial Institutions Lost $12 Billion to Cyberattacks in 20 Years – Says IMF

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cybercrime - Investors King

The International Monetary Fund (IMF) has disclosed that financial institutions worldwide have lost to$12 billion due to cyberattacks over the past 20 years.

This revelation comes from the IMF’s recent report, Global Financial Stability Report, April 2024, which highlights the significant vulnerabilities faced by the financial sector in the realm of cybersecurity.

The report indicates that since 2020, financial institutions have incurred losses of $2.5 billion due to cyber incidents.

The IMF further underscores the high susceptibility of the financial sector to cyber risks, noting that approximately one-fifth of cyber incidents over the past two decades have impacted financial institutions, primarily targeting banks, insurers, and asset managers.

The United States, home to several major financial institutions, faces heightened exposure to cyber risks. For example, JP Morgan Chase, the largest US bank, experiences a staggering 45 billion cyber events daily and invests $15 billion annually in cybersecurity efforts, employing 62,000 technologists, many focused on security.

Cyber incidents are considered major operational risks that threaten the resilience of financial institutions and can have broader macroeconomic repercussions.

The IMF warned that these incidents could jeopardize financial stability through loss of confidence, disruptions in essential services, and the interconnectedness of the financial system.

To counter these risks, the IMF urges central banks and relevant authorities to develop comprehensive national cybersecurity strategies and establish effective regulations and supervisory measures.

As cyber threats continue to evolve, the need for robust cybersecurity infrastructure is paramount for the protection and stability of the global financial system.

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Banking Sector

Zenith Bank Leads as Restricted Deposits Hit N17.1 Trillion

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Central Bank of Nigeria (CBN)

Zenith Bank Plc has emerged as a frontrunner among Nigerian banks as restricted deposits grew to N17.1 trillion.

This increase was propelled by Central Bank of Nigeria (CBN) regulations and represents 72.7% growth from the N9.91 trillion recorded in the previous year.

The Central Bank of Nigeria, in its effort to regulate the country’s money supply and manage inflation levels, has maintained the Cash Reserve Ratio (CRR) at 32.5%.

The CRR mandates banks to retain a certain percentage of their customer deposits with the CBN, thereby restricting access to these funds for day-to-day operations.

Zenith Bank, along with nine other major banks including Access Holdings Plc, Guaranty Trust Holdings Company Plc (GTCO), and United Bank for Africa (UBA) Plc, witnessed a substantial increase in their restricted deposits.

This surge underscores the impact of regulatory measures on the banking sector’s liquidity and operational dynamics.

The CBN’s decision to uphold the CRR at 32.5% and subsequently increase it to 45.0% reflects its commitment to curbing inflationary pressures and maintaining financial stability. While these measures aim to regulate money supply and inflation, they also pose challenges for banks and shareholders.

A member of the CBN’s Monetary Policy Committee (MPC), Aku Odinkemelu, emphasized the necessity of tightening monetary policy measures to address inflationary pressures effectively.

However, concerns linger regarding the adverse effects on borrowing costs for businesses and the banking sector’s profitability.

Philip Ikeazor, Director-General of Financial System Stability and MPC member, highlighted the pivotal role of complementary tools such as the CRR in taming inflation and managing liquidity.

Despite apprehensions from stakeholders, the CBN Governor, Mr. Olayemi Cardoso, reiterated the importance of assertive monetary policy measures to achieve the medium-term inflation target.

Zenith Bank’s noteworthy performance in managing restricted deposits underscores its resilience and strategic approach amidst regulatory challenges.

The bank’s 133.8% increase in mandatory reserve deposits with the CBN, reaching N3.9 trillion in 2023, demonstrates its ability to adapt to evolving market conditions.

Access Holdings, UBA, and other major banks also reported substantial growth in their restricted deposits, reflecting the broader impact of CBN policies on the banking sector’s liquidity and profitability.

Despite the surge in restricted deposits, concerns persist among shareholders regarding the profitability and operational constraints faced by banks.

Boniface Okezie, Chairman of the Progressive Shareholders Association of Nigeria (PSAN), advocated for CBN to consider paying interest on mandatory funds collected from banks, thereby enhancing their earnings and supporting the real sector of the economy.

As Nigerian banks navigate the intricacies of regulatory requirements and market dynamics, Zenith Bank’s leadership in managing restricted deposits underscores its resilience and strategic acumen in an evolving financial landscape.

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Banking Sector

Zenith Bank Achieves Historic Milestones in 2023 With Stellar Triple-Digit Topline And Bottom-Line Growth

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Zenith Bank - Investors King

Zenith Bank Plc has announced its audited results for the year ended December 31, 2023, achieving a remarkable triple-digit growth of 125% in gross earnings from NGN945.6 billion reported in 2022 to NGN2.132 trillion in 2023.

According to the audited financial results for the 2023 financial year presented to the Nigerian Exchange (NGX), this impressive triple-digit growth in gross earnings resulted in a Year-on-Year (YoY) increase of 180% in Profit Before Tax (PBT) from NGN284.7 billion in 2022 to NGN796 billion in 2023.

Profit After Tax (PAT) also recorded triple-digit growth of 202% from NGN223.9 billion to NGN676.9 billion in the period ended December 31, 2023.

The increase in gross earnings is primarily due to growth in interest and non-interest income. Interest income increased by 112% from NGN540 billion in 2022 to NGN1.1 trillion in 2023. Non-interest income grew by 141% from NGN381 billion to NGN918.9 billion in the same period.

The increase in interest income is attributed to the growth in the size of risk assets and their effective repricing, alongside the rise in the yield of other interest-bearing instruments over the year. Growth in non-interest income was driven by significant trading gains and an increase in gains from the revaluation of foreign currencies.

The cost of funds grew from 1.9% in 2022 to 3.0% in 2023 due to the high interest rate environment while interest expense increased by 135% from NGN173.5 billion in 2022 to NGN408.5 billion in 2023. Notwithstanding the 32% growth in operating expenses in 2023, the Group’s cost-to-income ratio improved significantly from 54.4% in 2022 to 36.1% in 2023 due to improved top-line performance.

Return on Average Equity (ROAE) increased by 118% from 16.8% in 2022 to 36.6% in 2023, underpinned by improved gross earnings, as the Group sought to deliver better shareholder returns. Return on Average Assets (ROAA) also grew by 95% from 2.1% to 4.1% in the same period.

The Group has continued to deepen its market leadership in key corporate and retail deposit segments as customer deposits increased by 69% from NGN9.0 trillion to NGN15.2 trillion in 2023.

Its retail drive continues to yield dividends as retail deposits now constitute 46% of total deposits (compared to 44% in 2022) and grew by 77% from NGN3.97 trillion in 2022 to NGN7.04 trillion in 2023, also reinforcing increased customer confidence in the Zenith brand.

Total assets increased by 66% from NGN12.3 trillion in 2022 to NGN20.4 trillion in 2023, largely due to growth in total deposits and the revaluation of foreign currency deposits.

Gross loans grew by 71% from NGN4.1 trillion in 2022 to NGN7.1 trillion in 2023 due to the revaluation of foreign currency loans and the growth in local currency risk assets.

As a result of the disciplined and diligent approach to risk assets creation and management, the loan growth did not significantly impact the Non-Performing Loans (NPL) ratio, which increased marginally from 4.3% to 4.4% despite the heightened risk environment and challenging operating environment, an attestation to the Group’s resilience despite headwinds and a challenging macroeconomic environment.

Also, the prudential ratios remain within regulatory thresholds, with the Capital Adequacy Ratio (CAR) and liquidity ratio at 21.7% and 71.0%, respectively, at the close of 2023.

As a demonstration of its commitment to shareholders, the bank has announced a proposed final dividend payout of NGN3.50 per share, bringing the total dividend to NGN4.00 per share.

In 2024, the Group will complete the transition to a holding company structure, which is anticipated to position it advantageously for exploring emerging opportunities in the Fintech space while bolstering its digital and retail banking initiatives.

Furthermore, the Group is undertaking urgent necessary actions to meet the new minimum NGN500 billion equity capital requirement to maintain its international authorisation within the timeframe stipulated by the Central Bank of Nigeria (CBN).

This will strengthen its presence in key markets to continue positioning for sustainable growth and value addition for stakeholders.

Zenith Bank’s track record of excellent performance has continued to earn the brand numerous awards, including being recognised as Best Bank in Nigeria, for the fourth time in five years, from 2020 to 2022 and in 2024, in the Global Finance World’s Best Banks Awards; the Best Bank for Digital Solutions in Nigeria in the Euromoney Awards 2023, being listed in the World Finance Top 100 Global Companies in 2023; being recognised as the Number One Bank in Nigeria by Tier-1 Capital, for the 14th consecutive year, in the 2023 Top 1000 World Banks Ranking published by The Banker Magazine; Best Commercial Bank, Nigeria, for three consecutive years from 2021 to 2023, in the World Finance Banking Awards; Best Corporate Governance Bank, Nigeria in the World Finance Corporate Governance Awards 2022 and 2023; Bank of the Year (Nigeria) in The Banker’s Bank of the Year Awards 2020 and 2022; Best in Corporate Governance’ Financial Services’ Africa, for four successive years from 2020 to 2023, by the Ethical Boardroom; Most Sustainable Bank, Nigeria in the International Banker 2023 Banking Awards; Best Commercial Bank, Nigeria and Best Innovation in Retail Banking, Nigeria in the International Banker 2022 Banking Awards.

Also, the bank emerged as the Most Valuable Banking Brand in Nigeria in the Banker Magazine Top 500 Banking Brands 2020 and 2021; Bank of the Year 2023 and Retail Bank of the Year for three consecutive years from 2020 to 2022, at the BusinessDay Banks and Other Financial Institutions (BAFI) Awards. Similarly, Zenith Bank was named Bank of the Decade (People’s Choice) at the ThisDay Awards 2020, Bank of the Year 2021 by Champion Newspaper, Bank of the Year 2022 by New Telegraph Newspaper, and Most Responsible Organisation in Africa 2021 by SERAS Awards.

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