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High Cost of Transactions Still Affects Banks in Q1— Okezie

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  • High Cost of Transactions Still Affects Banks in Q1— Okezie

The Chairman, Progressive Shareholders Association of Nigeria, PSAN, Mr. Boniface Okezie, in an interview, spoke on the first quarter financial performance of banks quoted on the Nigerian Stock Exchange, NSE as well as activities of the regulatory bodies in the regulation of the banking sector, among others.

IN your view, how have the banks performed in the first quarter of 2017? Did they meet shareholders’ expectations?

Well, in my view, the results so far released by some of the banks show improved performance. The earnings of most banks whose results were released to the NSE went up, but their profits did not rise like their gross earnings, an indication that cost of operations affected the bottom line.

The banks are still battling with the high cost of doing business, it is my hope that when the economy starts to record growth and address some of the infrastructure challenges, coupled with the challenges from the regulatory bodies, we will begin to see better performance of banks.

In all, the banks met my short term expectations considering the operating environment circumstances, but in the long run I still want them to perform more so that they can pay higher dividend at the end of the year.

What are the regulatory challenges that the banks are facing?

One of the regulatory challenges that banks are facing has to do with penalties from the Central Bank of Nigeria, CBN and Nigerian Stock Exchange, NSE. The penalty fees is becoming too much. An offence cost the banks not less than N60 million and this is impacting negatively on shareholders’ return on investment.

What could have been added to pay us as dividend is given away to regulators for committing one offence or the other.

So, I appeal to these regulators to reduce the charges for these offences and encourage the banks by churning out good policies that will help engender the growth of the banking sector.

What is your position on the directive from the CBN that banks should keep five per cent of their profit for Export Fund?

You can see what I said earlier about regulatory challenges been faced by banks. The banks fund Asset Management Corporation of Nigeria, AMCON. Now, the CBN has directed that banks should set aside another of their five per cent from their operating profit to finance Nigerian export businesses or businesses with import substitution capabilities. What is the responsibility of the Export Promotion Council? This Council has budgetary allocation from the Federal Government to promote the export sector.

The CBN just keep tasking the banks at the detriment of the owners. The same banks pay tax to the government. The banks should be allowed to use their initiative to fund the export sector.

The banks are set up to make profit, so they should be allowed to perform their intermediary role. We shareholders are tired of these pools of funds being initiated by the government.

The banks at the Bankers’ Committee meeting should communicate our feelings to the apex banks.

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

UBA America Strengthens Commercial Diplomacy, Hosts Diplomats, Others at World Bank Summit

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UBA America, the United States subsidiary of United Bank for Africa (UBA) Plc hosted diplomats, government officials and business leaders to a networking reception in partnership with the esteemed Business Council for International Understanding (BCIU) and the U.S. Department of States in Washington DC on Monday .

The event which was held on the sidelines of the ongoing IMF World Bank Spring Meetings was organised by the BCIU and US Department of State to enhance collaboration and fortify commercial diplomacy among nations, institutions and individuals.

Speaking during the event, UBA’s Group Managing Director/Chief Executive Officer, Oliver Alawuba, noted that the bank’s co-hosting of the event via its American subsidiary, underscores its commitment towards cultivating robust relationships within the development communities in the United States.

He said, “As a distinguished member of BCIU, a non-profit organisation providing customised commercial diplomacy services, UBA Group and UBA America share BCIU’s vision of actively pursuing strategic opportunities, contributing to global economic cooperation, deepening of economic diplomacy, facilitating ideas, forging partnerships, and adding value for all stakeholders.”.

“Our resolve to co-host this Networking Reception symbolises our dedication to fostering inclusive economic growth and partnership across borders. By leveraging platforms like this, we can collectively address shared challenges and seize opportunities for sustainable development,” he stated further.

BCIU is a non-profit Association comprising of policy experts, strategic advisors, and trade educators, and offers bespoke commercial diplomacy services to the world’s governments and leading organisations, from Fortune 100 companies to global investors and multilateral institutions.

Only last year, the CEO UBA America, Sola Yomi-Ajayi, was appointed to the Board of BCIU, where she collaborates with fellow board members to ensure the organisation operates in alignment with its by-laws and New York 501(c)3 non-profit legislation.

Yomi-Ajayi has been committed to nurturing long-term organisational growth and sustainability, thereby reinforcing the bond between UBA America, BCIU, and the broader international community.

UBA America is the United States subsidiary of United Bank for Africa (UBA) Plc, one of Africa’s leading financial institutions with presence in 20 African countries, as well as in the United Kingdom, France, and the United Arab Emirates. UBA America serves as a vital link between Africa and the global financial markets, offering a range of banking services tailored to meet the needs of individuals, businesses, and institutions.

As the only sub-Saharan African bank with an operational banking license in the U.S., UBA America is uniquely positioned to provide corporate banking services to North American institutions doing business with or in Africa.

UBA America delivers treasury, trade finance, and correspondent banking solutions to sovereign and central banks, financial institutions, SMEs, foundations, and multilateral and development organizations. Leveraging its knowledge, capacity, and unique position as part of an international banking group, the Bank seeks to provide exceptional value to our customers around the world.

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Banking Sector

Ecobank Pays Off $500 Million Eurobond

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Ecobank Transnational Incorporated (ETI) has announced the successful repayment of its $500 million Eurobond.

The Eurobond, issued in April 2019 with a coupon rate of 9.5%, matured on April 18, 2024, and was listed on the London Stock Exchange.

The repayment, totaling $524 million inclusive of principal and interest, underscores Ecobank’s commitment to financial prudence and investor confidence.

The bond garnered substantial support from a diverse group of global investors, including development banks, FMO, and Proparco, serving as anchor investors.

Mr. Ayo Adepoju, Ecobank’s Group CFO, emphasized the significance of the inaugural bond in broadening the institution’s investor base and enhancing its visibility in global capital markets.

Despite challenges in the operating environment, such as disruptions in the global supply chain and financial markets, Ecobank has demonstrated resilience through robust liquidity, a solid balance sheet, and effective leadership.

This repayment marks Ecobank’s commitment to fulfilling its financial obligations and maintaining strong relationships with investors.

While this Eurobond repayment closes a significant chapter, it also reflects Ecobank’s ongoing efforts to navigate challenges and sustain its position as a leading financial institution in Africa.

As Ecobank clears this debt, it reinforces its reputation for financial stability and prudent management, setting a positive trajectory for future growth and continued success in the dynamic global financial landscape.

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SEC to Guard Against Illicit Funds Influx Amid Banking Recapitalisation

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In response to the recent banking recapitalization exercise announced by the Central Bank of Nigeria (CBN), the Securities and Exchange Commission (SEC) has reiterated its commitment to safeguarding the integrity of the capital market against the influx of illicit funds.

This announcement came during a symposium organized by the Association of Capital Market Academics of Nigeria, where the Executive Director (Operations) of SEC, Dayo Obisan, addressed stakeholders on the implications of the banking sector recapitalization for the Nigerian capital market.

Obisan expressed the commission’s determination to collaborate with stakeholders to prevent the entry of laundered funds into the capital market.

He stressed the need for fund verification exercises to ensure transparency and accountability in capital inflows.

While acknowledging that fund verification is not typically within SEC’s purview, Obisan stated the commission’s willingness to collaborate with other regulators to prevent the entry of illicit funds into the market.

He said it is important to engage institutions such as the Central Bank of Nigeria (CBN) and the Nigerian Financial Intelligence Unit (NFIU) in verifying the legitimacy of funds entering the market.

Obisan also announced regulatory engagements aimed at enhancing the quality of filings and ensuring compliance with anti-money laundering regulations. These engagements seek to streamline the application process and mitigate the risk of illicit fund inflows from the onset.

Meanwhile, the President of the Chartered Institute of Stockbrokers, Oluwole Adeosun, maintained that the capital market can support the fresh capitalisation exercise.

He said, “The market is able and has expanded in the last ten years to be able to withstand any challenges with this capital raising exercise. It is important to know that investors have started to position themselves in the stocks of Tier 1 banks with the announcement of the planned recapitalisation last year.”

Adeosun also called on the banks to consider other options beyond the right issues, as had been seen in recent days in the sector, given the size of the funds needed to be raised as well as to bring in a fresh set of investors into the market.

“There should be more than a rights issue. We believe that some of them should go by private offer and public offer because the capital is huge so that we can bring in more shareholders into the market. We believe it is another opportunity for Gen Zs and millennial investors to come into the market.

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