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BVN: Banks That May Suffer from Deposit Loss

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  • BVN: Banks That May Suffer from Deposit Loss

The biggest casualties in terms of deposit loss should the Federal Government go-ahead to implement court order on funds forfeiture for Bank Verification Number (BVN) non-compliant accounts will be the first generation banks, The Nation has learnt.

These set of banks, according to an industry source who spoke anonymously, seem to have the largest number of customers that have stayed with them for close to or over 100 years.

Justice Dimgba Igwe of the Federal High Court, ruling on an ex parte application filed by the Federal Government through the Office of the Attorney-General of the Federation on October 21, granted the temporary forfeiture of funds in accounts not linked to BVN within two weeks unless the owners justify their ownership of such accounts. The deadline for compliance ended yesterday.

The source said it would be very difficult to put a figure to the 46 million accounts not linked to BVN, adding that: “The first generation banks are believed to have the largest number of dormant accounts, although that has not been established. These banks have the largest number of dormant accounts because of how long they have been in the business,” he said.

The source explained that some new generation banks also have a large number of accounts, but a majority of their customers are from the middle class. He said many of the customers joined the bank during or after the banking consolidation of 2005, in what is regarded in the banking industry as ‘’Flight to Safety’’.

“A lot of the middle class tend to associate more with some new generation banks. So, even though the accounts are many, but they remain largely active,” the source said.

The banks with the largest impact are likely to lose deposits running into billions of naira, and that may affect their liquidity positions.

The Federal Government has secured an interim forfeiture order from Federal High Court which would now allow it to freeze the accounts of bank customers in Nigeria who have no Bank Verification Number, BVN.

The order obtained before Justice Dimgba gave the Federal Government the nod to instruct the banks to disclose any investments made with these funds and to freeze any outward movement from these accounts.

The court order mandates the Central Bank of Nigeria (CBN) to appoint an examiner to look into the books of any commercial bank that fails to comply. The banks are expected to provide the names of accounts without BVN, account numbers, outstanding balances, domiciliary accounts without BVN, branch/locations where these accounts are domiciled.

The CBN through the Banker’ Committee and in collaboration with all banks in Nigeria on February 14, 2014, launched a centralised biometric identification system for the banking industry tagged Bank Verification Number (BVN). The BVN gives a unique identity that can be verified across the Nigerian Banking Industry (not peculiar to one bank) while bank customers are protected from unauthorised access.

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

Nigerian Ports Authority Secures $700m Loan from Citibank for Lagos Ports Rehabilitation

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The Nigerian Ports Authority (NPA) has successfully secured a $700 million loan from Citibank to facilitate the rehabilitation of the Lagos ports.

The finance was facilitated by the UK Export Finance to revitalize the Apapa and Tincan Island Ports, two pivotal gateways for maritime trade in Nigeria.

The announcement was made during a signing ceremony held in Lagos, marking a pivotal moment in Nigeria’s efforts to modernize its port infrastructure.

Mohammed Bello-Koko, the Managing Director of the NPA, expressed optimism regarding the prompt commencement of the reconstruction efforts following the finalization of the funding agreement.

The rehabilitation project is expected to address longstanding challenges faced by the Apapa and Tincan Island Ports, including congestion, inadequate infrastructure, and operational inefficiencies. By modernizing these key maritime hubs, Nigeria aims to bolster its trade capabilities, enhance port efficiency, and stimulate economic growth.

Speaking at the ceremony, Bello-Koko highlighted the strategic significance of the Citibank Facility, citing its favorable terms and affordable interest rates as key advantages for the NPA.

Bello-Koko outlined the NPA’s broader strategy to upgrade port facilities beyond Lagos, with discussions underway to secure additional funding for the enhancement of Eastern Ports such as Calabar, Warri, Onne, and Rivers Ports, as well as the reconstruction of Escravos Breakwater.

The collaboration between the NPA and Citibank underscores the importance of public-private partnerships in driving infrastructural development.

Ireti Samuel-Ogbu, Managing Director of Citibank Nigeria Limited, reaffirmed the bank’s commitment to supporting the NPA and the Federal Government in bridging the infrastructural gap.

Samuel-Ogbu commended the NPA’s strategic initiative and underscored Citibank’s dedication to facilitating the project’s success.

 

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Banking Sector

UBA Announces Final Dividend of N2.30 per Share for FY 2023, Totaling N95.8 Billion

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UBA (United Bank for Africa) shareholders are set to receive dividends as the bank announces a final dividend of N2.30 per share for the fiscal year 2023.

This translated to a total payout of N95.8 billion, more than the N37.6 billion paid out in 2022.

Despite the robust increase in dividend payments, UBA’s dividend payout to profit after tax (PAT) ratio experienced a decline of 6.3 percentage points, dropping from 22.1% in 2022 to 15.8% in 2023.

Shareholders will receive the dividends based on their shareholdings as of the close of business on Friday, May 10, 2024. The payment is scheduled for May 24, 2024.

UBA urges shareholders who have not completed the e-dividend registration process to obtain the E-Dividend Mandate Form to ensure a smooth disbursement process.

The bank’s unclaimed dividends increased to N14.9 billion in 2023, an 18% increase from the previous year.

The bank reported a profit after tax of N607.7 billion, representing a 257% increase from the N170.3 billion recorded in 2022. This increase in profitability includes a net FX revaluation gain of N26.6 billion.

However, it’s worth noting that the Central Bank of Nigeria (CBN) directive prohibits banks from utilizing FX revaluation gains for dividends payment or operational expenses.

Shareholders are advised to complete the e-dividend registration process or contact the registrar, Africa Prudential Plc, for assistance regarding outstanding dividend warrants or share certificates.

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President Tinubu Launches National Single Window Project

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President Bola Tinubu inaugurated the National Single Window Project to streamline trade processes and combat bureaucratic bottlenecks.

The initiative promises to unlock significant economic benefits and bolster Nigeria’s position as a global trade leader.

Addressing stakeholders at the Council Chamber of the State House in Abuja, President Tinubu outlined the transformative potential of the Single Window Project.

He explained that Nigeria stands to gain approximately $2.7 billion annually by implementing the initiative, while also saving an estimated $4 billion lost to inefficiencies and corruption plaguing the trade sector.

The National Single Window Project, codenamed a digital trade compliance initiative, will serve as a cross-government website facilitating trade by providing a unified portal for Nigerian and international trade actors.

This centralized platform will offer access to a full range of resources and standardized services from various Nigerian agencies, promising to expedite cargo movement and optimize inter-African trade.

President Tinubu’s directive to dismantle obstacles hindering trade efficiency reflects a commitment to fostering a transparent, secure, and business-friendly environment.

He underscored the urgency of eliminating red tape, bureaucracy, delays, and corruption at Nigerian ports, asserting that the economy cannot afford to sustain such losses.

The President’s call to emulate success stories from countries like Singapore, Korea, Kenya, and Saudi Arabia highlights the transformative potential of the Single Window system.

By joining the ranks of nations that have significantly improved trade efficiency through similar initiatives, Nigeria aims to unlock new avenues for economic growth and prosperity.

Tinubu stated that the National Single Window Project transcends Nigeria’s borders, presenting opportunities for regional integration and inter-African trade optimization. By linking Nigeria’s system with those of other African nations, the initiative seeks to expedite cargo movement and enhance trade facilitation across the continent.

Managing Director of the Nigerian Ports Authority, Bello Koko, provided insights into the practical implications of the Single Window initiative.

He affirmed that imports would be cleared at all seaports within 24 hours, a significant improvement compared to neighboring countries where clearance often takes up to 72 hours.

Koko outlined how the initiative would streamline paperwork, enhance information sharing among government agencies, and foster greater efficiency in trade transactions.

With representatives from key government agencies and bodies forming the project secretariat, the National Single Window Project reflects a collaborative effort to drive comprehensive reform in Nigeria’s trade sector.

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