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Banking Sector

CBN and Bankers Committee In Plans To Digitize Sales of Dollar Through An App

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Naira Dollar Exchange Rate - Investors King

The Central Bank of Nigeria (CBN) and the bankers’ committee have made move to digitize dollar sales for legitimate needs through creating an App.

Such legitimate needs include Business Travel Allowance (BTA), Personal Travel Allowance (PTA), school fees and medicals. This was the outcome of the 357th meeting of the banker’s committee meeting held virtually on Thursday.

The committee also disclosed that anyone engaged in fraudulent practices would be reported to the CBN for sanction.

“The committee discussed a number of issues, updates were provided on the State of the economy and FX policy following the stoppage of FX sales to the BDCs. There were also discussions on the ongoing rehabilitation of the National art theatre which is going to be a game-changing development to reposition the theatre to reposition Nigeria on the global tourism map,” Haruna Mustapha, CBN director of banking supervision, said while briefing journalists on the outcome of the meeting.

Segun Agbaje, Group chief executive officer, Guaranty Trust Holding Company (GTCO) Plc, who spoke on the CBN’s latest foreign exchange policy said, the new FX policy with regards to Invisibles – BTA, PTA, school fees and health is working very well.

“The banks are taking it upon ourselves along with the regulator to make sure that this works. Most of the things you are doing today involve going into the branches to do most things. We are going to try also to digitize this whole thing the way the world is going,”  he said.

He said an App is being created by NIBSS where customers will be able to buy online. “You have to bring your ticket so we are sharing this information on the portal. This is very important information because if we find that people are trying to defraud the system, we will track it on the portal. The banks will report the individuals to the CBN.

“The likely punishment is that your account will be PMDied. PMD of your account means that you won’t be able to do anything in the banking system. This is for people who have genuine needs so fraudulent transactions or fraudulent individuals will be reported to the CBN and the portal will help us this,” Agbaje said.

In addition to digitizing the dollar sales, he also hopes that all the transactions will not just be cash as the world today is not completely friendly about arriving in countries with cash. “So we are hoping that people will be able to put this on a card, put it into your card account, you travel, you will use it for medical, school fees and so on,” he said.

The committee believes that most people who qualify for medical or school fees or for BTA, PTA will be people who have bank accounts and therefore encourage customers to go to their own banks because all banks are the same and customers can access BTA, PTA in their own bank.

“Progress today is very good, completely committed to doing this is for people who have legitimate needs, their needs will be met. We do not want fraudulent transactions taking place in this space and we will continue to make it quicker, faster and cheaper and more efficient by digitizing things, putting them in the cards and so on and so forth. I think that is the kind of things that we have decided around BDCs and the use of Invisibles,” Agbaje said.

Buttressing, Ireti Samuel-Ogbu, managing director of Citibank, said, there will be sanctions where people abuse the system because it is all about ensuring the foreign exchange is fairly allocated among legitimate users.

“We have digital means of being able to to determine if people are using fraudulent documentation or wanting to gain the system in a way that was not intended. We are here to support the demand, to make sure people get their foreign exchange. It is important that people realize that there is a responsibility that comes to that,” she said.

Other bank’s CEOs that spoke included Herbert Wigwe, Group managing director/CEO, Access Bank Plc, Demola Sogunle, managing director, Stanbic IBTC, Oluwatomi Somefun, managing director/CEO Unity Bank Plc, and Yemisi Edun, managing director/CEO, FCMB.

Wigwe said Banks have been criticized for not being able to handle PTA, BTA transactions. “This is just to let people know that we will continue to the due diligence required with respect to KYC compliance.

Foreign exchange is a very scarce resource if we find people trying to come up with tickets that have expired or that they are going to cancel or passports that are not legitimate by any way or people coming to buy more than they are supposed to buy using all the banks, we will report them to the law enforcement agency for them to deal with these people,” he said.

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Banking Sector

Global Banking Sector Grows 40% Reviving Pandemic Losses in Just 12 Months

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In 2020, the global banking sector took a hit following the economic impact of the coronavirus pandemic, which was reflected in the overall market capitalization. However, with the ongoing global recovery, the banking industry has regained most of the losses incurred during the health crisis. 

According to data acquired by Finbold, in just 12 months between Q2 2020 and Q2 2021, the global banking sector’s market cap has surged 39.62%, adding €2.1 trillion from €5.3 trillion to €7.4 trillion. On the path to recovery, the market cap slightly plunged in 2020 Q3 to €5.2 trillion before gaining 17.3% the next quarter.

Among the Western European banks, Spain’s BBVA bank recorded the highest total shareholder return rate at 19.7% between April 2021 – July 2021, followed by Société Générale from France at 13.8%, while Banco Santander, also from Spain, ranks third at 12.1%. United Kingdom’s Barclays is the worst performer with a TSR of -8%. Data on the global banking sector’s market cap is provided by Banking Hub.

How banking sector sustained growth

The registered market capitalization is supported by the large-scale reopening of economies due to the vaccine rollout. Additionally, the banks, especially from major economies like the United States and Europe, have reaped from policies meant to cushion the economy from the adverse effects of the pandemic. Notably, the decisions by most banks to retain a low-interest-rate environment has been beneficial to banks.

Worth noting is that during the pandemic, banks found themselves in a tight spot. Historically, the banking sector has been considered the custodian of the economy but the pandemic also plunged the banks into a crisis. The banking sector’s profits were adversely affected considering they are bound to the business cycle and interest rates.

At the same time, banks also put in place measures like approaching loans with caution due to uncertainty in repaying which directly impacted profits. However, banks were tapped to facilitate the distribution of stimulus packages boosting their capital reserves in return.

Worth pointing out is that institutions like the European Central Banks allowed banks to continue using their capital buffers flexibly with a planned extension until 2022. With such moves helping banks sustain growth, it eliminates the worry of straining capital buffers while the health crisis is still impacting the banks’ balance sheets.

Furthermore, the crisis highlighted the need for banks to keep huge reserves of capital that can be activated in the wake of economic turmoil. Although most banks have historically relied on assets for future cushion, a crisis like the coronavirus calls for more capital because selling assets in such an environment is challenging.

Besides the policies, the banking sector recovery was partly aided by existing operational risk management arrangements. The pandemic tested all financial market participants and most leading banks successfully invoked business continuity plans. The plans ensured that the financial markets continued to run smoothly and orderly.

The sector’s recovery has also been accelerated by other factors like the increased adoption of pre-pandemic trends like digitalization and sustainability. Digitization of operations has been backed by consumers who are willing to conduct transactions online. At the same time, the digital shift has presented a competitive factor in the sector, with institutions that had established online presence benefiting the most.

Notably, the recovery was at some point under threat during the third quarter of 2020 amid concerns of the pandemic’s second wave. However, the sector sustained the gains with the rollout of the vaccine. Furthermore, moving into 2021, the industry appears not to be bothered by the Delta variant.

The future of the banking sector

By sustaining the market capitalization for two consecutive quarters, it can be assumed that the banking sector response to the health crisis is bearing fruits. However, it is still early to determine if the recovery is sustainable.

The rally will be tested, especially when central banks eliminate all the policies meant to cushion the economy. However, in the long run, banks will have to tailor their operations towards changing consumer behaviour.

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Banking Sector

How Stanbic IBTC is Transforming Nigeria’s Trade Landscape

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Stanbic IBTC Bank PLC, a subsidiary of Stanbic IBTC Holdings PLC, has reiterated its commitment to fostering international trade and help the nation actualise its economic growth and development goals.

The Bank said it will continue to fine-tune its three-pronged approach to facilitating trade activities for clients. These are the development of bespoke financial solutions to help boost trade for clients; sponsorship of relevant trade shows that bring together stakeholders in global trade, including exporters and importers; and organisation of seminars and workshops to provide clients and other stakeholders with industry insights and enlighten them on global trade opportunities.

“Our goal is to become the ‘go-to’ Bank as far as global trade is concerned, with emphasis on Africa-China trade. This approach is of immense value to our clients and will help us achieve our fundamental purpose, which is to drive Nigeria’s growth,” Chief Executive Stanbic IBTC Bank PLC, Wole Adeniyi, said.

In line with this resolve, Stanbic IBTC organised a webinar on the African Continental Free Trade Area (AfCFTA). The webinar themed: ‘AfCFTA State of Play: Understanding Potential and Maximising Opportunities for the Customer’, emphasised Stanbic IBTC’s readiness to leverage the trade opportunities of the AfCFTA agreement to unlock business opportunities for its clients in the small and medium-sized enterprises (SMEs) sector as well as its corporate clients.

In 2019, Stanbic IBTC launched its Africa China Agent Proposition (now called Africa China Trade Solutions – ACTS) to boost trade transactions between Africa (Nigeria) and Asia, especially China, and help customers consummate the best business deals without having to travel to China.

According to Stanbic IBTC, ACTS will give customers exclusive access to an array of exporters in China through an accredited agent, Zhejiang International Trading Supply Chain Co Ltd, also known as Guamao.

Stanbic IBTC has held various fora as part of its sensitisation drive on ACTS and the currency swap agreement between Nigeria and China. These fora provided insight on how best to help clients and businesses leverage the opportunity and assess the impact of the Chinese economy on trade in Nigeria and Africa as a whole.

According to Wole, these workshops were geared towards deepening trade connections with the Chinese business community, thereby stimulating strong trade and business ties between Africa, with a special focus on Nigeria and China.

Stanbic IBTC Bank was a platinum sponsor of the 2021 Global Trade Review (GTR) West Africa Conference themed ‘Connecting the Region’s Trade Experts. The GTR West Africa Conference is an annual regional event for trade discussions and networking among leading practitioners in trade, export, and commodity finance to strategically explore the latest developments, strategies, and solutions needed to drive growth.

Experts have continued to commend Stanbic IBTC on this bold approach to educate its clients and investors about the benefits of AfCFTA, the Nigeria China currency swap deal, and the ACTS proposition, all geared towards helping clients unlock business opportunities.

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Banking Sector

Arise B.V., Equity Investor, Invests US$75 Million in Ecobank

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A leading investor in financial institutions in Sub-Saharan Africa, Arise B.V. has made US$75 million perpetual non-cumulative AT1 capital investment in Ecobank Transnational Incorporated.

In a statement signed by Adenike Laoye, the Group Head of Corporate Communications, Ecobank, the fund will help optimise and improve ETI’s Tier 1 capital.

“This Basel III compliant instrument is the first AT1 instrument issued by ETI and a landmark transaction in the sub-Saharan Africa region. The investment will optimize and improve ETI’s Tier 1 capital by US$75 million,” the bank stated.

The latest investment showed Arise, an existing shareholder of Ecobank, has confidence in the bank’s future given the series of support and commitment the leading equity investor has provided to Ecobank in recent years.

Speaking on the new investment, Ade Ayeyemi, Group Chief Executive Officer of ETI, stated: “This investment by Arise is a testament to continued support and confidence from our shareholders; their commitment to, and belief in our strategy which we remain focused on executing to deliver value to our shareholders and excellence to our customers. Indeed, in addition to improving our double leverage ratio, it is also a good boost for the firm and its staff”.

Deepak Malik, Chief Executive Officer of Arise stated: “ETI is our primary banking investment in Francophone West Africa and Anglophone West Africa. We are very supportive of ETI’s growth ambitions and its ability to increase financial services to Agri, SMEs & retail customers. Our investment will also strengthen the balance sheet of ETI and provide additional risk capital”.

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