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Banking Sector

Femi Otedola Divests From FBN Holdings, Sells Shares Worth N8 Billion

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Femi Otedola

Femi Otedola, FBN Holdings Plc’s largest shareholder, has sold a combined 717,939,764 shares valued at N7.983 billion in five transactions, according to the management of the financial services company.

The lender disclosed in a statement signed by Adewale Arogundade, acting company secretary for FBN Holdings Plc and obtained by Investors King.

Otedola, who held a 7.57% stake in the lender, reportedly sold 200,000,000 shares he acquired directly under his name at N11.10 a unit or for N2.220 billion.

The billionaire sold another 170,000,000 he acquired through Primrose Global Concept on the same day at N11.14 a unit or N1.894 billion.

The divestment continued as Otedola disposed another 53,000,000 shares he purchased via Impetus Synergy and 120,000,000 shares bought through Wells Properties & Investment Company Limited at N11.10 a unit or N1.920 billion.

In the last transaction, Otedola sold 174,939,764 shares at N11.14 a share or N1.949 billion to bring the total shares divested and reported by the Nigerian Exchange Limited (NGX) to 717,939,764.

Prior to the divestment, Otedola holds a 7.57% equity stake in FBN Holdings Plc.  The billionaire was the company’s largest shareholder before divesting about 30% of his holding. Presently, Otedola holds about a 5% stake in the leading financial services company.

Otedola had aggressively purchased the shares at the peak of a power tussle over the largest shareholder between himself and Tunde Hassan-Odukale, the Chairman of First Bank and the Managing Director of Leadway Assurance Company Limited.

According to the Chief Operating Officer, InvestData Ltd, Mr. Ambrose Omordion is likely divesting into other businesses and needs fresh capital.

He said Otedola “had bought some stocks around N7-8.00, while some were brought around N13.00 per share. I think the billionaire has seen another opportunity and he decided to sell those shares. Mind you, he is not selling all the shares.”

However, the identity of the buyer is unknown. A transaction of this magnitude is usually acquired by high net worth individuals.

The disclosure is in line with the Securities and Exchange Commission policy on all insider dealings. Listed companies are required to disclose transactions of insiders, top equities holders in the company, to enforce transparency across the Nigerian Exchange Limited (NGX).

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

Tinubu Aide Urges CBN Governor to Consider Political Impact of Economic Reforms

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Central Bank of Nigeria (CBN)

Tunde Rahman, a senior aide to Nigerian President Bola Tinubu, has said Central Bank of Nigeria (CBN) Governor Olayemi Cardoso must start factoring in the political effects of CBN’s decisions.

In his piece, titled “Navigating the Dilemma: Political Considerations in Economic Reforms,” sheds light on the complexities facing Cardoso as he seeks to stabilize Nigeria’s economy.

Rahman’s commentary shared through the Presidency’s official channels, acknowledged the challenges Cardoso confronts, particularly regarding the country’s currency devaluation and the contentious plan to relocate CBN staff from Abuja.

While Rahman refrained from direct criticism of Cardoso’s policies since his appointment by Tinubu, he underscored the necessity for the CBN governor to strike a delicate balance between economic imperatives and political sensitivities.

The upcoming meeting of the monetary policy committee presents a pivotal juncture for Cardoso, where discussions are expected to revolve around potential interest rate hikes to counter inflation and bolster the national currency.

Rahman’s insights underscore the high stakes involved in these decisions, especially given the public outcry over soaring living costs and inflation rates nearing three-decade highs.

Cardoso’s commitment to orthodox central banking, following a period marked by blurred monetary and fiscal policy lines, reflects his determination to navigate Nigeria’s economic landscape with prudence.

Nonetheless, Rahman’s op-ed serves as a reminder of the intricate interplay between economic reforms and political realities, urging Cardoso to exercise flexibility in policymaking, especially in matters with broader political implications.

As Nigeria grapples with economic challenges, the spotlight remains firmly fixed on Cardoso and the CBN’s response to the nation’s evolving financial landscape.

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Banking Sector

CBN’s New Foreign Currency Gateway Bank Raises Concerns Over Nigerian Banks’ Liquidity: Fitch Ratings

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Central Bank of Nigeria (CBN)

The Central Bank of Nigeria (CBN)’s announcement of a new Foreign Currency Gateway Bank has stirred concerns over the liquidity of Nigerian banks, according to recent commentary from credit rating agency Fitch Ratings.

The proposed bank, designed to centralize correspondent banking activities, has prompted Fitch to issue cautionary remarks regarding its potential impact on the banking sector’s foreign currency (FC) liquidity.

Governor of the CBN, Dr. Olayemi Cardoso, unveiled plans for the Foreign Currency Gateway Bank to streamline and centralize correspondent banking functions, currently dominated by two major banks.

The initiative is part of the CBN’s efforts to address Nigeria’s persistent forex crisis.

Fitch Ratings expressed apprehension, highlighting the potential negative effects on the banking sector’s FC liquidity.

The agency noted that the centralization of correspondent banking activities, coupled with recent measures by the CBN, might exacerbate liquidity challenges for Nigerian banks.

Furthermore, Fitch cautioned that the recent devaluation of the naira, coupled with the CBN’s circular prohibiting banks from holding net long foreign currency positions, could further strain FC liquidity.

The prohibition on net long FC positions may leave banks more vulnerable to naira depreciation, potentially affecting their capital positions.

The CBN’s move to harmonize different segments of the foreign currency market last June led to significant naira devaluation, with the local currency closing at 899/$ at the official market by the end of last year.

As of February 13, the naira experienced a second devaluation, reaching 1,516/$, marking a 40% devaluation.

While the shift away from a managed exchange rate regime aims to attract capital inflows and mitigate forex shortages, it poses short-term risks such as heightened inflation and potential strains on loan quality and capital adequacy within the banking sector, as highlighted by Fitch Ratings.

As discussions continue, stakeholders closely monitor the implications of the proposed Foreign Currency Gateway Bank on Nigeria’s financial landscape.

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Banking Sector

CBN Mandates Automated Transaction Monitoring to Combat Fraud in Nigeria

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Central Bank of Nigeria (CBN)

The Central Bank of Nigeria (CBN) has introduced new regulations mandating banks to implement automated transaction monitoring systems to combat the growing threat of fraud in the country’s financial sector.

Under the CBN’s latest ‘Consumer Protection Regulations’ draft, banks are required to adopt advanced measures to protect customers’ assets and prevent fraudulent activities.

These measures include multi-variant customer identification, multifactor authentication mechanisms for transactions, automated transaction monitoring, alert functions, and behavioral monitoring.

The move comes amid a significant rise in fraud cases across Nigeria, with the first half of 2023 witnessing 24,232 reported fraud cases totaling N12.33 billion.

The banking industry has seen 110 executives and junior staff members dismissed due to fraud-related offenses amounting to N82 billion over the past two years.

According to the CBN, sensitizing customers on fraud threats or scams and providing secure and simple user interfaces for digital financial services are crucial steps to minimize the risk of fraudulent activities.

The regulations emphasize the importance of continuous efforts to enhance cybersecurity and protect consumers in an increasingly digital financial landscape.

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