Banking Sector

Currency in Circulation Surges by N1.7 Trillion Amidst Rising Cash Transactions

Published

2 months ago

September 22, 2023

The currency in circulation in Nigeria has surged by N1.7 trillion, driven by a surge in cash transactions.

According to data obtained from the Central Bank of Nigeria (CBN), as of the end of August, the currency in circulation rose to N2.7 trillion.

This substantial increase in currency in circulation comes after a 235.03 percent dip to N982.1 billion as of the end of February 2023 from N3.29 trillion at the close of October 2022, primarily due to the naira redesign policy spearheaded by the CBN.

However, the currency in circulation began its steady ascent once the policy concluded. Cash that had been previously withdrawn from circulation to promote electronic payments was reintroduced into the economy, contributing to this significant boost.

The data obtained from the CBN reveals that a whopping N2.3 trillion was removed from circulation during this period.

The CBN defines currency in circulation as all legal tender currency in the hands of the general public and within the vaults of Deposit Money Banks, excluding the central bank’s vaults.

The CBN further elucidated its methodology, stating that it employed an “accounting/statistical/withdrawals & deposits approach” to calculate the currency in circulation in Nigeria. This approach meticulously tracks the movement of currency in circulation on a transaction-by-transaction basis.

Under this methodology, each withdrawal made by a Deposit Money Bank at one of CBN’s branches results in an increase in currency in circulation (CIC), while each deposit made by a DMB at one of CBN’s branches leads to a decrease in CIC.

This surge in currency in circulation reflects the evolving landscape of financial transactions in Nigeria and underscores the importance of flexible monetary policies in facilitating economic growth and stability.

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Banking Sector

FirstBank UK Enhances Fixed-Income Workflow Through Bloomberg Integration

Published

23 hours ago

November 29, 2023

Investors King

FirstBank UK, the UK subsidiary of First Bank Nigeria Limited, has announced its onboarding on Bloomberg’s Trade Order Management System (TOMS) to enhance its fixed-income workflow.

The integration with TOMS is expected to provide FirstBank UK with access to a comprehensive suite of data and analytics, communications, order, and execution management solutions, streamlining its fixed-income bonds business.

As a niche market-maker for its customers in Africa, FirstBank UK plays a vital role in providing market liquidity in cash bonds, particularly in Nigerian, Angolan, Egyptian, and Ghanaian Eurobonds, to manage risk and optimize its inventory.

Olukorede Adenowo, CEO-designate at FirstBank UK, expressed enthusiasm about the integration, stating, “Bloomberg TOMS provides FirstBank UK with a complete end-to-end trading workflow covering African bonds in most of our home markets. The solution enables us to focus on expanding our footprint in the African Fixed Income landscape and deliver a first-in-kind service to our customers in Africa.”

Bloomberg’s TOMS is renowned for enhancing operational efficiency across enterprises. Lisa Bravo, Global Head of Sell-Side OMS at Bloomberg, commented, “We are pleased to help FirstBank UK enhance operational efficiency across its enterprise with our award-winning sell-side order management solution TOMS.”

FirstBank UK had previously digitized its order management workflow by offering clients access to liquidity on its Eurobond Single-Dealer Platform.

The recent integration with Bloomberg TOMS aims to centralize order handling, aggregated custom analytics, and liquidity tools within a single interface, facilitating real-time access to liquidity for customers.

Robert Hagenaars, Head of Markets at FirstBank UK, highlighted the unique feature of real-time access to liquidity in their markets, providing a distinct advantage for their customers.

This move signifies FirstBank UK’s commitment to leveraging advanced technological solutions to fortify its position in the African Fixed Income market and deliver enhanced services to its clientele.

Banking Sector

BFREE and Union Bank Explore Distressed Loan Portfolio Acquisition in Innovative Partnership

German-Nigerian Fintech BFREE and Union Bank of Nigeria to Explore Distressed Loan Portfolio Acquisition

Published

2 days ago

November 28, 2023

Investors King

In a strategic move to address economic challenges and adapt to the current financial landscape, German-Nigerian fintech firm BFREE and Union Bank of Nigeria have announced a Memorandum of Understanding (MoU) that explores the potential acquisition of distressed loan portfolios.

The MoU was formalized during the German-Nigerian Business Forum in Berlin, signifying a collaboration that could reshape Union Bank’s loan portfolio strategy.

BFREE, in conjunction with its international financing partners, is eyeing a potential investment cap of $40 million.

The focus of the collaboration is on refinancing non-performing loan portfolios, particularly those facing delays in repayment or already written off.

As Union Bank adjusts to economic pressures, the partnership leverages artificial intelligence to provide innovative solutions, offering increased flexibility for loan repayment plans.

Union Bank, acknowledging the challenging economic environment, has taken proactive steps to navigate uncertainties.

Executive Director of Union Bank, Joe Mbulu, expressed excitement about the strategic partnership, emphasizing its alignment with Union Bank’s commitment to innovation and adaptability.

This collaboration underscores the dedication to finding inventive solutions to address economic challenges faced by customers.

The potential acquisition of distressed loan portfolios reflects a forward-looking approach to financial management and resilience in a dynamic economic landscape.

Banking Sector

Nigerian Bank Shares Surge as Central Bank Signals Capital Buffer Strengthening

Investors Respond Positively to Anticipated Capital Raising Measures

Published

2 days ago

November 28, 2023

Investors King

Nigerian bank shares experienced a surge on Monday as investor sentiment rose following the central bank’s announcement that banks should increase their capital to cushion against economic uncertainty.

FBN Holdings Plc led the way with a 10% increase to N22 per share, its highest-a-day increase in five months.

Access Holdings Plc and Sterling Financial Holdings Plc also joined the upward trend, recording gains of 4.3% and 5%, respectively.

The banking index, which gauges the performance of the country’s major lenders, rose 1.7% to 754.95, reflecting the most significant increase in almost a month.

Investors are interpreting the central bank’s directive as a precursor to potential capital-raising initiatives by banks.

Joshua Odebisi, a bank equity analyst at RMB Nigeria Stockbrokers, stated, “Investors are anticipating a few things that can happen, such as capital raising, which has potential upside for those taking a position now.”

He highlighted FBN as having significant room to fulfill higher capital requirements that the central bank might set.

Central Bank Governor Olayemi Cardoso announced the need for banks to raise additional capital as a safeguard against the challenges posed by the weaker naira and sluggish economic growth.

While specific details were not provided in the announcement, the industry expects forthcoming guidelines that may involve an increase in minimum shareholders’ equity and adjustments to capital adequacy ratios.

The move aligns with a broader industry trend of reinforcing capital buffers amid naira depreciation.

FBN had previously gained shareholder approval for a rights issue to raise up to 150 billion naira in fresh equity.

The central bank’s emphasis on capital strengthening comes as the Nigerian currency has experienced a 40% depreciation against the dollar since the easing of foreign-exchange controls in June.

FBN’s capital adequacy ratio stood at 16% in the third quarter, closely approaching the 15% minimum threshold for international banks.

In comparison, Access Bank reported a ratio of 19.6%, indicating a stronger position relative to regulatory requirements.