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Distress Hits Heritage Bank, CBN In Cover-up Mode

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  • Distress Hits Heritage Bank, CBN In Cover-up Mode

Heritage Bank Plc is currently stuck in a debilitating liquidity situation, according to a SaharaReporters report.

Our sources disclosed on Monday that the bank is unable to meet customers’ immediate withdrawal requests and has wiped out all foreign currency domiciliary accounts through physical theft of cash by the bank’s directors.

First Bank Plc, which handles Heritage Bank’s universal clearing activities, has threatened to blacklist the bank and stop further clearing transactions if its outstanding deficit of over N5billion is not cleared.

At the weekend, at a meeting held at a secret location between the Managing Director and some top management staff, it was resolved that the Managing Director and two Executive Directors should resign their appointment for their role in throwing the institution into distress.

Sources said the bank’s operations in the Northern part of the country region are sustained by one customer, Rano Oil Limited, which maintains a deposit with Heritage Bank because its Chairman is unaware of the severity of the situation in the bank has slipped into.

Among others, the Managing Director is alleged to have been involved in the laundering of about N12.8billion. Two insurance firms: IEI Insurance Plc, and the National Insurance Commission of Nigeria, are said to be connected to the matter.

Also, the report noted that the Economic and Financial Crimes Commission (EFCC) was prepared to charge the Managing Director to court, but did not, following the intervention of Senate President Bukola Saraki, who is a part-owner of the bank. The EFCC, whose chairman is awaiting confirmation by the Senate, stepped back.

Customers with foreign currency deposits are facing severe difficulties because they no longer have access to those funds.

Because of the magnitude of the bank’s problems and the possibility of prosecution, the Managing Director is said to have taken ill.

Out of about 500 Automated Teller Machines (ATMs) of the bank in the Lagos metropolis, only 138 are currently dispensing cash, the bank lacking money to feed the others.

Bank sources said a sum of N140million is required to supply all the ATM locations, and Heritage struggles to provide N10million for these ATM locations, which is why its machines rarely dispense cash.

The bank’s situation is further worsened by boardroom intrigues, tribal politics and ownership tussle.

The Managing Director and one Executive Director are said to run the bank like sole proprietors. The Managing Director and another Executive Director, Mary Akpobomen, who has been promised the position of the Deputy Managing Director by December, are in the same camp. The Yoruba interest in the bank, with Board Chairman, Mr.

Seyi Akinfenwa, also has Mr. Tayo Ayeni and two Executive Directors, Mr. Niyi Adeseun and Mr. Ola Olabimjo on another side. On yet another side are Mr. Godwin Emefiele, Governor of the Central Bank of Nigeria (CBN), who is the main pusher of Delta State/Agbor interest. The battle axes are said to be two other Executive Directors, Mrs. Ada Eze and Mr. Jude.

The three-dimensional feuds have ensured that positions, postings or deployments are made on lines of group loyalty, with competence plainly ignored. The bank’s Treasurer, Mr. Abidemi Shonaiki, was eased out of the bank when the Managing Director was on leave.

Insiders revealed that the bank has been turned into a compost heap by its top management staff, who among other misdeeds, use customers’ naira deposits to finance the acquisition of private properties in Lagos, Abuja, and Port Harcourt. They are also said to award contracts at inflated costs to the Managing Director, relatives, and friends of executive directors; employ top management staff without clearance from the CBN; bribe CBN staff on banking inspection with dollars; and cover up the bank’s liquidity problems by buying cash from other banks without the required documents or due diligence.

The Heritage Bank management portfolio of misdeeds is also said to include paying N100million bribe to pension funds officials for patronage retention; illegal warehousing of N1.2billion that should be in the Treasury Savings Account; as well as illegal clearance of customers’ deposits via issuance and payments of questionable ‘PRs’ in hundreds of millions.

The CBN Governor has ensured that these misdemeanors are kept hidden due to political pressure by the owners of the bank, and because the CBN doesn’t want to give the appearance of further distress in the banking sector following the recent crisis at Skye Bank.

The bank’s ailments have also manifested in the practice of debiting customers’ accounts for transfers without crediting the beneficiaries for days, blaming it on network failure; arbitrary sacking of staff who insist on standards; sacking of staff who exposed the fraud involving the Nigeria Ports Authority through which N7billion was illegally warehoused and diverted in clear violation of TSA directives; and refusal to report fraudulent activities involving relatives and cronies of the Managing and Executive Directors.

Other symptoms of poor corporate governance include the transfer to Abuja, but not sanction, of an Executive Director and General Manager from Lagos for committing fraud; promoting Managing Director’s relatives without appraisal; fraudulent conversion of bank properties by the Managing Director and top management staff; and the procurement of N2billion worth of furniture items and N3billion Toyota cars without passing through tender procedure.

Also, the bank awarded all cleaning contracts to one Mrs. Akpobome, who used different names for contracts, which cover North, South, West, East and Abuja outlets of the bank. The Managing Director and other top management staff also award contracts to their wives and children without due diligence.

The bank, the sources added, employed school certificate holders as officers, assistant managers, deputy managers or managers, even without experience.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade long experience in the global financial market. Contact Samed on Twitter: @sameolukoya

Investment

Barclays Tell High Net Worth Investors to Shun Africa and Other Emerging Economies

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Barclays to High Net Worth Clients, Stay Off Africa and Other Emerging Economies

Barclays, one of the world’s largest investment banks, has started advising high net worth clients to stay off Africa and other emerging economies.

According to Barclays, despite the recent recovery noticed in emerging-market stocks, investors are better off avoiding the risks that still abound in emerging nations. Barclays Plc, however, advised high net worth clients to focus on U.S equities despite the S&P’s breakneck rally.

The investment bank said emerging economies do not have enough fiscal buffers to spend their way out of the COVID-19 pandemic and will likely continue to struggle in the near-time compared to the US with 12 percent of gross domestic product fiscal-support.

It said the huge US stimulus may halt rebound in emerging-markets stocks as more money is expected to flow into the world’s largest economy and its European counterparts.

“Compared to the U.S., emerging-market economies appear more vulnerable,” said Haider, the London-based managing director and head of global growth markets. “Their central banks have less room to maneuver, their governments may not be able to provide unlimited support and equity markets, given their sector mix, can be more challenged by an economic slowdown.”

Barclays added that even after 33 percent rebound in stocks of emerging markets since the panic selloff subsided in March, stocks are still down by 9 percent from year-to-date while the US S&P 500 stocks are up by 45 percent. Presently, their stocks trading at a 36 percent discount to US stocks, up from 25 percent three months ago.

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Economy

Crude Oil Rises to $43.1 Per Barrel on Production Cuts Extension

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  • Crude Oil Hits $43.1 Per Barrel Following OPEC’s Production Cuts Extension

Brent crude oil, against which Nigerian oil price is measured, rose by 1.25 percent on Monday during the Asian trading session following OPEC and allies’ agreement to extend crude oil cuts to the end of July.

OPEC and allies, known as OPEC plus, agreed to extend production cuts of 9.7 million barrels per day reached in April to July on Saturday.

In the virtual conference, delegates agreed that members, including Nigeria and Iraq presently struggling to attain a 100 percent compliance level must keep to the agreement or be forced to do so in subsequent months.

Nigeria, Iraq and others failed to keep to the cartel’s agreement in May after reports show that Nigeria only managed to attain a 19 percent compliance level during the month while Iraq struggled to attain just 38 percent in the same month.

Russia and Saudi Arabia, the two largest producers of the group, warned members to stick to the agreed quota if they want to rebalance the global oil market.

While the errant producers such as Iraq and Nigeria have vowed to reach 100% conformity and compensate for prior underperformance, we still think they will likely continue to have some commitment issues over the course of the summer,” said Helima Croft, head of global commodity strategy at RBC Capital Markets.

The potential return of Libyan output could also cause considerable challenges for the OPEC leadership.

Earlier on Monday, Brent crude oil hits $43.1 per barrel, more than a month record-high, before pulling back slightly to $42.83 per barrel.

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Economy

Gold Dips by 2 Percent on Better Than Expected Job Report

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  • Gold Dips by 2 Percent on Better Than Expected Job Report

Gold prices declined by 2 percent on Friday following a better than expected US non-farm payroll report.

The report showed an increase of 2.5 million payroll numbers against a decline of 7.5 million predicted by many experts.

The surprise number boosted investors’ confidence in US recovery as many dumped their haven investment (gold) for the stock market.

“We had significantly stronger-than-expected U.S. payroll numbers – an increase of 2.5 million versus an expectation of a decline of 7.5 million – that 10-million swing has brought forward expectations of the economic recovery in the United States,” said Bart Melek, head of commodity strategies at TD Securities.

Spot gold immediately declined by 1.9 percent per ounce to $1,678.81 while the U.S. gold futures slid 2.6 percent to settle at $1,683.

Gold was also being pressured by stronger yields and a slightly firmer dollar, “meaning the opportunity cost to hold gold in the portfolio has gone up,” Melek added.

The surprise didn’t stop there, US Dow Jones was up 614 points despite the protest going on the US and US-China tension.

Also, NASDAQ rose by 29 points while the S&P index added 50 points increase.

Note: Investors generally increase their investments in gold and other haven assets during a crisis to avert risk exposure and do the opposite once they sense a better economy.

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