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Top Oil Trader Vitol Paid Staff Dividend of $820 Million in 2015

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A sign is pictured in front of the Vitol Group trading commodities building in Geneva
  • Top Oil Trader Vitol Paid Staff Dividend of $820 Million in 2015

Vitol Group, the world’s biggest independent oil trader, paid its top executives and staff a special dividend of $820 million in 2015, regulatory filings show.

The dividend, distributed among a group of about 350 top employees who are also shareholders, came as the company confirmed it posted net income of $1.6 billion, the highest profit for the trading house since 2011, filings with the Dutch Chamber of Commerce show.

The dividend payments are awarded to employee-shareholders of the privately held company in addition to salaries and bonuses. From 2008 to 2015, Vitol shareholders were awarded payouts totaling about $6.4 billion, the filings show.

In an interview last year, Vitol’s Chief Financial Officer Jeff Dellapina said the payouts haven’t prevented the company from continuing to invest in its business. “Over the past 10 years we’ve reinvested 50 percent of the profits in the business — an appropriate level for an established and growing company,” he said.

A Vitol spokeswoman in London declined to comment.

The documents also show Vitol’s board of directors’ total remuneration increased more than sixfold to $26 million in 2015 from $4 million a year earlier. Vitol’s board includes Chief Executive Officer Ian Taylor, Switzerland Managing Director David Fransen, Head of Asia Kho Hui Meng, Mike Loya the U.S. trading head and Russell Hardy, a senior executive.

In 2015, oil traders reaped rewards from price swings and a contango market structure that allowed them to lock in profits by storing crude to be sold later at higher prices. Vitol’s first-half net income slumped 42 percent in 2016, a person familiar with the matter said in October, as the trading house grappled with fewer opportunities to benefit from volatility.

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

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Foreign-Currency Shortages to Render Nigerian Banks Vulnerable -Moody’s

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Forex Scarcity Renders Nigerian Banks Vulnerable

Nigeria’s banks to experience acute funding challenges as the drop in foreign currency deposits hit a record-low following COVID-19 pandemic disruption, stated Moody’s.

In a recent report titled ‘Renewed foreign-currency shortages highlight vulnerability for Nigerian banks‘ published by Moody’s Investors Service, a bond credit rating business of Moody’s Corporation, the drop in dollar deposits amid low oil revenue, volatile foreign investment and declined remittances from abroad due to COVID-19 pandemic are threatening to renew forex liquidity crisis of 2016-2017 on Nigerian banks.

“Lower dollar inflows at a time when foreign currency borrowing will likely be more expensive for Nigerian banks will strain their foreign currency funding, despite substantial improvements compared to 2016,” said Peter Mushangwe, Analyst at Moody’s.

“Our moderate scenario where foreign-currency deposits decline by 20%, while loans remain constant, would increase rated banks’ funding gap to NGN1.5 trillion [$3.8 billion], and to NGN1.9 trillion [$5.0 billion] under our severe-case scenario of 35% foreign-currency deposit contraction, creating acute funding challenges.”

According to Moody’s, oil and gas exports account for about 90 percent of Nigeria’s foreign currency revenue. However, with crude oil now trading at around $40 per barrel, far below its average of $65 per barrel in 2019 and $72 per barrel in 2018, Nigeria’s banks are expected to struggle to meet foreign-currency withdrawals in the next 12 to 18 months.

Moody’s said its rated “banks reduced their foreign currency funding gap to a combined NGN354 billion ($984 million) in 2019 from NGN1.436 trillion ($5.5 billion) in 2016. The ratio of foreign-currency loans to foreign-currency deposits at Moody’s rated banks dropped to 106% at the end of 2019 from 135% in 2016 as banks cut back on dollar loans while building up their dollar deposits.

“The smaller funding gap will enable the banks to better withstand unforeseen deposit withdrawals and likely higher borrowing costs. However, in the event of foreign currency deposits contracting by 20% or more, banks’ funding gaps will be significant.”

This further explained why the Nigerian Naira is trading at a record low of N461 against the United States dollar on the black market in recent weeks.

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Naira Records Marginal Gain Against the US Dollar on Thursday

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Naira Gains Marginally  Against the US Dollar On Thursday

The Nigerian Naira gained slightly against the United States dollar both on the black market and Investors and Exporters’ Forex Window on Thursday

On the black market, the local currency gained N1 from the N462 it exchanged against the US dollar on Wednesday to close at N461 on Thursday.

This slight improvement continues against the Euro single currency on Thursday as the Naira gained N2 from N505 it traded on Wednesday to N502 on Thursday.

However, the Nigerian Naira was unchanged against the British Pound. The local currency traded flat at N560 against the British Pound.

On the Investors and Exporters’ Forex Window, the Naira gained 0.13 percent or 50 kobo against the US dollar to trade at N386. This was after trading as low as N389.75 during the trading hours of Thursday.

Activity level rose by almost 2000 percent from $10.37 million turnover recorded on Wednesday to $204.90 million on Thursday.

The Nigerian Naira remained under pressure as dollar scarcity continues to hurt its value and sentiment.

Also, the lack of clear policy direction is one of the reasons Nigeria continues to struggle with needed capital importation and huge forex demand from investors looking to repatriate their funds.

The Federal Government recently raised fuel pumping price at a time when most nations are reducing costs to ease economic burden on their citizens.

This move already rejected by the Nigeria Labour Congress (NLC) on Thursday highlighted the nation’s lack of economic direction despite numerous announcements by the central bank and federal government to mitigate negative impacts of COVID-19 on the economy.

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Naira Exchanges at Record-low Against US Dollar on Black Market

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Naira Trades at Record-low of N462 Against US Dollar

The Nigerian Naira plunged to a record low of N462 against the United States dollar on Wednesday on the black market as scarcity persists.

The local currency lost N2 against the US dollar from the N460 it traded on Tuesday to N462 on the black market on Wednesday. While against the British Pound, the Naira remained unchanged at N560. The same rate it exchanged on Tuesday.

Similarly, the Nigerian Naira remained flat at N505 against the Euro single currency on the black market.

On the Investors and Exporters Forex Window, the local currency remained unchanged at N386.50 to a US dollar, the same rate it was exchanged on Tuesday.

Activity on the platform dropped on Wednesday as daily turnover stood at $10.37 million, below the $14.37 that was exchanged on Tuesday.

Scarcity across key foreign exchange segments continues to hurt the nation’s currency and economic outlook due to the inability of investors and businesses to access foreign exchange needed to import raw materials into Africa’s largest economy.

This was evident in the broad-based decline recorded in the manufacturing sector in the month of June.

Also, the unconfirmed report that the Federal Government is looking to converge the nation’s exchange rate due to the pressure from the International Monetary Fund (IMF) added to Naira pressure as speculators and hoarders now have reason to remain in business.

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