CBN to review bank charges, as official-parallel forex rates remain wide
The Central Bank of Nigeria (CBN) is on the verge of reviewing the Guide to Bank Charges, as it has already requested banks and other financial institutions to forward their respective lists of products and services as at March 31, 2013, which were not covered in the extant guide.
The latest review would include products and services, which charges in the current guide do not cover costs according to banks’ judgement.
In a circular signed by U. A. Obot for the Director of Financial Policy and Regulation Deprtment, CBN, addressed to all banks and other financial institutions, they are directed to detail products and services introduced since April 1, 2013, the fees and charges, as well as justifications, while those they intend to unveil in the short to medium term and proposed tariffs and justifications are to listed equally.
But Sub-Saharan Africa Banking Analyst and Head of Research, Nigeria, at Renaissance Capital, Adesoji Solanke, said: “We view this as a positive development.
The phasing out of Commission on Turnover (CoT) remains a key concern for investors in Nigerian banks, particularly considering the current plan for CoT to move to zero per cent from next year. “We have noticed this year that the banks have become relatively more confident than in previous years on the unlikelihood of CoT being wiped out completely, and we think it was on the back of expectations that CBN intended to review the bank charges… we expect at the minimum, the phasing out of CoT will be looked at, probably with a view to keeping it at current 0.1 per cent.”
Meanwhile, the naira remained stable at N199.10/$ at the interbank market last week, as the apex bank sustained intervention at N197/$, while at the parallel market segment, the local unit started the week with 1.8 per cent appreciation from N221/$ it ended the previous week, to N217/$.
However, the parallel market rates remained the most volatile when compared to interbank market and CBN’s intervention rates. For the rest of the week, parallel market rates traded within the bands of N212/$ and N221/$ as the Nigerian financial system continued to adjust to the extant policy stance on foreign exchange.
With the CBN’s persistent efforts at defending the currency via the use of demand management policies in order to conserve the external reserves, the local unit has appreciated 5.8 per cent month-to-date to N212/$ in the parallel market.
However, the spread between the interbank market and the parallel market rates remained wide due to continued intervention by the CBN.
Our outlook on the foreign exchange market this week is a continuation of what transpired last week, hence exchange rates are expected to trade at current levels with marginal swings in the parallel market,” analysts at the securities company said.