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CBN sanctions nine banks over $2.334 billion NNPC funds



• ‘Why we can’t pay at once’
• ‘CBN owes us $3b in unfunded LCs’

Nine of the deposit money banks in the country have been banned from further foreign exchange transactions for their refusal to remit outstanding $2.334 billion Nigerian National Petroleum Corporation (NNPC) funds in their coffers.

The Central Bank of Nigeria (CBN), that wielded the big stick said it was forced to impose the ban for the refusal of the banks to remit the outstanding sum into its Treasury Single Account (TSA), as directed by the Federal Government last year.

The banks affected include United Bank for Africa (UBA), $530m; First Bank of Nigeria (FBN), $469m; Diamond Bank Plc, ($287m); Sterling Bank Plc, ($269m); Skye Bank Plc, ($221m); Fidelity Bank, ($209m); Keystone Bank, ($139); First City Monument Bank, (FCMB) $125m; and Heritage Bank, ($85m).

But in a swift reaction, the banks accused the CBN of trying to de-stabilise the market, claiming that the apex bank already owed Nigerian banks up to $3billion from unfunded letters of credit (LCs), since last year, before the TSA regime.

The Guardian exclusively reported yesterday about the CBN conducting stress tests on the banks to determine the strength of each of the financial institutions after the withdrawal of public funds from the banks.A top official of one of the affected banks, told The Guardian in a telephone: “We didn’t do anything wrong, we (banks) have been negotiating on this since last year because the dollar is not available to remit all the funds. We told the (CBN) that we can’t pay off in one go because the monies have been given out for loans and other investment purposes.”

The source, who spoke in confidence, blamed the CBN for inability to remit the funds, as the apex bank “Is owing banks about $3billion in outstanding Lcs, which they have not paid for over one year. They have only paid us $1billion from that amount yesterday, (Monday), and will pay another tranche next week.”

A top manager in another bank said: “We banks are working on an amicable resolution with CBN,” adding: “But harassing us will not solve the problem because this will cause an upheaval in the market.”

With regard to the unfunded LCs, another bank official said: “The amount came up to $3billion because CBN sold forex forward for the money they were owing us instead of using the spot market.”He expressed suspicion that CBN now needs the NNPC money “to shore up their dollar reserves,” which was down to about $26.4billion as at July 2016.

He continued: “When you create a problem like this and you know we don’t have the capacity to pay, you will only cause panic in the system because before we can pay back, we will have to borrow from the international banks. But right now, because of our current economic crises, even the international banks are not willing to help until we have resolved our problems.”

The sudden ban, analysts believe, will not only see a spike in the dollar against the naira in forex trading today and the future until there is a resolution, but cause a bearish run at the stock market.

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  • Basil Ogbanufe

    This is very serious.

    • Mr Abel Ighodaro

      This is Nigeria at it’s best. what a shame.

  • somoye kehinde

    Ds Emeifule sef?

  • abiamone

    In all countries, the central bank is supposed to be “the commercial bankers’ bank”. This suggests that the central bank is superior to commercial banks. With what is revealed above, it appears that the central bank has little or no authority on our commercial banks, and this is sad for the financial stability of Nigeria.

    • Carlos el Primero

      They had authority, but an independent audit of the CBN ought to be conducted to uncover the possibility of connivance between regulator and the regulated. This news makes a strong case for complicity somewhere…

      • abiamone

        Any probe of the central bank is a probe of the government because the central bank is supposed to be a mere mouthpiece of the government. Our central bank does not feel ashamed that its directives can eithet be challenged or ignored by commercial banks! We are in a very big mess.

  • Ezuma Smart

    Please , apex bank (CBN ) and Ameifule (the CBN governor ), let nothing happened to the poor masses deposite. Things are very difficult now. You people have to carefully handle this issue. All these jokes are reducing our economic morals in international market . And keeping the masses in fears .

  • Anne Mumuney

    Wow Mr President and Vice President, how do you handle this constant underhand dealing and outright thievery cloaked in heavy economic grammer on a daily basis. They took our money, laundered it for the various thieves in government and their partners in the private sector, and dispatched to foriegh accounts (in Panama amongst other places!!) on behalf of the operators under the guise of loans or financing of dead end projects that would never get off the ground, and now have the guts to turn around and say pay me first so i can pay you because we loaned out your money, and they were bad loans, and oh yes, your forex rates affected us and there’s nothing we can do, sorry about that. Na waoh!! Dont you wish that all this ingenuity could be applied to something constructive. Actually, I correct myself. Its not ingenuity, because even in stealing we are lazy, and get caught very easily. Its the lack of ACCOUNTABILITY that creates the enabling environment for all this nonsense, and the first person to be held accountable should be the CBN Governor. The buck stops with him after all.

  • pmagroup

    The source, who spoke in confidence…?

    A top manager in another bank said….?

    Does it mean that the affected banks do not have spokesperson….shameful Nigeria

  • Osgg Nigeria

    The only problem i see is that My President (Buhari) does not see the hidden agenda of the CBN Governor. The present CBN governor is an agent of the “3 Bank cabals” who wants to lord it over the Central Bank and dictate the economy. These 3 banks are warehousing all the looted funds in this country with high interest fixed-deposit ROI, so they will buy
    over all the CBN treasury bills and therefore CBN cannot dictate or request banks to loan at single digit, because they are collectively richer than the CBN. This is a longtime ago game plan and President Jonathan was ill adviced without reading in between the lines to appoint Emefiele as CBN Governor of Nigeria. If Mr President will take advise from OSGG, sack Emefiele and all Executive Directors with immediate effect – regardless of time-tenor and appoint some good hands from the legacy banks ( Firstbank, Unionbank or outside etc) and you will see the power of sincere monetary policies and leadership in CBN. Nigeria or CBN has so much natural resource equities as security to go outside and borrow soft loans from stable financial markets/countries to finance our forex “reasonable” demand for 5years with good moratorium. The President/CBN accepting to use or allocate our limited Forex for Christian and Muslim pilgrimage at a discount at this material time, is a misnomer. This is corruption and financial recklessness. A stitch in time saves nine. Let us keep praying for Divine intervention for Nigeria.