Why CBN joined Etisalat, banks debt mediation
Forex, naira get stable forecasts in short-term
The Central Bank of Nigeria (CBN) joined the intervention efforts in resolving the controversial $1.2 billion debt owed to 13-bank syndication group by Etisalat to avoid looming asset stripping.
Although not within its purview to decide how banks and individual customer resolve bad loans, the apex bank said its intervention now is necessitated by the systematically important nature of the company and consequent job losses.
It is also compelled to step in due to the assessed 20 million subscriber-base and the huge transactions volume it represents, as well as the negative implications for the banking system if not well handled.
The move came on the heels of deepening crisis and failed negotiations last week between Etisalat and the consortium of banks over the syndicated loan, as the apex bank is now set to join Nigeria Communications Commission (NCC) in the mediation.
Confirming the development, CBN Spokesman, Isaac Okorafor, explained that the two regulators, sensing that banks might go ahead in the usual way and downsize the company’s over 4,000 staff, reached an agreement to intervene and implore the consortium of banks to reassess its position in dealing with Etisalat.
Okorafor described media reports insinuating a “handwriting” by CBN on the issue as “the height of mischief and insensitivity”, explaining that the collaborative move by the regulators was rather a preventive measure against escalation and ensure that Etisalat remains in business to pay back the loans.
He affirmed that sooner, CBN and NCC will meet with the syndicate of banks and the IHS Towers, the tower managers and the equipment suppliers, to reach what he described as “a win-win outcome” for all.
Meanwhile, the nation’s foreign exchange market and the naira have been forecast at stable outlook in the short term, as the apex bank sustains reforms and interventions in efforts to reach convergence of all rates.
This is coming just as the volatile parallel market stayed subdued last week, ending the week at N365 per dollar and remaining in the band of N363-N368 per dollar in the last three weeks at near convergence.
Analysts at Afrinvest Securities Limited, at the weekend, were unanimous that stability in the FX market will be sustained in the short to medium term as the CBN continues its drive to boost foreign exchange liquidity across segments.
At the weekend, the newly launched investors and exporters window, reached a volume of trades worth more than $2.5 billion, with only 30 per cent of the value assessed to intervention by the regulator.
The Managing Director of Afrinvest Securities, Ayodeji Eboh, admitted that it is a sign of returning confidence to the market and has been felt across the equities and securities segments in the last few weeks.
The bank, also on Friday, confirmed the sale of forex to dealers in the Bureau de Change (BDC) segment of the market to meet the needs of low-end forex users.But the Acting Director, Corporate Communications Department CBN, Okorafor, said there is no reason to speculate about the sustainability of the interventions anymore, as it has been proven overtime.
To ensure that this week is started on a good note by Wednesday after the two-day holiday, CBN had on Friday, offered $240 million to the Secondary Market Intervention Sales (SMIS) for spot and forward market, covering deals initiated in the course of the out-gone week.
CBN, had in the last two weeks, offered more than $1.2 billion in the foreign exchange market, covering all segments in the market, with majority of the offer made up of 30-day and 60-day tenors.
No comments yet