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CBN re-admits UBA into forex market

The Central Bank of Nigeria (CBN) has announced it has readmitted the United Bank for Africa (UBA) into the interbank foreign exchange market.

The re-admittance of the UBA into the interbank forex market came in the wake of moves by   managers of the nine banks sanctioned for withholding the Nigeria National Petroleum Corporation (NNPC) $2.1 billion,  to negotiate with the Federal Government to resolve the controversy,
The Director of Banking Supervision of the CBN Mrs. Tokunbo Martins, said the re-admittance of the UBA followed the remittance of all the outstanding NNPC/NLNG deposits in its possession to NNPC’s TSA account at the CBN.
Her word: “Accordingly, the United Bank for Africa (UBA) Plc has been re- admitted into the Foreign Exchange Market effective Thursday, August 25, 2016.”
Meanwhile, some of the affected banks have been explaining efforts being made to iron out the issue with the CBN.
FCMB said it was working with the apex bank to resolve the issue, which it said was a function of illiquidity in the currency markets and the weak economy rather than wilful non-compliance.
First Bank, said it remits government funds when due but was discussing with the CBN and NNPC on ways of retaining the dollars to help solve forex shortages and meet its obligations.
The management of Sterling Bank Plc, said it unequivocally rejects the suggestion that it failed or neglected to disclose at any time, any sum held on behalf of its clients to the regulatory authorities as such balances were fully captured in the relevant regulatory returns. It affirmed that it went beyond this basic requirement of disclosure and reporting to holding several meetings with the parties involved.
“The current situation is a broader sector issue arising from the foreign currency illiquidity in the domestic banking sector. Sterling Bank continues to work with its client and the banking regulator to resolve the situation in the shortest possible time, the bank said.
A statement from Keystone Bank read: “We wish to assure you that Keystone has always made full disclosure of outstanding TSA funds, and had at various times diligently engaged the CBN and relevant stakeholders for resolutions to enable the bank fulfill the TSA obligations in the face of challenging market conditions. All our efforts are geared towards very timely resolution as we understand the importance of sourcing foreign exchange for our customers’ needs to support economic growth.”
The suspension of eight banks from foreign exchange (forex) transactions has taken a huge toll on the weak Naira as it slumped to N402 per dollar Wednesday at the black market
This was N5 weaker than the N397 /$ it traded at its previous session as dollar shortages gripped the official market.
Traders said that the naira, which hit fresh record low since the central bank floated the currency on the official interbank market in June, first touched 400 on the black market this month.
At the interbank market, no trades were posted until three minutes before the end of the session, when CBN which has been reducing its dollar sales, intervened, traders said. Only three deals worth $0.75 million were recorded at 305.50 per dollar, a level the market has closed at since Monday. The naira hit an all-time low of N365.25 per dollar on the interbank on Thursday.
The nine banks suspensions from the interbank market were imposed after they failed to remit $2.1 billion, the government’s share of dividends from National Liquified Natural Gas (NLNG). They were due to pay the funds into the government account at the central bank.
The banks, whose suspension would remain in force until they remit all the funds to the Treasury Single Account (TSA) are First Bank of Nigeria (FBN) $469 million; Diamond Bank Plc ($287 million); Sterling Bank Plc ($269 million); Skye Bank Plc ($221 million); Fidelity Bank ($209 million); Keystone Bank ($139 million); First City Monument Bank (FCMB) $125 million; and Heritage Bank ($85 million).
Foreign investors – other past suppliers of dollars – have remained on the sidelines, making the central bank the main source of hard currency.
On Wednesday, Nigeria’s dollar reserves fell 2.5 per cent from a month ago to $25.67 billion, its lowest level in more than 11 years, according to central bank figures. But reserves may be far less when all future dollar commitments are included.
The CBN settled $1.2 billion worth of outright forward contracts it sold in June at N280.

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