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These are definitely not the best of times for Fidelity Bank, Skye Bank plc and with seven others sanctioned weeks ago by the Central Bank of Nigeria, CBN. Not least among their tribulations is their declining shares at the Nigeria Stock exchange, NSE. The banks were barred from the forex market by the CBN over their failure to remit the Nigerian National Petroleum Corporation, NNPC, fund to the Treasury Single Account (TSA).
Investigations by The New Diplomat has shown that scarcity of foreign exchange has been fingered as the reasons the affected banks failed to remit the Nigerian National Petroleum Corporation, NNPC, fund to the Treasury Single Account (TSA).
An insider who squealed to The New Diplomat said the untold story was that due to the scarcity of foreign exchange arising from the banks’ overdependence on foreign exchange transactions for a huge portion of their earnings, coupled with the prevailing fall in oil prices the banks resorted to doing business with the deposits in their possession.
‘’It is pertinent to know that the referenced NNPC dollar accounts are fully disclosed to the CBN and are being operated in line with the regulatory requirements, while tripartite documented discussions have been ongoing between the CBN, NNPC and the bank on the need for domestic retention of those balances as part of measures to ameliorate challenges posed by the lack of FX availability, and customers inability to source FX to fund their trade finance obligations to the bank,” the insider said.
Indeed, it appears the banks may have done nothing wrong since the said the dividends due to the NNPC from the Nigeria Liquefied Natural Gas, NLNG, dividends are statutorily exempted from those to be remitted to the TSA.
According to information by Quadrant Company, Nigeria’s first full service PR consultancy, with tested and established processes and experience in issue analysis and management:
“The TSA policy came into force in August 2015 with government saying it would help control leakages in the system. However, following deliberations with the chief executives of the banks, the CBN clarified that the dividends due to the NNPC from the NLNG were exempted from the TSA policy. The Accountant General of the Federation, M K Dikwa, issued a circular addressed to the Director, Banking and Payments System Department of the CBN with reference number FD/LP2015/C/ADC/20/1/DF, dated September 14, 2015 to clarify this.”
CBN’s directive by its Director, Banking Supervision, Mrs. Tokunbo Martin, had directed that all outstanding unremitted $2.334 billion NNPC/NLNG dollar deposits should be made into the TSA.
The ripple effect of the sanction is expected to continue as the affected banks are recording huge losses in their shares. Diamond Bank recorded the highest decline of 8.9 per cent, falling from N1.24 per share to N1.12. FCMB followed with a decline of 5.0 per cent to N1.14 from its opening share price of N1.20.
UBA shed 2.9 per cent, sliding from N4.53 to N4.46 per share. Skye Bank went down by 1.5 per cent to close at N0.64, against its opening price of N0.65.
Fidelity Bank fell by 0.9 per cent to N1.00 per share, just as FBN Holdings fell by 0.3 per cent to end the day at N3.16.
Recall that CBN last week barred nine banks from participating in the FX market for not remitting a total of $2.334 billion to the TSA.
The affected banks were the United Bank for Africa (UBA) Plc – $530 million, First Bank of Nigeria (FBN) Ltd. – $469 million, Diamond Bank Plc – $287 million, Sterling Bank Plc – $269 million, Skye Bank Plc — $221 million, Fidelity Bank Plc – $209 million, Keystone Bank Ltd. – $139 million, First City Monument Bank (FCMB) Ltd. – $125 million, and Heritage Bank Limited – $85.5 million.
This is even as further sanctions loom for the affected banks in the coming days.
As at the time of going to press, only UBA has fully complied with the CBN’s directive and has been fully reabsorbed by the country’s apex bank.
Fidelity and Skye Bank are no strangers to controversy going by their antecedents in recent times. Few weeks ago, the CBN dissolved the board of Skye Bank Plc. over financial impropriety perpetrated by the board of the bank.
The country’s apex bank cited persistent failure of Skye Bank PLC to meet minimum thresholds in critical prudential and adequacy ratios, which has culminated in the bank’s permanent presence at the CBN Lending Window as one of the reasons for the changes that have swept across the bank. In particular, Skye Bank’s Liquidity and Non-performing loan Ratios have been below and above the required thresholds, respectively, for quite a while.
CBN also announced the selection of Alh. M. K. Ahmad to be the new Chairman while Mr. Adetokunbo Abiru was also announced as the new Managing Director.
Earlier, Fidelity had suffered its share of sanctions as the bank’s former MD, Kenneth Okonkwo; Head of Operations, Martins Izuogbe along with some other top officials were guests of the country’s anti-graft agency, the Economic and Financial Crimes Commission, EFCC.
Okonkwo and his cohorts were alleged to have helped former Minister of Petroleum Resources, Diezani Alison-Madueke launder the sum of N23billion.
Diezani, it was alleged, called on Okonkwo to help her handle some cash to be distributed to some election groups and officials during the build-up to the 2015 general election.
She allegedly lodged $26 million into an account, and four companies Actus Integrated, Northern Base Gas Company, Midwestern Oil and Gas and Laitan Adesanya also paid $17.8m, $60m, $9.5m, and $1.35million respectively into the same account.