CBN re-admits sanctioned banks to forex market

By Omodele Adigun and Chinwendu Obenyi,

A week after it barred nine banks from all foreign exchange (forex) related transactions, the Central Bank of Nigeria (CBN) yesterday re-admitted other eight banks to commence dealing in the market.
The reprieve came after United Bank for Africa Plc (UBA) was readmitted last Thursday following  its remittance of all outstanding NNPC/NLNG deposits in its possession to Nigerian National Petroleum Corporation’s (NNPC) Treasury Single Account (TSA) at the CBN.
Announcing the reinstatement of the eight banks in Abuja, the CBN Director of Banking Supervision, Mrs. Tokunbo Martins, stated that the Body of Bank CEOs, under the auspices of the Chartered Institute of Bankers of Nigeria (CIBN), met with the Committee of Governors of the CBN and presented a payment plan for all outstanding US dollars deposits from the NNPC/NNLG in their possession to the TSA.
Speaking during the briefing, the CIBN President, Prof. Segun Ajibola, stated that the Body of Bank CEOs, in partnership with the CIBN, decided to seek for the resolution of the situation in the interest of the Nigerian economy.
Corroborating the decision, the Managing Director of Access Bank Plc, Mr. Herbert Wigwe, said the Body of Bank CEOs met with the CBN Committee of Governors in order to resolve the issue.
The apex bank had on Tuesday last week, August 23, banned some banks from dealing in the forex market for non-remittance of the US dollars deposits from the NNPC/NLNG in their possession to the TSA until they comply with the directive.
The affected banks were UBA, $530 million; First Bank of Nigeria (FBN), $469 million; Diamond Bank Plc, $287 million and Sterling Bank, $269 million. The rest were Skye Bank, $221 million; Fidelity Bank, $209 million; Keystone Bank, $139 million; FCMB, $125 million and Heritage Bank, $85 million.
The apex bank threatened that further disciplinary actions awaited the erring banks after remitting the funds in full to government’s coffers.
Reacting to the latest development, Mr. Ike Chioke, an investment banker and Managing Director of Afrinvest West Africa Limited, applauded the decision to reinstate the banks, saying, “I think it is a good thing that the banks have been re-admitted. It will normalise the foreign exchange market a little bit where the naira depreciated by as much as 1.5 per cent  and almost 14 per cent at the black market from where it was before the sanction.”
Chioke opined that the sanction imposed on the banks was far from helping the economy. “There are certain actions that were wrong. But you may have to leave that and consider whether the punishment will achieve the results you want.
And for the economy, looking at how fragile the Nigerian economy has become in recent times, we don’t need these sort of surprises or shocks from the central bank at all. It was a frustrating experience for the Nigerian economy in my view,” he added.