Banking
14 banks on edge over new cash reserve policy
LAGOS-ABOUT 14 banks may have landed at the receiving end of the Cash Reserve Requirement, CRR, harmonisation policy announced last week by the Monetary Policy Committee, MPC, of Central Bank of Nigeria, CBN.
About nine banks are benefiting from the policy change.
Godwin Emefiele, CBN Gov
CRR simply specifies the proportion of a bank’s deposit that must be reserved, thus specifying the limit of cash banks can lend out of its total deposits.
For this purpose banks’ deposits are divided into public sector and private sector with 75 percent reserve imposed on public sector deposits, while 20 percent was imposed on private sector deposits up until last week.
However, MPC rose from its second quarter meeting last Tuesday harmonising the two by crashing public sector CRR to 31 percent, while hiking the private sector CRR to same level.
Effectively the decision threw most banks that do not have substantial public sector deposits into difficult liquidity position, while also giving broader resources to others with big public sector deposits.
Our investigations show that the five banks usually categorised as systemically important banks, SBIs, in addition to four others are the major beneficiaries of the policy.
At the backdrop of deep concern about the state of the global and domestic economy, lower level of external reserves buffer, surging inflation and the fact that monetary policy is gradually approaching the limits of tightening, last week’s MPC had retained its policy stance on MPR (13%), exchange rate and liquidity ratio (30%), stating that additional tightening measures may not be appropriate now to avoid overheating the economy.
Banking industry analysts believed that in a bid to check moral hazard by private market participants given the current discriminatory CRR on public and private sector deposits, MPC took the decision to harmonise the CRR on public and private sector deposits.
Moreover, CBN sources indicated that the committee also envisaged that a relaxing effect of the harmonisation would be a release of about N500 billion hitherto reserved under the previous CRR for public sector funds into the economy, which would have a salutary effect in the macro-economy environment.
However, it was not clear if the apex bank took into consideration the consequence of the harmonisation on the health of the less-privileged banks as these banks have become embattled with squeezing liquidity since last week.
Experts’ views
Analysing the emerging scenario Afrinvest, a Lagos-based investment bank outfit said: “Although we initially considered MPC’s move to be strategic easing, further examination of CBN’s data as at end-April (2015), however, indicated that CRR consolidation to 31 percent actually lead to a net outflow of liquidity from system with varying impact across banks.
“Banks with more exposure to public sector deposit may benefit from CRR crediting, while banks over-weighted on private sector deposit will face further tightening pressure.
“While the MPC’s decision was borne out of the need to engender overall stability of the banking system, with reluctance for further tightening, the decision of the monetary policy committee on CRR may have resulted in an unintended tightening in our view.”
Reacting to the development, the Chief Executive of Financial Market Dealers Association, the umbrella body of banks’ chief financial strategists, Mr. Wale Abe, told Vanguard that while the policy may have some unintended outcome, the overall picture was positive given that CBN has a broader view and more information on the economy at large.
Out of the N500 billion expected to have been freed by the new policy, the nine benefiting banks control over N450 billion, while the remaining 14 banks share the balance of less than N50 billion.
-Vanguard
Banking
Millions of customers still stranded worldwide 24 hours after GT Bank online operations suffered attacks
By Yemie ADEOYE
GT Bank, one of Nigeria’s leading banks, with operations across Africa and the United kingdom, and with an asset base of about US$3.11 trillion is under a cyber attack which has left millions of its customers across the world stranded in the last 24 hours.
The bank which was renowned for its seamless online operations at inception has suffered dwindling online efficiency in recent years and this current attack didn’t come as a surprise to many of its numerous customers. However, it is becoming worrisome that over 24 hours after its online operations went down, the bank has not been able to arrest the situation and restore its online services.
Stranded GT Bank customers outside the banks premises
Several customers of the bank took to their X (formerly known as twitter) handles to express their frustrations at the bank, as several of the customers in the diaspora are unable to access their accounts and carry on with their transactions. A customer , Jeff55 who lamented on his X handle about the development, stated that it is a thing of shock that a bank of this size couldn’t afford to have the necessary tools and experts to ensure a full protection of its online operations in this age and time.
Another customer Dimma stated that while Cybersecurity training may seem tedious, the recent #GTBank hack is a stark reminder that everyone is just a click away from a devastating attack.
Several media organisations had reported that hackers have stolen GT Bank website, and intercepted customers Data in massive phishing operation.
At the time of filing this report, Biztellers.com.ng checks on the banks website shows that it is still down and unaccessible, and neither GT Bank media and communications unit nor any of its agencies or surrogates have commented officially on the development.
Says output surge buoyed by reforms he announced in May 2024 to address gaps in PIA
President Bola Ahmed Tinubu on Sunday declared a resurgence in the oil & gas industry, commending the increased crude production to 1.6 million barrels per day.
The president, who said this in a national broadcast, maintained that the resurgence was buoyed by the reforms he announced in May 2024 to address the gaps in the Petroleum Industry Act (PIA).
Nigeria’s crude oil output got a boost to 1.61 million barrels per day in July 2024 through the president’s directive and the industry leadership provided by the Nigerian National Petroleum Company Limited (NNPCL).
Acknowledging what he called a resurgence of the once-declining oil and gas industry in his Sunday-morning broadcast to the nation, President Tinubu said that oil investors are coming back to Nigeria.
He said; “Our once-declining oil and gas industry is experiencing a resurgence on the back of the reforms I announced in May 2024 to address the gaps in the Petroleum Industry Act. Last month, we increased our oil production to 1.61 million barrels per day, and our gas assets are receiving the attention they deserve. Investors are coming back, and we have already seen two Foreign Direct Investments signed of over half a billion dollars since then.
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“Fellow Nigerians, we are a country blessed with both oil and gas resources, but we met a country that had been dependent solely on oil-based petrol, neglecting its gas resources to power the economy.
We were also using our hard-earned foreign exchange to pay for and subsidise its use. To address this, we immediately launched our Compressed Natural Gas Initiative (CNG) to power our transportation economy and bring costs down.
This will save over two trillion Naira a month, being used to import PMS and AGO and free up our resources for more investment in healthcare and education.
“To this end, we will be distributing a million kits of extremely low or no cost to commercial vehicles that transport people and goods and who currently consume 80% of the imported PMS and AGO.
“We have started the distribution of conversion kits and the setting up of conversion centres across the country in conjunction with the private sector. We believe that this CNG initiative will reduce transportation costs by approximately 60 per cent and help to curb inflation.”
Plans are in top gear for the 11th Annual General Meeting (AGM) of the FBN Holdings Plc.
The management made this disclosure in a notice it filed with the Nigerian Exchange Limited (NGX) on Thursday, where it averred that it has not been served with any court order against the proposed AGM.
According to notice, which was signed by the acting Company Secretary, Adewale Arogundade, FBN Holding said, “The attention of FBN Holdings Plc (the Company) has been drawn to recent media reports purporting that the Company has received a Court Order stopping it from holding the Annual General Meeting (AGM) scheduled for August 15, 2023.
“We confirm that this assertion is a false narrative as the Company has, as at the date hereof, not been served with any court order to stop the forthcoming AGM.
“Suffice to mention that the AGM is a statutory meeting of Shareholders that must be held in accordance with the law, further to which the Company will notify the regulators and the public as appropriate if there is any lawful order to restrain the Company from conducting same.
“We hereby assure our esteemed Shareholders that the AGM shall hold on August 15, 2023, as planned and we look forward to their attendance and active participation at the meeting.”
However, court orders published in national dailies showed that the Federal High Court in Lagos had issued an order against the financial institution, barring it from holding its 11th AGM.
The order was entered pursuant to a petition by Olusegun Onagoruwa, in suit No: FHC/L/CP/1271/2022. It was addressed to the bank and some other bank officials.
It read, “Take notice that unless you obey the directives in the judicial order contained in the order made on July 15, 2022, by the Federal High Court, Lagos, by refraining from proceeding with the 11th Annual General Meeting of FBN Holdings Limited proposed for August 15, 2023, from seeking approval to issue or raise share capital in any manner whatsoever, from appointing or confirming the appointment of new directors, or in any other manner taking any step towards implementing, actualising enforcing resolution of the 10th Annual General Meeting of FBN Holdings Plc held on June 20, 2022, or in any other manner overreaching, disobeying or undermining the said order of a court, you will be guilty of contempt of court and you will be liable to be committed to prison and to there imprisoned.”
Biztellers brought you a report that a segment of shareholders had staged a protest at the headquarters of the bank on Monday, calling for the AGM to be held, as well as soliciting regulatory interventions.
It is expected that at the AGM, FHN Holdings is poised to breathe life into plans to seek shareholders’ approval to raise N150bn fresh capital via a rights issue and elect new directors including billionaire, Femi Otedola and Samson Ariyibi among other resolutions.
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