Banking
Europe moves to banking union with blueprint for failing lenders
BRUSSELS – The European Union agreed on Thursday a blueprint to close failing banks but stopped short of a more ambitious plan for the euro zone to unite in tackling its troubled lenders.
More than five years since a financial crisis struck, Europe is on the verge of finalizing one its most ambitious reforms since the launch of the euro – an agency and fund to shut problem banks as soon as the European Central Bank starts to police them next year.
Early on Thursday morning, finance ministers from across the bloc sealed a broad agreement on this final element of banking union. European leaders, who will gather in Brussels later in the day, will sign off on it and the final touches will be made in negotiations with the European Parliament next year.
“The final pillar for the banking union has been achieved,” Germany’s Finance Minister Wolfgang Schaeuble told journalists.
The project’s aim is to prevent a repeat of the turmoil when failing banks in countries from Ireland to Cyprus brought their states to the brink of bankruptcy.
By setting up a system to shutter troubled lenders, Europe would equip the ECB with the means of dealing with teetering banks. However, the scheme that has emerged, because of efforts to accommodate skeptical countries, is unwieldy.
It requires the ECB to fire the starting shot by declaring a bank as too weak to survive. What follows, however, involves input from a new agency empowered to shut banks, the European Commission and up to 18 different euro zone countries.
Schaeuble played down concerns that this could prove cumbersome. “It has to go quickly in an emergency, over a weekend,” he said, adding that the new structure would be nimble enough to do so.
Michel Barnier, the European commissioner in charge of financial regulation, expressed frustration with the watered down deal.
“When I compare it with my original proposal I have regrets,” he said. “I would like to have seen things done otherwise.”
The ECB, which also lobbied for a simpler system, achieved limited success in its suggestion for a fast-track procedure in an emergency to decide the fate of a sick bank.
It now remains to be seen whether the European Parliament, which also has a say in the law, will approve the scheme.
Sharon Bowles, one of its most influential members, earlier warned that lawmakers would stop any scheme that allowed “politics and bully tactics”. “We do not want any more fiascos like those witnessed with Dexia and Fortis,” she said.
BLOW TO INVESTORS
Despite the progress on Thursday, central elements of the banking union are still missing. For one, Germany continues to stand firm against the use of euro zone money to back a scheme for tackling troubled banks.
Schaeuble earlier made clear that no money from the euro zone’s rescue fund, the 500-billion-euro European Stability Mechanism (ESM), would be available directly for bank clean-ups.
Instead, a government struggling to pay for a failing bank will have to ask for an ESM-paid-for bailout, a humiliating step with strict conditions attached.
That deals a blow to a central tenet of banking union as it was originally conceived, namely that weak governments should not be left to cope with banks whose problems can buckle a country.
Unlike in the United States, where the federal government can transfer funds to help weaker states, countries in the euro zone do not send such aid. Germany, which makes up more than a third of the euro zone’s economy, wants to keep it that way.
Instead, euro zone ministers agreed that banks will pay into funds for the closure of failed lenders, amassing roughly 55 billion euros ($76 billion) over 10 years.
French Finance Minister Pierre Moscovici is one of many ministers who still harbor hopes that Germany will make further concessions in talks over the coming weeks.
“We wanted a backstop,” he said. “We are working on its definition, which will evolve over time with several possibilities.”
Schaeuble, however, emphasized that new rules to impose losses “first and foremost” on a failing bank’s investors and creditors reduced the need for governments to step in.
Jeroen Dijsselbloem, the Dutch finance minister who chairs meetings of euro zone finance ministers, also said this new order had overtaken the need for any joint backstop.
“Is it national or European? My approach is it public or private? As of today, it’s private.”
“Banks … can take the first blow. The second blow will have to be carried by the investors, shareholders, bondholders in the banks. And the third blow … will be carried by the fund but the fund is also paid by the sector itself.”
Many in the room, including the ECB, were disappointed, officials said. There were fears that uncertainty over how failed lenders will be dealt with will compromise a clean up the financial sector after ECB health checks next year.
“Now we have, let’s call it, a compromise,” said one official, summing up the mood among many in the room. “It could be way better.”
Completing a banking union is central to keeping the euro safe in the long term, a currency bloc that is as political in its goal of deepening European integration as it is economic.
The euro lacks the workings of a normal currency union such as in the United States, which has a central finance ministry and regulators alongside a central bank. Europe’s banking union had promised to help change that.
– REUTERS
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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