Banking
Banks challenged to step up as CBN set to withdraw public sector funds
ABUJA – Nigerian banks will be challenged in the weeks ahead to enhance professionalism within their systems by way of growing the requisite skills-set for real banking, improving risk appraisal, rendering enhanced customer service and re-assessing the overheads they bear in terms of number and cost of branches, among others.
This follows on the imminent removal of all public sector funds from the vaults of banks.
Besides, the 100 percent hike in cash reserve ratio (CRR) by the Central Bank of Nigeria (CBN) will engender real intermediation that banks are supposed to do through even allocation of resources to all sectors of the economy.
Sanusi Lamido Sanusi, CBN governor, said this at the 30th anniversary lecture of the Udo Udoma & Belo-Osagie law firm in Lagos, yesterday.
The move, which will be through the Monetary Policy Committee (MPC) chaired by Sanusi, will see the CRR moved to 100 percent, thereby forcing banks to create risk assets through aggressive deposit mobilisation.
However, some analysts said yesterday that the development would highlight the state of the banks, in terms of skills acquisition in relevant areas such as risks and credit appraisals.
The move, the analysts said last night, would make the current tightening policy stance of the CBN more meaningful to both the citizens and government, through checking of fiscal dominance, with the resultant effect of high liquidity in the system which is putting pressure on the naira.
Speaking at the anniversary lecture, Sanusi decried a situation where, in the face of current account surplus, with oil price above $100 per barrel, the external reserves continue to go down, exposing the economy to external shocks.
“From the perspective of economic theory, a persistent surplus on our current account, resulting from high oil price, should see the naira strengthen. However, the failure to build reserves has resulted in strengthening expectation that the naira will lose value. This expectation has been manifest in a continuing switch from naira to foreign currency-denominated deposits,” Doyin Salami, a member of the Monetary Policy Committee, had said at the recent MPC meeting.
Speaking further, Sanusi wondered how people would expect the CBN to perform its task of price stability in the face of fiscal dominance, stable exchange rate in the face of scarce foreign exchange due to leakages and theft, and how it could put the naira stable in the face of dwindling fiscal buffers.
Consequently, the CBN governor said his concern was to have a stable naira and exchange rate, stressing that this was the area that affected most Nigerians, rather than interest rate.
He expressed the opinion that when these funds are moved to the CBN, which is the best practice internationally, banks would become agents of development by moving funds from excess areas to where they are needed.
The implication is that liquidity in the system would be monitored and controlled; government’s accounting procedure would be synchronised and transparent, while the accompanying speculation of foreign capital withdrawal after hike in CRR would be eliminated.
“Available evidence from our decision to increase CRR on public sector deposits to 50 percent in July 2013, for instance, shows that this is one form of monetary tightening that has led to increased lending to the real sector by banks,” Uche Chibuike, a member of MPC who, like Sanusi, is an advocate of removing or increasing the CRR rate, said at the last MPC meeting.
“This is so because the incentive for banks to earn rent income by simply colluding with government officials to privately place government deposits in such banks has been reduced. Banks have therefore been forced to focus more on their intermediation function which is what leads to economic development,” he added.
But some of the banks are so heavily exposed to public sector funds that they have abandoned their core responsibilities. Besides, management of public sector funds by banks had always encouraged corruption, as government officials are usually gratified by banks for patronage and in most cases at the expense of developmental projects.
As such, Sanusi said the CBN had to embark on intervention in various sectors of the economy so as to engender growth and development, adding that this had manifested through lending to agriculture, which has moved from zero level to 4 percent, and the financing of the privatisation of the power sector by banks.
BusinessDay gathered that the CBN had recommended the establishment of a Treasury Single Account (TSA) to check some of these abuses but government had not been forthcoming.
Underscoring the importance of TSA, Chibuike further said: “At the very least, the incessant practice of unnecessary borrowing at high interest rates, while simultaneously holding huge balances in non-interest yielding deposits, will be greatly curtailed. Despite this simple logic, government is yet to implement the TSA. This has led to widespread allegations that private interests within government policymaking circles are colluding with banks and benefitting handsomely from the status quo, through the receipt of deposit brokerages.”
– BUSINESS DAY
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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