Banking
Nigerian Banks seek investment outlets for N1tr excess cash
FG, others to pay more for foreign debt — Afrinvest
By Babajide KOMOLAFE
LAGOS-BANKS are desperately searching for how to invest the over N1 trillion of excess cash in their vaults. This desperation was reflected in trading for treasury bills (government securities) where banks and other investors demanded for 291 percent more bills than the amount offered for sale by the Central Bank of Nigeria (CBN). Trading results show that banks and other investors demanded for N791.42 billion worth of treasury bills but the CBN offered N202.4 billion.
Further analysis show that in the secondary market, where existing bills are sold, the CBN offered N50 billion worth bills (Open Market Operation, OMO) while investors demanded for N236.84 billion, out of which the apex bank accommodated N233.84 billion. At the Primary market, where fresh bills are sold, the CBN offered N152.4 worth of fresh bills, while investors demanded N554.58 billion, out of which the apex bank accommodated N155.4 billion.
Recall that the CBN on Tuesday November 24th, lowered interest rate it pays on bank’s excess cash deposited in its Standing Deposit Facility (SDF) to 4.0 percent from 11 percent. Since then banks have been battling with where to invest their excess cash. Investigation revealed that volume of excess cash in bank’s vaults rose during the week, due to reimbursement for unmet demand for foreign excess exchange, and payment of matured treasury bills.
From N665 billion on Monday, excess cash rose sharply by 84 percent to N1.19 trillion on Tuesday before dropping N262 billion on Wednesday. On Thursday excess cash rose again by 131 percent to N606 billion due to repayment for matured treasury bills. Consequently, cost of funds (interest rates) remained low in the interbank money market. According to Afrinvest Plc, “Money market rates stayed at low levels with the Overnight (O/N) lending and secured Open Buy Back (OBB) lending instruments closing at 0.5 percent and 1.0 percent respectively on Monday.
The level of liquidity remained robust at over N1 trillion mid-weeks as we saw additional inflows of N155.4 billion from maturing T-bills, hence money market rates recorded marginal changes. “However, we observed a moderate uptick on Thursday with the O/N and OBB rising to 1.0 percent and 1.4 percent respectively, majorly due to the T-bills Primary Market Auction (PMA) held the same day and provisions Banks made for CBN foreign exchange auctions.
The O/N and OBB rose 54 basis points (bps) and 42bps Week-on-week (W-o-W) to close at 1.0 percent and 1.4 percent respectively; while the NIBOR closed flat W-o-W. “Sentiment differed across tenors in the T-bills market as we saw bullish sentiment at the short end of the curve but selling activities was recorded at the longer end as dealers exited to take position at the T-bills PMA on Thursday. This dragged Average yields up by 42bps W-o-W to 4.4% on Friday.
At the PMA held, the 91, 182 and 364 Days tenured bills were issued at Stop Rates of 4.0 percent, 6.2 percent and 7.5 percent respectively, lower than 5.6 percent, 7.0 percent and 8.0 percent stop rates during the December 2nd 2015 PMA. “The lower rates at this week’s auction are due to the high level of liquidity.
We expect interbank money market rates to continue to trend at the current level against the backdrop of robust liquidity whilst we anticipate some level of profit-taking at the longer end of the curve. Tenured deposits rate might likely increase towards the end of the year as portfolio managers rebalance their portfolio towards equities.”
FG, others to pay more for foreign debt-Afrinvest
Meanwhile Afrinvest has predicted that the interest rate increase by the United States Federal Reserve’s will make the federal government and Nigerian companies to pay more as interest rates on foreign debt. On Wednesday, the Federal Reserve increase its policy rate to 0.25 percent from 0.05 percent, thus ending seven years of low interest rate regime in the world’s largest economy. This, according to Afrinvest will lead to further weakening of the naira, and increase cost of foreign debt.
It stated, “Prior to the Fed-Fund rate hike, restriction on foreign exchange by the Central Bank of Nigeria (CBN) has constrained market activities, fuelled higher inflation rate and depressed output growth in Nigeria. While official and interbank market rate steadied at N197.00/$ to N199.10/$, parallel market rate has depreciated to N280/$ in December 2015. Increased flow of fund towards the US economy due to higher rate environment points to a stronger dollar.
“Therefore, another scenario is a further loss in the value of the domestic currency (Naira) against the dollar. We perceive the stability portrayed by the Apex Bank in terms of the official rate which has been kept at N197 as contrived, given the significant N80/$ spread to parallel market rate of N280. Consequently, we expect the pressure on the CBN to devalue to intensify as dollar receipts to government treasury continue to shrink in Naira terms while current account deficit worsens.
“Finally, higher interest rate in the US and a stronger dollar will increase cost of foreign debt. The recently released Medium Term Expenditure Framework (MTEF) for 2016 shows that fiscal arm is budgeting an expansionary 2016 with a total budget of N6.08tn relative to N4.48tn in the 2015 budget. Consequently, the budget deficit is expected to rise from N1.04tn in 2015 to N2.19tn and foreign borrowing is budgeted to account for about 29.0% (N635.88bn) of the total financing for the deficit.
“Following the Fed decision, the cost of borrowing for the government, is expected to rise. Furthermore, the cost of servicing FGN and Corporate Eurobond worth US$6.2bn (US$2.5bn & US$3.7bn) is expected to hike as a result of stronger dollar and weaker naira.
Notwithstanding the anticipated impact as noted above, the short term impact in Nigeria is expected to stay muted given that macroeconomic concerns in the domestic economy had already forced market actors to adjust ahead of the announcement.”
Vanguard-
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.
The Central Bank of Nigeria (CBN) has refuted claims of devaluing the.
Earlier reports suggested that the CBN had devalued the Naira, lowering its exchange rate from N631 to the dollar, compared to the previous day’s rate of N461.60 at the Importers and Exporters (I&E) window.
However, the Central Bank of Nigeria (CBN) released a statement on Thursday through its Acting Head of Corporate Communications, Dr. Isa Abdulmumin, categorizing the report as false information.
In the statement titled ‘CBN Has Not Devalued The Naira’, he said the attention of the apex bank was drawn to the news report by an Abuja based newspaper edition of June 1, 2023, titled “CB Devalues Naira To 630/51”.
However, the CBN stated categorically that the news report was replete with outright FALSEHOODS and destabilizing innuendos, ‘reflecting potentially willful ignorance of the said medium as to the workings of the Nigerian Foreign Exchange Market.’
“For the avoidance of doubt, the exchange rate at the Investors’ & Exporters (I&E) window traded this morning (June 1, 2023) at N465/USS1 and has been stable around this rate for a while.
“The public is hereby advised to ignore the news report by Daily Trust in its entirety, as it is speculative and calculated at causing panic in the market,” the CBN spokesman added.
He, therefore, advised media practitioners to verify their facts from the Central Bank of Nigeria before publishing in order not to misinform the public.
Biztellers had earlier reported that 139 micro financial institutions, made up of 132 microfinance banks, four primary mortgage banks, and three finance companies fell under the sledgehammer of regulatory authorities with their operating licenses withdrawn.
The Central Bank of Nigeria (CBN) made public the revocation in the official gazette of the Federal Government published on the apex bank’s website on Tuesday.
We now avail you of the names of the affected micro financial institutions, so that you can check if the one you have been doing business with is affected.
Governor, CBN, Godwin Emefiele, explained that the licenses were revoked in the exercise of the powers conferred on the apex bank under Section 12 of BOFIA 2020, Act No. 5.
Biztellers shares below the full list of the affected Microfinance Banks, finance companies and primary mortgage institutions:
S/No. Name Of Institution
1. ATLAS MICROFINANCE BANK
2. BLUEWHALES MICROFINANCE BANK
3. EVEREST MICROFINANCE BANK
4. IGANGAN MICROFINANCE BANK
5. MAINSAIL MICROFINANCE BANK
6. MERIT MICROFINANCE BANK
7. MINNA MICROFINANCE BANK
8. MUSHARAKA MICROFINANCE BANK
9. NOPOV MICROFINANCE BANK
10. OHON MICROFINANCE BANK
11. PREMIUM MICROFINANCE BANK
12. ROYAL MICROFINANCE BANK
13. STATESMAN MICROFINANCE BANK
14. SUISSE MICROFINANCE BANK
15. VIBRANT MICROFINANCE BANK
16. VIRTUE MICROFINANCE BANK
17. ZAMARE MICROFINANCE BANK
18. NORTH CAPITAL MICROFINANCE BANK
19. CHIDERA MICROFINANCE BANK
20. EXCELLENT MICROFINANCE BANK
21. NI’IMA MICROFINANCE BANK
22. COSMOPOLITAN MICROFINANCE BANK
23. PROGRESSIVE LINK MICROFINANCE BANK
24. TRUST ONE (FOMERLY DESMONARCHY)
25. EKUOMBE MICROFINANCE BANK
26. FIRST INDEX MICROFINANCE BANK
27. OLA MICROFINANCE BANK
28. ULI MICROFINANCE BANK
29. VERDANT MICROFINANCE BANK
30. AGULERI MICROFINANCE BANK LIMITED
31. APEKS MICROFINANCE BANK LIMITED
32. FAHIMTA MICROFINANCE BANK LIMITED
33. MANNY MICROFINANCE BANK LIMITED
34. REALITY MICROFINANCE BANK LIMITED
35. SURBPOLITAN MICROFINANCE BANK LIMITED
36. ONYX MICROFINANCE BANK LIMITED
37. OSINA MICROFINANCE BANK LIMITED
38. OLOFIN-OWENA MICROFINANCE BANK LIMITED
39. ZIKADO MICROFINANCE BANK LIMITED
40. PRUDENTIAL CO-OPERATIVE MICROFINANCE BANK LIMITED
41. PENIEL MICROFINANCE BANK LIMITED
42. TARABA MICROFINANCE BANK LIMITED
43. BRASS MICROFINANCE BANK LIMITED
44. MICHIKA MICROFINANCE BANK LIMITED
45. NDIAGU MICROFINANCE BANK LIMITED
46. NORTHBRIDGE MICROFINANCE BANK LIMITED
47. FCT MICROFINANCE BANK LIMITED
48. OMU-ARAN MICROFINANCE BANK LIMITED
49. CHERISH MICROFINANCE BANK LIMITED
50. BIPC MICROFINANCE BANK LIMITED
51. DANELS GLOBAL MICROFINANCE BANK LIMITED
52. BANCORP MICROFINANCE BANK LIMITED
53. MANNA MICROFINANCE BANK LIMITED
54. MONEYWISE MICROFINANCE BANK LIMITED
55. MERCURY MICROFINANCE BANK LIMITED
56. NEW AGE MICROFINANCE BANK LIMITED
57. PEARL MICROFINANCE BANK LIMITED
58. ZAWADI MICROFINANCE BANK LIMITED
59. SEED CAPITAL MICROFINANCE BANK LIMITED
60. EDUEK MICROFINANCE BANK LIMITED
61. EKSU MICROFINANCE BANK LIMITED
62. DAKINGARI MICROFINANCE BANK LIMITED
63. OGOJA MICROFINANCE BANK LIMITED
64. NWABOSI MICROFINANCE BANK LIMITED
65. NUTURE MICROFINANCE BANK LIMITED
66. ACTIVE POINT MICROFINANCE BANK LIMITED
67. AMOYE MICROFINANCE BANK LIMITED
68. BOLUWADURO MICROFINANCE BANK LIMITED
69. IYEDE MICROFINANCE BANK LIMITED
70. MAYFAIR MICROFINANCE BANK LIMITED
71. CALABAR MICROFINANCE BANK LIMITED
72. IGHOMO MICROFINANCE BANK LIMTED
73. HACKMAN MICROFINANCE BANK LIMITED
74. IDESE MICROFINANCE BANK LIMITED
75. BRIDGEWAY MICROFINANCE BANK LIMITED
76. GRASSROOT MICROFINANCE BANK LIMITED
77. SURELIFE MICROFINANCE BANK LIMITED
78. TIJARAH MICROFINANCE BANK LIMITED
79. IC-GLOBAL MICROFINANCE BANK LIMITED
80. EJIAMATU MICROFINANCE BANK LIMITED
81. BRIYTH COVENANT MICROFINANCE BANK LIMITED
82. NANKA MICROFINANCE BANK LIMITED
83. CUB MICROFINANCE BANK LIMITED
84. BFL MICROFINANCE BANK LIMITED
85. UMUNNE MICROFINANCE BANK LIMITED
86. OROKE MICROFINANCE BANK
87. ALKALERI MICROFINANCE BANK LIMITED
88. CROWNED EAGLE MICROFINANCE BANK LIMITED
89. UNIFA MICROFINANCE BANK LIMITED
90. DADINKOWA MICROFINANCE BANK LIMITED
91. IFESOWAPO MICROFINANCE BANK LIMITED
92. OAF MICROFINANCE BANK LIMITED
93. BAMA MICROFINANCE BANK LIMITED
94. NGALA MICROFINANCE BANK LIMITED
95. IWOAMA MICROFINANCE BANK LIMITED
96. KADA MICROFINANCE BANK LIMITED
97. KEFFI MICROFINANCE BANK LIMITED
98. NUT-ENDWELL MICROFINANCE BANK LIMITED
99. FIRST MULTIPLE MICROFINANCE BANK LIMITED
100. SBDC MICROFINANCE BANK LIMITED
101. OROS CAPITAL MICROFINANCE BANK LIMITED
102. OZIZZA MICROFINANCE BANK LIMITED
103. PRIMERA CREDIT MICROFINANCE BANK LIMITED
104. IFEANYICHUKWU MICROFINANCE BANK LIMITED
105. IHIOMA MICROFINANCE BANK LIMITED
106. JOSAD MICROFINANCE BANK LIMITED
107. AKPO MICROFINANCE BANK LIMITED
108. AIYEPE MICROFINANCE BANK LIMITED
109. ABC MICROFINANCE BANK LIMITED
110. STAR MICROFINANCE BANK LIMITED
111. PURPLE MONEY MICROFINANCE BANK LIMITED
112. UTUH MICROFINANCE BANK LIMITED
113. STALLION MICROFINANCE BANK LIMITED
114. KJL MICROFINANCE BANK LIMITED
115. CREDIT AFRIQUE MICROFINANCE BANK LIMITED
116. COWRIES MICROFINANCE BANK LIMITED
117. LAWEBOD MICROFINANCE BANK LIMITED
118. MABINAS MICROFINANCE BANK LIMITED
119. BUSINESS SUPPORT MICROFINANCE BANK LIMITED
120. OGBE-AHIARA MICROFINANCE BANK LIMITED
121. OLOFIN MICROFINANCE BANK LIMITED
122. OBOSI MICROFINANCE BANK LIMITED
123. FIYINFOLU MICROFINANCE BANK LIMITED
124. BISHOPGATE MICROFINANCE BANK LIMITED
125. AWKA MICROFINANCE BANK LIMITED
126. ZIGATE MICROFINANCE BANK LIMITED
127. ESAN MICROFINANCE BANK LIMITED
128. ENUGU-UKWU MICROFINANCE BANK LIMITED
129. ECHO MICROFINANCE BANK LIMITED
130. ALLY MICROFINANCE BANK LIMITED
131. NETWORK MICROFINANCE BANK LIMITED
132. AWGBU MICROFINANCE BANK LIMITED
SCHEDULE II
LIST OF FINANCE COMPANIES LICENCES REVOKED
S/No. Name Of Institution
1. HHL Invest & Trust Limited
2. TFS Finance Limited
3. Treasures & Trust Limited
SCHEDULE III
LIST OF PRIMARY MORTGAGE BANKS LICENCES REVOKED
S/No. Name Of Institution
1. RESORT SAVINGS & LOANS
2. SAFETRUST MORTGAGE BANK
3. ADAMAWA SAVINGS & LOANS
4. KOGI SAVINGS & LOANS
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