CBN Cannot Sustain The New Foreign Exchange Policy – Muda Yusuf

srThe Director General, Lagos Chamber of Commerce and Industry, Muda Yusuf says the Central Bank of Nigeria (CBN) cannot sustain the new Foreign Exchange Policy to improve the economy.

He noted that the CBN does not have the capacity.

According to him, “we need to create a window for capital competition to come in  to improve the foreign exchange”.

Mr. Yusuf made this known on Channels Television’s breakfast programme, Sunrise Daily.

He however, said “the fundamental issue with the foreign exchange situation in the country is a supply side issue, we have a supply crisis.

“This situation has come about because the CBN is virtually the only supplier in the market meanwhile, the CBN doesn’t have the capacity to support the market, they have always had supplies from autonomous sources.

“So, when you are dealing with this kind of method, you deal with it both on the supply side and on the demand side.

“What we have seen over the years is the concentration on managing demands, there is nothing on the table as we speak.

“To encourage supply, we need supply either from foreign direct investors, foreign portfolio investors or from our exporters”.

He added that the policy is only aggravating the demand.

Akingbola takes his chance in court, says I never stole a kobo

The former Managing Director of defunct Intercontinental Bank Plc, Erastus Akingbola, who is standing trial over allegations of stealing N47.1 billion from the bank, on Wednesday, had a chance to defend himself in court.

The former Managing Director of Intercontinental Bank, Erastus Akingbola is standing trial for allegedly stealing N47.1 billion from the defunct bank

Mr Akingbola, who testified in his own defence before a Lagos High Court sitting in Ikeja that is trying him and his aide, Bayo Dada, the General Manager of Tropics Securities Limited for stealing, denied ever stealing or defrauding the bank he help founded in 1989.

The former bank boss said the 16 counts of stealing brought against him by the Economic and Financial Crimes Commission (EFCC) before the court presided over by Justice Habeeb Abiru are spurious, malicious and false.

While being led in evidence by his counsel, Felix Fagbohungbe, Mr Akingbola said “the allegations are false and it is incorrect because I never posted, receive or authorize any such amount and I did not receive or see any money. I didn’t convert Intercontinental Bank Plc funds fraudulently to Tropics Securities Limited”

Mr Akingbola said though he is the Chairman of Tropics, he never authorised, signed or paid any money to Tropics Finance and he was not aware of the transactions on purchase of shares as he was not involved in the day to day running of the company as there was an Executive Director in charge of shares in Intercontinental Bank.

“Intercontinental Bank has 200 branches within Nigeria, 57 in Ghana and many subsidiaries so there are about 10 Executive Directors that have autonomy and are checked through countersigns by other Executive Directors,” he said.

He said the alleged transactions were carried out by the Executive Director in charge of Investments and Subsidiaries, Yinka Adebiyi who he has not seen since he left the bank in August 14, 2009 but who he learnt is still wanted by the EFCC.

“I was not aware that Intercontinental Bank Plc instructed Tropics Securities to purchase shares in 2008. This was carried out by one of the 10 Executive Directors under me who process transactions in their directorate,” he said.

Mr Akingbola also denied the allegation that he had between March and July 2009, transferred 8.5 million and 1.3 million Pound belonging to the bank to Fulgher Solicitors, a United Kingdom- based law firm.

“My Lord, this is not correct because money was not paid from the bank’s NOSTRO account but through the NOSTRO account. Like any other customer of the bank or any Nigerian that needs foreign exchange, I commissioned the bank to buy them for me.

“I put the naira equivalent down before they bought the exchange and my transfers did not go through until the naira equivalent was in the hands of our foreign operations department staff,” he said.

According to him, he financed the transaction through a N2.2 billion loan obtained from Regal Investment Company Ltd, owned by the Chairman of Board of Intercontinental Bank, Raymond Obieri.

Mr Akingbola when asked if he knew how the forex was sourced said he did not know as he does not poke nose into what does not concern him as people assigned the responsibility knew how to do their job and as a customer, he can’t be asking them and since there was no complaint from the beneficiaries.

Though Mr Akingbola admitted that he was the chairman and a signatory to the accounts of Tropics Securities Ltd, Tropics Property Ltd, Tropics Finance Ltd and Bakinson Nigeria Ltd, he was emphatic that he was not aware of the transactions.

“I am only a signatory to their accounts because I signed when the accounts were being opened about 15 years ago. I have never signed any cheque or document for these companies since then”.

He also denied that he had in February 2009, transferred N2.5 billion from Intercontinental Bank’s account with the Central Bank of Nigeria (CBN), to his personal account.

Justice Abiru adjourned the trial till 26 September to enable the EFCC’s counsel, Emmanuel Ukala cross examine Mr Akingbola.

Fitch affirms Nigerian banks

Fitch Ratings has upgraded First Bank of Nigeria Plc’s (First Bank) Viability Rating (VR) to ‘b’ from ‘b-‘ and Union Bank of Nigeria Plc’s (Union) VR to ‘ccc’ from ‘c’. At the same time, Fidelity Bank Plc’s (Fidelity) Long-term National Rating was upgraded to ‘BBB+(nga)’ from ‘BBB-(nga)’ and its National Short-term rating to ‘F2(nga)’ from ‘F3(nga)’.

The ratings of all other Fitch-rated Nigerian banks were affirmed. A full list of rating actions is at the end of this announcement.

The VRs of the Fitch-rated banks indicate highly speculative fundamental credit quality, with no VRs above the ‘b’ range. This is due to an extremely challenging operating environment, rapid underlying credit growth, concentrated credit risk and weak – albeit improving – corporate governance and transparency requirements.

In this context, the upgrade of First Bank’s VR follows the sale of significant loans to the Asset Management Corporation of Nigeria (AMCON) which has resulted in material improvement in the bank’s asset quality and reduced the concentrated problem loans that were constraining the VR at ‘b-‘. The VR also reflects First Bank’s dominant domestic franchise and acceptable levels of Fitch Core Capital.

The upgrade of Union’s VR acknowledges the restoration of the bank to solvency through the injection of capital from AMCON and a private equity consortium.

Fidelity’s National Ratings were upgraded due to the perceived level of support that Fidelity could expect from the authorities if required. Strong support was demonstrated across the sector during Nigeria’s banking crisis which Fitch expects would be repeated.

The IDRs and National Ratings of Access Bank Plc (Access), Diamond Bank Plc
(Diamond), Fidelity, First Bank, United Bank for Africa Plc (UBA) and Union are derived from Fitch’s perceived level of support from the authorities if required. These banks’ ratings are sensitive to a reduction in the level of support Fitch views would be forthcoming from the Nigerian authorities – either through indications of a reduced willingness to support or the ability to do so.

The latter would be signalled by a downgrade of Nigeria’s ‘BB-‘ sovereign rating. In Union’s case, the perceived level of support is enhanced by substantial AMCON ownership.

Stanbic IBTC Bank Plc’s (Stanbic IBTC) National Ratings are driven solely by potential support from its majority parent, Standard Bank Group (‘BBB+’/Negative). The ratings of Guaranty Trust Bank Plc (GTB) and Zenith Bank Plc (Zenith) are based on these banks’ individual strengths.

GTB and Zenith have the highest stand-alone VRs among the Nigerian banks at ‘b+’. The VRs on these banks reflect their strong domestic franchises, superior asset quality relative to peers and acceptable levels of capital.

The ratings also take into account their relatively resilient earnings throughout Nigeria’s banking crisis and GTB’s positive outlier cost/income ratio. Upward potential for these ratings is limited due to Nigeria’s challenging operating environment.

The VRs could be sensitive to a material weakening of levels of core capitalisation, possibly by loan growth exceeding retained earnings over time. If this were to occur, GTB’s Issuer Default Rating (IDR) could fall to its Support Rating Floor (SRF) of ‘B’ while Zenith’s IDR would not be affected due to its SRF at ‘B+’.

First Bank’s VR at ‘b’ takes account of its improved asset quality and reduced concentrations of problem loans following the sale of loans to AMCON. It also acknowledges the bank’s dominant domestic franchise and acceptable levels of capital. The VR could be positively sensitive to a track record of stable asset quality and maintenance of stable and/or improving Fitch Core Capital and leverage ratios. Downward pressure is limited in the short-term following significantly improved asset quality due to AMCON intervention.

Access’s VR of ‘b-‘ reflects earnings and asset quality that were sensitive to the Nigerian banking crisis and a historically developing franchise. In the medium-term, an upgrade could result from a track record of entrenching its expanded franchise following the acquisition of Intercontinental Bank Plc and stable asset quality through a cycle as well as stable or improving Fitch Core Capital and leverage ratios. Downward pressure is limited in the near-term.

Diamond and UBA’s ‘b-‘ VRs reflect their low Fitch Core Capital ratios and weak earnings through the banking crisis. The poor financial performance of these institutions was driven by weak operating efficiencies and high levels of impairment charges as a result of poor asset quality. Positive actions on these ratings would be sensitive to Fitch Core Capital and leverage ratios increasing significantly from current levels, possibly from demonstrating improved efficiency and underwriting. Downward pressure on these VRs in the short to medium term is limited following the sale of problem loans to AMCON during 2010 and 2011. This has materially improved the asset quality of these institutions.

Union’s VR of ‘ccc’ has limited downward pressure given the bank’s recent capital injection. Positive rating sensitivity could come from a track record of improving operating earnings and management’s ability to transition from restructuring a failed institution to running the bank as a going concern.

Stanbic IBTC’s ratings could only change if there were a material change in SBG’s willingness or ability to support the bank.

A Special Report will be available shortly at www.fitchratings.com giving more details on the banks discussed in this RAC. Credit updates and Full Rating Reports on each of the individual banks will follow this.

The rating actions are as follows:

Access
Long-term foreign currency IDR: affirmed at ‘B’. Stable Outlook
Short-term foreign currency IDR: affirmed at ‘B’
National Long-term rating: affirmed at ‘A-(nga)’
National Short-term rating: affirmed at ‘F2(nga)’
Viability Rating: affirmed at ‘b-‘
Support Rating: affirmed at ‘4’
Support Rating Floor: affirmed at ‘B’

Diamond
Long-term foreign currency IDR: affirmed at ‘B’. Stable Outlook
Short-term foreign currency IDR: affirmed at ‘B’
National Long-term rating: affirmed at ‘BBB+(nga)’
National Short-term rating: affirmed at ‘F2(nga)’
Viability Rating: affirmed at ‘b-‘
Support Rating: affirmed at ‘4’
Support Rating Floor: affirmed at ‘B’

Fidelity
National Long-term rating: upgraded to ‘BBB+(nga) from ‘BBB-(nga)’
National Short-term rating: upgraded to ‘F2(nga)’ from ‘F3(nga)’

First Bank
Long-term foreign currency IDR: affirmed at ‘B+’. Stable Outlook
Short-term foreign currency IDR: affirmed at ‘B’
National Long-term rating: affirmed at ‘A+(nga)’
National Short-term rating: affirmed at ‘F1(nga)’
Viability Rating: upgraded to ‘b’ from ‘b-‘
Support Rating: affirmed at ‘4’
Support Rating Floor: affirmed at ‘B+’

GTB
Long-term foreign currency IDR: affirmed at ‘B+’. Stable Outlook
Short-term foreign currency IDR: affirmed at ‘B’
National Long-term rating: affirmed at ‘AA-(nga)’
National Short-term rating: affirmed at ‘F1+(nga)’
Viability Rating: affirmed at ‘b+’
Support Rating: affirmed at ‘4’
Support Rating Floor: affirmed at ‘B’

GTB Finance BV’s Senior Notes, guaranteed by Guaranty Trust Bank: affirmed at
‘B+’, ‘RR4’

GTB Finance BV’s Global Medium-term Note Programme, guaranteed by Guaranty Trust
Bank: affirmed Long-term Rating at ‘B+’, ‘RR4’ and Short-term Rating at ‘B’

Stanbic IBTC
National Long-term rating: affirmed at ‘AAA(nga)’
National Short-term rating: affirmed at ‘F1+(nga)’

UBA
Long-term foreign currency IDR: affirmed at ‘B+’. Stable Outlook
Short-term foreign currency IDR: affirmed at ‘B’
National Long-term rating: affirmed at ‘A+(nga)’
National Short-term rating: affirmed at ‘F1(nga)’
Viability Rating: affirmed at ‘b-‘
Support Rating: affirmed at ‘4’
Support Rating Floor: affirmed at ‘B+’

Union
Long-term foreign currency IDR: affirmed at ‘B+’. Stable Outlook
Short-term foreign currency IDR: affirmed at ‘B’
National Long-term rating: affirmed at ‘A+(nga)’
National Short-term rating: affirmed at ‘F1(nga)’
Viability Rating: upgraded to ‘ccc’, from ‘c’
Support Rating: affirmed at ‘4’
Support Rating Floor: affirmed at ‘B+’

Zenith
Long-term foreign currency IDR: affirmed at ‘B+’. Stable Outlook
Short-term foreign currency IDR: affirmed at ‘B’
National Long-term rating: affirmed at ‘AA-(nga)’
National Short-term rating: affirmed at ‘F1+(nga)’
Viability Rating: affirmed at ‘b+’
Support Rating: affirmed at ‘4’
Support Rating Floor: affirmed at ‘B+’

AMCON may list nationalised banks

The Asset Management Company of Nigeria (AMCON) on Tuesday said it may list three banks that were nationalised as part of a bailout in 2009, instead of selling them to rivals, as it seeks to determine fair value for the banks.

The Chief Executive Officer of the Asset Management Company of Nigeria (AMCON), Mustapha Chike-Obi

Mustapha Chike-Obi, the chief executive of AMCON, said the AMCON will need to find financial advisers before finalising its decision on whether to list directly or sell to competitors.

“AMCON is appointing an adviser that will evaluate and determine the value of the banks, evaluate all the options available to AMCON,” he said.

“We expect our eventual adviser to consider this (listing) among other options,” Chike-Obi said. He said in April that all three rescued banks were now profitable.

Previously, AMCON said that more than 20 firms — banks and private equity investors — had expressed interest in acquiring the nationalised lenders, but AMCON is keen to have them valued before starting any negotiations.

It may opt to take them public if it can get a better deal.

The Central Bank of Nigeria (CBN) nationalised three banks changed their names to Mainstreet Bank from Afribank; Enterprise Bank from Spring Bank; Keystone Bank from Bank PHB, for failing to find new investors before a recapitalisation deadline.

The CBN then injected N620 billion into nine banks in 2009, judging that they were dangerously undercapitalised.

Union Bank posts N122 billion 2011 loss

Union Bank of Nigeria on Tuesday posted a 2011 pre-tax loss of N122 billion ($750 million), compared with a profit of N36.5 billion a year ago, it said in a filing with the stock exchange, giving no reason for the loss.

Gross earnings at the lender fell 38 percent to N80.7 billion, it said, while net assets recovered to N196 billion during the period, from a loss of N115.8 billion last year.

A large chunk of the losses are likely to be due to write downs of bad debts left over from a 2008/9 banking crisis.

Shares in the lender shed 4.35 percent to N3.72 on the news, almost the maximum 5 percent swing allowed, and underperforming the broader index, which gained 0.55 percent to hit 21,690 points.

Union Bank last year sold a 60 percent stake in itself to a group of institutional investors led by African Capital Alliance private equity for $750 million to help it recapitalise.

It was one of nine lenders that the central bank bailed out to the tune of $4 billion in 2009, after it judged they were dangerously undercapitalised.

N47 billion theft: Court says Akingbola has case to answer

A Lagos high court sitting in Ikeja has thrown out the no case submission filed before it by the former Managing Director of Intercontinental Bank (Now Access Bank), Erastus Akingbola, and his aide, Bayo Dada, over the N47.1 billion theft charge brought against them by the Economic and Financial Crimes Commission (EFCC).

In his ruling, presiding judge Justice Habeeb Abiru, held that there was a connection between the evidence of the prosecution and the charges preferred against the defendants.

“At this stage, it is not for the court to look at the credibility of the evidence, but to see whether a prima facie case has been established against the defendants,” he said.

Counsel to Mr Akingbola, Deji Sasegbon had informed the court at its last sitting that though they were just served the prosecution, he had a-no-case application before the court; and therefore subject to the court’s convenience, he was ready to move same.

N47.1 billion theft: Akingbola tells court he is innocent

The Lagos High Court sitting in Ikeja has fixed Wednesday the 30 May to decide whether the Economic and Financial Crimes Commission (EFCC) has established a prima facie case against the former Managing Director of Intercontinental Bank Plc (now Access Bank Plc), Erastus Akingbola.

Justice Habeeb Abiru fixed the date after hearing arguments for and against a “no case submission” filed by Mr Akingbola, through his counsel, Deji Sasegbon.

The counsel insisted that the EFCC had failed to link his client to the crime and it also failed to prove the ingredients of stealing as specified in section 383 subsection 2F of the Criminal Code Law of Lagos State.

The former bank chief, who is facing allegations of stealing about N47 billion belonging to intercontinental bank, is standing trial alongside his associate, the General Manager of Tropics Securities Limited, Bayo Dada.

The court had adjourned the matter till today for the accused persons to open their defence, but when the case was called, the defence counsel informed the court that his client would not be opening their defence, as they had instead, filed an application of no-case-submission which he urged the court to hear first.

This move was strongly opposed by the counsel to the EFCC, Emmanuel Ukala who argued that it was too late in the day for the accused persons to file an application of no-case-submission, having earlier given an impression that they were ready to open their defence.

He asked the court to order the accused persons to open their defence, stressing that the application was “a ploy to delay the trial and determination of the case”.

Justice Abiru, in a short ruling, allowed the application to be moved, but complained that he had to cancel two dates earlier fixed last week for the accused to open their defence.

If the “no case application” succeeds the accused person will get an acquittal.

Internal fraud in Banks responsible for collapse of Capital market – CBN deputy governor

The deputy governor, financial systems stability, of the Central Bank of Nigeria (CBN), Kingsley Moghalu on Wednesday said that lending to non-priority sectors and to operators of the capital market by commercial banks in Nigeria were key factors responsible for the near-collapse of the nation’s capital market in 2009.

The deputy governor, financial systems stability, of the Central Bank of Nigeria (CBN), Kingsley Moghalu

Mr. Moghalu disclosed this while he was making a submission at the resumed hearing of the House of Representatives ad-hoc committee investigating the collapse of the capital market.

He said that the nation’s financial system would have collapsed if the CBN had not exercised its responsibility as the lender of last resort as he replied to questions by members of the ad-hoc committee on who authorised the CBN to nationalise the bank.

The CBN in November 2008, injected N602 billion into eight banks that were almost running aground.

Giving a breakdown of how some of the banks manipulated their share prices, Mr. Moghalu said that “Afribank PLC via a share buy-back arrangement manipulated its share price when it went to the stock market in 2007.”

He claimed the bank through the services of three stock broking firms bought 66 per cent of the bank’s offer using fictious name of 1,258 subscribers and at the end of the offer, they will announce that their offer was over-subscribed.

He also revealed that Finbank in August 2006 conspired with three companies incorporated by the bank to buy N2.8billion worth of its own shares between August 2006 and August 2008, adding that the bank will claim the offer was over-subscribed.

Another bank accused of the fraudulent shares buy-back was Intercontinental bank. The CBN deputy governor said that the bank bought 3.4million units of its share which constitute 29 per cent of the bank’s share value on the stock market between September 2007 and December 2009.

He gave a breakdown of the non-performing loans by the eight liquidated banks as below:

  • Bank PHB – 40.86%
  • Oceanic Bank – 44.35%
  • Afribank – 47.0%
  • Finbank – 47.45%
  • Intercontinental bank – 48%
  • Equatorial Trust Bank (ETB) – 57%
  • Wema bank – 77%
  • Spring Bank – 85%

He described the banks as ‘net-takers’ that are only surviving exchanges from the inter-bank rate markets’. He added that between 2008 and 2009 “the banks were also on ‘life-supports’, surviving on sub-ventures from the CBN such as the Expanded Discount Window and Standing lending facility.

Bank Consolidation

A member of the committee, Bimbo Daramola, raised the issue on how the bank consolidation of N25 billion forced on the bank’s was the reason why the banks were involved in the round-tripping of share buy-back in a bid to rush and make the N25 billion.

Mr. Moghalu noted that it was just eight banks that were culpable of the wrong-doing and not all the banks that sort to carry-out the consolidation. “Without the consolidation, the global financial crises would have wiped out all the Nigerians bank” he said.

He added that the knock-on effects of the global financial crisis and the capital flight of $15 billion also contributed to the crash of the capital market.

Another Member of the ad-hoc committe, Representative Usman Mohammed, noted that despite the huge investment of funds into the banks, the lending rate to the real is still poor. Responding to the observation, Mr Moghalu stated that “the most important obstacle and challenge to the nation’s real sector is the absence and lack of power and not interest rate”, adding that “loans to the agriculture sector has risen from 1% to 3% in the last one year.”

He also assured the hearing that with the ongoing reforms across the nation’s economic sector, the banks will start granting more loans to the sector once the reforms kick-off.

He further explained that banks lending has increased drastically due to AMCON’s purchase of all bad loans. “Just about 5% of banks loans are now bad loans” he stated.

Nigeria banks are the healthiest in the world- AMCON CEO

The Chief Executive Officer of the Asset Management Company of Nigeria (AMCON), Mustapha Chike-Obi on Monday said that the banking crisis in the country is over and that the sector should see a substantial recovery when results come in for the first quarter of this year.

The Chief Executive Officer of the Asset Management Company of Nigeria (AMCON), Mustapha Chike-Obi says that the banking crisis in the country is over.

AMCON was set up in 2010 to clean up the banking system in Nigeria following a $4 billion rescue of nine banks that came close to collapse.

Speaking to the Reuters Africa Investment Summit in Lagos, Mr Chike-Obi said earnings in the banking sector would recover well in the first quarter of 2012, after suffering last year because of write-downs on bad debt.

“The numbers we’re seeing in the first quarter are very robust,” he said, adding that three nationalised banks were all now profitable.

“We should wait to the second quarter of this year before passing judgment — I will not tell you that nothing surprising can come up — but the banking crisis of 2007-2009 is over”.

The banking sector was the second worst performing index on the local exchange in 2011, falling 32 per cent, with only oil and gas doing worse.

Seven out of 15 banks listed on the Nigeria stock exchange have announced 2011 earnings, with most posting higher-than-expected loan losses. FCMB has reported a loss while UBA issued a profit warning.

Diamond Bank also reported a loss last year, but swung back to profit in the first quarter.

“Nigerian banks are now the healthiest banks in the world in terms of asset quality and capital,” Mr Chike-Obi said.

He said AMCON was now the largest institutional holder of Nigerian bank stocks “And we’re happy to hold them. We’re not selling.”

AMCON plans to refinance its N1.7 trillion three-year bond with maturities of somewhere between seven and 10 years when the debt expires next year.

The AMCON boss said they were not yet at the stage of seeking investors for the bond, and that a preliminary roadshow in New York, Boston and London next month was more about explaining what asset company is doing than marketing new debt issues.

He said that within four to six weeks AMCON would appoint advisors for the sale of three banks nationalised after a bail out, though it will six months before recommendations are expected.

He said AMCON’s aim was to gradually reduce its operations and cut staffing in the next five years, as a full banking recovery makes it no longer needed.

 

FCMB losses N11.35 billion in 2011

First City Monument Bank (FCMB) said on Monday it had made a pre-tax loss of N11.35 billion in 2011, compared with a N9.02 billion profit before tax in 2010, on underwriting losses and bad loans.

Revenues rose to N80.39 billion, from N62.68 billion the previous year, it said.

FCMB attributed the loss to the underwriting of several share issues dating back to 2009, and on some non-performing loans sold to Nigeria’s state-backed rescue bank AMCON (Asset Management Company of Nigeria).

“All legacy loans and weaknesses associated with capital market and oil and gas transactions have been fully regularised through sales to AMCON or outright provisioning/ write-offs,” the bank said in a statement.

FCMB said it expects that the first half of 2012 will see improvements and is likely to exceed its released forecasts.
The bank’s shares fell 2.49 percent to 3.70 naira per share on Monday.