Non remittance of NNPC’s fund saga, banks really guilty?
Following the recent suspension of nine Nigerian banks from the foreign exchange market as a result of alleged non remittance of NNPC fund into the Treasury Single Account (TSA), a whole heat blame game has suddenly erupted. NIYI JACOBS, therefore, writes on the reactions coming from various banks as they try to explain their positions that they are not culpability and the question as to where lies the blame constantly propping up.
Nigerian market observers were dumb-founded on Tuesday, when the Central Bank of Nigeria, (CBN) suspended nine Nigerian banks from the foreign exchange market as a result of alleged non remittance of NNPC fund into the Treasury Single Account (TSA).
In view of this, the banks however have been trying to release various statements in order to prove to the financial world that they are blameless.
According to them, the NNPC management had been kept in the picture on the funds in their possession, while the NNPC is claiming credit for the suspension, accusing the banks of holding back the funds.
Business247 News Online recalls that the CBN listed the suspended banks as United Bank for Africa (UBA) $530m; First Bank of Nigeria (FBN) $469m; Diamond Bank Plc. ($287m); Sterling Bank Plc. ($269m); Sky Bank Plc. ($221m); Fidelity Bank ($209m); Keystone Bank ($139); First City Monument Bank (FCMB) $125m; and Heritage Bank ($85m).
The Group General Manager, Public Affairs Division of the NNPC, Mallam Garba Deen Muhammed claiming credit for the suspension of banks from foreign exchange market said that the corporation realised that some money were stashed in the banks which were not remitted to the TSA and that was how they quickly alerted the authorities’ concern to take the necessary action.
Muhammed said NNPC management discovered the delay and prompted the President on the issue. He said the management of NNPC believes in transparency and due process in the remittance of government funds.
However, FCMB one of the banks affected by the suspension in a note to its customers said “the Central Bank of Nigeria announced a temporary suspension of FCMB along with eight other commercial banks from access to the foreign exchange market. This suspension is based on the Treasury Single Account Directive, which stops banks from holding funds on behalf of government entities and instead, effect daily remittances to the CBN.
“For our bank this suspension is based on the non-payment/transfer of the remaining $125million NNPC fund with us to TSA. As a financial institution with strong corporate governance rules, we have always fully disclosed the outstanding TSA funds in our books and have continued to work assiduously to fulfil our outstanding obligations. The members of the NNPC Management Team have been kept fully in the picture on the funds. This scenario is really because of lack of foreign exchange availability and the prevailing fall in oil prices rather than concealment or wilful non-compliance by FCMB. It is actually a widespread industry issue”, it stated.
While responding Sterling Bank said: “The Bank unequivocally rejects the suggestion that it failed or neglected to disclose at any time, any sum held on behalf of its clients to the regulatory authorities as such balances was fully captured in the relevant regulatory returns. In actual fact, the Bank affirms that it went beyond this basic requirement of disclosure and reporting to holding several meetings with the parties involved;
“While the current situation is a broader sector issue arising from the foreign currency illiquidity in the domestic banking sector, the Bank stated that it continues to work with its client and the banking regulator to resolve the situation in the shortest possible time” It mentioned that the bank, at all times, reported the balances involved to the CBN and at no time concealed or refused to remit the funds as documented in several written correspondences”.
Similarly, UBA in a statement also said “The CBN had earlier on Tuesday announced the suspension of 9 banks from all foreign exchange transactions until they remitted into the TSA over $2 billion in various NNPC/NLNG accounts in the banks as ordered by President Muhammadu Buhari last year”. Further to our press statement of yesterday, we are pleased to inform our valued customers, stakeholders and business partners as well as the public that the CBN has re-admitted us into the Foreign Exchange Market following our remittance of all NNPC/NLNG dollar deposits. UBA wishes to thank you all for your continued support and patronage”
This is how Fidelity Bank responded: “NLNG was paying dividends from the investment of the government in the company (NLNG) to the NNPC. These dividends had accumulated to about $5bn. NNPC was investing this dividend payment in a dedicated account as fixed deposits with commercial banks.
“When the government raised the issue that the dividends should have been paid into the Federation account, the CBN Governor invited the CEOs of all the banks that had the funds to Abuja for a meeting on the following:
“A reconciliation of the amount in each bank with the records of CBN/NNPC; agree a repayment time-table of the funds with the banks.
“As at the time the TSA implementation commenced in September 2015, some of the banks had paid back over 50% of the funds based on the repayment timetable.
“This repayment by the banks was the bailout of $2.1bn (N414bn) that was shared by the FGN and state governments in July/August 2015.
“When the TSA commenced, the banks reported these funds as part of government deposits they had but it was not remitted like other TSA funds because of the remittance timetable that had been agreed with the CBN. The NNPC invited banks earlier this year to submit a revised repayment plan for the balance of the funds.
“From the above you can see that the CBN and NNPC had a clear picture of the status of these funds with the banks”. The bank explained.
Diamond Bank reacted by reassuring its customers of enhanced quality service delivery and commitment to meet its banking obligations despite the announcement by the CBN that nine commercial banks (inclusive of Diamond Bank) have been barred from foreign exchange transactions for alleged infringement on the Treasury Single Account (TSA) directive last year.
The CBN on its part has said that it was not ready to join issues with any of the parties saying it would rather let sleeping dogs lie as the process is an ongoing administrative routine. A CBN official said that the apex bank does not want to join issues with those running to the media. “This is an administrative thing; it should not be harped to heat up the market”, he said.
According to him, “everybody is trying to defend himself, now who is right and who is wrong? For some of the banks issuing statements, he said, why did they hold the money back in the first instance? Why did we report non remitted funds to presidency?
Meanwhile, the Association of Senior Staff of Bank, Insurance and Financial Institutions (ASSBIFI), has said the CBN’s ban on nine banks could further weaken the banks and lead to mass sack of workers. The umbrella body for senior workers in the financial sector contended that though the ban might be necessary, the timing was not right for this present economy. It called for the ban to be lifted and more placid approach be engaged in settling the matter.
In a statement by President of the association, Mr. Sunday Salako, ASSBIFI said: “Research shows that CBN owed Nigerian banks up to $3 billion from unfunded letters of credit (LCs) since last year, i.e. before the TSA regime. This may leave one to wonder if the banks accusation that the CBN is trying to de-stabilise the market holds waters.”
Already, there are unintended consequences in the financial sector and even the economy as a whole. For instance, reports have it that Naira was quoted at an all-time low of 409 to the dollar on the black market on Thursday, compared with 402 the previous day, after the suspension of some banks from forex trading made dollars even harder to obtain. This is according to Reuters’ report monitored by Business247 News Online. Shares in some of the banks hit dropped by up to 7.8 percent.
According to the reports, traders said the local currency fell due to the impact of the suspensions, compounding the dollar shortages Nigeria has been suffering due to the slump in the price of its oil exports. “The suspension of some banks from transaction in the forex market has really increased pressure on the market,” said Aminu Gwadabe, president of the Bureaux De change Association.
In the Capital Market on Thursday, Skye Bank fell the most of those suspended from foreign exchange transactions, shedding 7.81 per cent, followed by Fidelity Bank down 3.0 percent. FBN Holdings shed 1.9 percent while Diamond Bank and FCMB were down 0.8 percent. The falls pulled the main index down 1.8 per cent.
The question engaging the minds of many observers of our system is couldn’t this issue be better handled?
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