(By Omodele Adigun and Isaac Anumihe)
The Central Bank of Nigeria (CBN) has banned nine deposit money banks (DMBs) from its foreign exchange market following their failure to remit over $2.1 billion belonging to the Nigerian National Petroleum Corporation (NNPC) into the Treasury Single Account (TSA).
The suspension comes after the CBN paid $1.2 billion for currency forwards it sold in June at N280 per dollar, thus further draining the nation’s dollar reserves down to $25.7 billion, its lowest in more than 10 years.
The apex bank, which had briefed President Muhammadu Buhari on the breach by the banks directed that the monies be moved into the TSA.
Recall that on assumption of office in 2015, Buhari had ordered the Accountant General of the Federation (AGF), Ahmed Idris, to ensure full implementation of the TSA initiated by the President Goodluck Jonathan administration.
This implies that all public funds belonging to the Ministries, Departments and Agencies (MDAs) in possession of the banks would be returned to the Federation Account at the CBN.
The order, however, forced most of the banks which hitherto traded with the funds to embark on massive retrenchment of staff following a huge drop in profit margins.
But despite that directive, some of the banks still refused to remit part of the funds, prompting the CBN Governor, Mr. Godwin Emefiele, to warn them to comply with the TSA or face stringent punishment.
Emefiele gave this warning while unveiling the guidelines for foreign exchange trading in June.
“The CBN may take action against any FXPD that fails to comply with the standards set forth in these guidelines. Such action will vary depending on the type of non-compliance, but may range, for instance, from fines, suspension from any or all FX operations for a period of time to termination as an FXPD,” CBN had said.
Before yesterday’s hammer fell on nine banks, CBN had fined two leading banks for the same offence leading to the payment of over N4 billion to the apex bank by the banks.
Meanwhile, a source close to Fidelity Bank yesterday denied withholding government fund meant for the TSA. It stated that the said N2.1 billion was part of NLNG dividends from the investment of the government in the company to the NNPC.
According to it, “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 for a meeting in Abuja to reconcile the amount in each bank with the records of CBN/NNPC, and to agree on a repayment time table of the funds with the banks.”
It stated that as at the time the TSA implementation commenced in September 2015 some of the banks had paid back over 50 per cent of the funds based on the repayment timetable, adding that this repayment by the banks was the bailout of $2.1billion and N414billion 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.
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 source told Daily Sun.
The NNPC invited banks earlier this year to submit a revised repayment plan for the balance of the funds.
However, Daily Sun learnt that all the MDAs as at today have complied with the remission order.
According to a highly-placed source in the Accountant General of the Federation’s (AGF) office, the success of the programme has continued irrespective of some dissenting voices from various quarters.
“Similarly, the universities, polytechnics and monotechnics, which vehemently opposed the policy, under the excuse that it would make running of the schools difficult, have now come to embrace, appreciate and extol the policy. It has simplified the banking sector, which has continued to oppose the policy under the guise that it would lead to job loss in the sector. Worrisome as that position would seem, commendations have come from reputable financial managers and financial institutions both foreign and local.”
Speaking on the benefit of the policy, the Managing Director and Chief Executive of Financial Institutions Training Centre (FITC), Dr. Lucy Surhyel Newman, said the policy “will revolutionise the banking sector and put them into proper banking business.”
“Despite all these successes, it is surprising that some people are still calling on the government to review its policy on TSA, blaming it for being responsible for recent retrenchment of staff from the banking sector. They claim that the policy has created liquidity problems for the banks, thus making it difficult for them to meet their obligations to staff. This is not only regrettable but a dent on the integrity of most Nigerian banks and managers who have in the last two decades grown their institutions into global brands,” he said.