•Appoints new board, mgt
…Says bank not in distress
Stories by Blaise Udunze
The Central Bank of Nigeria (CBN) on Monday appointed a new board and management for Skye Bank Plc after it failed to sustain key liquidity and capital adequacy ratios.
The Governor of CBN, Godwin Emefiele, at a press briefing at its head office annex in Lagos, said the apex bank appointed new board and management to take over the affairs of the bank following the resignation of the Chairman, Chief Tunde Ayeni, and Managing Director/Chief Executive Officer, Mr. Timothy Ogunatayo.
It was also revealed that several key management staff of the bank had resigned in anticipation of the planned dissolution of the board and management by CBN, which has discreetly been working to remove directors of some commercial banks that have demonstrated a level of distress in the last few months.
Skye Bank had been in talks with shareholders and new investors to raise N30 billion ($150 million), but suspended plans for a rights issue last year due to weak market conditions.
Emefiele said the bank’s outgoing board and management had consistently failed to turn its fortunes despite regular warnings from the CBN.
In place of the outgoing board and management, Emefiele said the CBN has appointed Alhaji Mohamad K. Ahmad as the new Chairman, while Mr. Tokunbo Abiru is the new MD/CEO.
The governor explained that CBN had to remove all the non-executive directors and two longest-serving directors of Skye Bank and appointed new non Executive and Executive Directors and EDs in their place.
“The most important issues in banks are Non Performing Loans (NPL), Capital Adequacy Ratio (CAR) and liquidity situation. What we have since late 2014 to 2016 is that the prudential and adequacy ratio has been weakening. We thought it is not right for us to allow this to continue to the point that it gets irreversible. That is why we took this step to nip it in the bud. It has nothing to do with being in distress. We do not want the liquidity and adequacy ratio to worsen to the point that depositors’ fund gets into risk,” he explained.
The CBN boss urged shareholders and customers of the bank to remain calm, assuring that the bank was not in distress.
“I maintain that Skye Bank is not in distress. We have only taken this unavoidable decision to ensure that depositors’ funds are not eroded,” he said.
He hinted that the overall banking industry was sound, despite weaknesses in the economy but that none of Nigeria’s 21 commercial lenders were in distress.
“The strategic health of the banking industry remains sound and where there is need to inform the general public about the strategic health of the banks, we will do it. I want to assure everybody that the strategic health of the industry is still good.
“No doubt, as a result of the global shock, there is certain weakening in certain ratios, then those ratios have not weakened to the point where we can say the industry is distressed. We are appealing to all depositors to be calm. There is no need to leave an impression that any bank is distressed. We at the CBN and NDIC have held discussions and I want to assure you that no deposit is at risk.
“Customers should continue to do their businesses the way they have been conducting in all the banks. No depositors will lose their money. SEC and other concerned regulators have been informed of this development,” Emefiele said.
Skye Bank evolved from the merger of five legacy institutions including Prudent Bank Plc, EIB International Plc, Bond Bank Limited, Reliance Bank Limited and Co-operative Bank Plc.
Recall that on October 5, 2014, AMCON announced Skye Bank Plc as the preferred bidder for Mainstreet Bank Limited with N126 billion. Mainstreet Bank, formerly Afribank, was adjudged to possess N261 billion assets in 2012 and N29.8 billion shareholders’ fund as at 2011.
AMCON had selected Skye Bank for the acquisition of all its interests in Mainstreet Bank, representing the entire capital of the bridge bank after a rigorous bidding exercise that spanned five months and involving over 20 bidders.
The bank said it intended to leverage its wealth of experience from the successful integration of the five legacy banks to drive efficiency, increase market share and ultimately ramp up stakeholder value from the acquisition of Mainstreet Bank.
According to the lender, the acquisition will avail it of many benefits, including cost leadership, business optimisation and greater ability to offer business convenience to its retail and commercial customers, with a combined branch network of over 450 across all the states of the federation.
Skye Bank, a leading tier two bank, was among the eight banks designated as Systemically Important Banks in 2014, which reflected its industry leadership, strong market share, diverse location spread and strong brand equity.
Within four days of the announcement of Skye Bank as the preferred bidder by AMCON, the bank paid the mandatory 20 per cent deposit of the bid price well ahead of the October 9, 2014 deadline, the same day it signed the Share Sale and Purchase Agreement (SPA).
And in a display of capacity and commitment to see the deal through, the bank again, on October 31, 2014 paid the 80 per cent balance to complete the takeover of Mainstreet Bank ahead of the transaction deadline.
Rising cyber threat: NeFF warns financial services providers
The Nigeria electronic Fraud Forum (NeFF) has warned financial institutions against cyber-security threat, since 95 per cent of such activities occur in the “deep web.”
Director, Banking and Payment System Department of the Central Bank of Nigeria (CBN), Dipo Fatokun, disclosed this, weekend at the launch of NeFF’s 2015 annual report themed, “Improving and Securing the Cyber Environment.”
Fatokun, who is also Chairman of the forum explained that NeFF wants stakeholders and the public to know that what happens in the deep web could also affect financial services providers in Nigeria.
The deep web, invisible web or hidden web is a part of the World Wide Web whose contents are not indexed by standard search engines for any reason but facilitates a lot of underground transactions.
He explained: “The reality we face today is that the conventional use of the World Wide Web is like dragging a net across the surface of the ocean, capturing less than 1 per cent of web content.
“It is true that an entire life exists beyond the surface of the web as we know it, the deep web. Who controls this life, what are the impacts on our electronic payment transactions and what impact does it hold for the global financial industry?
“When we speak of electronic payment, it runs on the web. We have the deep web and we have the surface web. While the surface web accounts for 5 per cent of what happens on the web, 95 per cent of what happens in the web is in the deep web and, of course, there are so many illegal things that come up in the deep web, which people are not aware of.
“And as you know, we have always emphasised this at this forum that lack of knowledge or ignorance is the primary reason why the spate of electronic fraud has not abated as well as we would have loved it to abate.
“So that is the reason we consider it necessary at this quarterly meeting as a form of education, sensitisation and enlightenment for members of the forum and, of course, the financial services industry to be aware that what happens in the deep web can also affect us if we are not careful about it.”
According to Fatokun, the forum presented its first annual report in 2012, which was a compendium of papers shared at its gathering and after an interval it presented the second report titled, “e-fraud: Fighting the Battle, Winning the War in 2015.”
“As we unveil another literary contribution to the annals of e-fraud fighting in Nigeria, we thank all our stakeholders who found time to contribute to the scholarly papers that make up the report being unveiled today,” he stated.
Fatokun said the forum has been very busy between March 2016 when it had its last meeting and now, adding that a lot of items deliberated during the 2015 retreat have occupied activities “and we are glad to report back to you the outcomes.”
At NeFF’s last meeting, it was announced that a sub-committee of NeFF had commenced the compilation of a draft policy framework for the proposed Dedicated e-Payment and Card Crime Unit (DePCCU). This draft framework has now been completed and approval from the Committee of Governors received for the following: the operational framework for the unit and provision of temporary office accommodation for the unit in a location in Lagos for two years.
The Managing Director, Fidelity Bank, Nnamdi Okonkwo, represented by an Executive Director of the bank, Chijioke Ugochukwu, described another term, DUMPs as a term used to indicate raw data stored on the magnetic strip of a smart card also warned financial institutions to be awake to the threat of deep web.
Okonkwo said DUMPs are usually obtained by physically skimming the card or by using a point-of-sale malware that is able to scrape the memory of the payment systems to siphon card data. The DUMPs, he said, are used by criminal crews to clone legitimate credit cards; their prices depend on multiple factors, including the nation of the cardholder and the card expiration date.
FULLZ is a term that refers to the full financial information of the victim, including name, address, credit card information, social security number, date of birth, and more. The information could be used by crooks to commit more complex frauds. The availability of FULLZ allows hackers to steal the identity of cardholders. This means that they could open temporary bank accounts to use in the cash-out phase. A common abuse of FULLZ data consists in performing bank transactions that request users to provide their financial information as an authentication mechanism.
Forex: Stakeholders tackle CBN, NNPC over allocation formula
…We don’t want multiple rates –Okoroafor
A recent Central Bank of Nigeria (CBN) directive to International Oil Companies (IOCs) to sell forex to six importers of petroleum products from the consolidated IOCs’ forex pool put together by the Nigeria National Petroleum Corporation (NNPC) is creating some disquiet among stakeholders.
The said letter dated June 23 and signed by E. U. Ukeje, SA to CBN Governor, Godwin Emefiele/Head, Financial Markets Department of the apex bank to the IOCs obtained by Daily Sun read “note that you are only permitted to sell your FX to the designated PMS importers approved by the NNPC or to the CBN at the ruling exchange interbank rate.”
The aggrieved stakeholders noted that, according to the letter, the “designated importers” to whom forex should be sold in line with the CBN directive include Conoil Plc, Mobil Plc, MRS Oil Nig, Oando Plc, Northwest Petroleum and Total Nig. Plc, adding that the directive contradicts the apex bank’s Revised Guidelines for the Operation of the Nigerian Inter-Bank Foreign Exchange Market issued a fortnight ago.
They pointed out that, Section 2.1 of the guidelines states that: “Participants in the inter-bank FX market shall include authorised dealers, authorised buyers, oil companies, oil service companies, exporters, end users and any other entity the CBN may designate from time to time.”
Also, Section 2.4.2 iii of the guidelines states: “There shall be no predetermined spread on FX spot transactions executed through CBN intervention with the PXPDs.”
On the basis of those provisions, the stakeholders then argued that the apex bank’s directive could be counter-productive as the “favoured oil companies cannot handle all the petroleum needs of the country,” adding that it could also undermine the whole essence of accountability and transparency of the FX process.
“It will be imperative for the NNPC and CBN to explain how they settled for the six oil majors to the exclusion of other independent marketers who make up the bulk of petroleum imports and distribution chain in the country.
The authorities are arm twisting the IOCs. Imagine asking them to contribute $400 million every month while the CBN decides who gets it. Something fishy is going on concerning this FX matter,” they argued.
As long as the NNPC and CBN cherry pick, the naira will keep bouncing around. The remedy is to allow the IOCs to access the open market as contained in the revised guidelines and not all these restrictions.”
In his letter to the IOCs, Kachikwu wrote: “At the heart of the liberalisation is the need to reflect realities of foreign exchange pricing outside the CBN, to ensure supply continuity. Therefore, it is imperative that all sources of foreign exchange are explored to enable the importation of petroleum products. As such, our expectation is for the IOCs to support this initiative by allocation into a general source pool, approximately $400 million monthly for the importation of petroleum products.
“NNPC will act as moderator of the foreign exchange pool and determine the eventual disbursement of these funds.”
But according to Acting Director of Corporate Communication of CBN, Mr. Isaac Okoroafor, CBN’s letter was meant to draw stakeholders’ attention to the NNPC directive that all foreign exchange should be sold at market determined rate.
This, he said, was because the CBN doesn’t want to create room for multiple exchange rates and so it expects OICs to sell to it as a participant and to other importers at the prevailing market rate. He said this has become necessary to avoid having multiple exchange rates, which will defeat the whole essence of flexible interbank market regime.
“All forex must come to CBN so that we can manage the rate appropriately in line with demand and supply. But some other stakeholders have gone ahead with insinuation that we have selected those to get the FX. Our position is that it should be sold to fuel importers and other importers at market determined rate to avoid creating two markets,” he said.
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