CBN Unveils Strategy To Double Remittances,Grants AIP To 14 New IMTOs

Mohammed Shosanya

The Central Bank of Nigeria (CBN) has activated plans to double foreign-currency remittance flows through formal channels by granting 14 new International Money Transfer Operators (IMTOs) Approval-in-Principle (AIP).

The Bank’s Acting Director of Corporate Communications, Mrs. Hakama Sidi Ali, disclosed this in a statement on Wednesday.

She stated that the initiative will help increase the sustained supply of foreign exchange in the official market by promoting greater competition and innovation among IMTOs to lower the cost of remittance transactions and boost financial inclusion.

She added: “This will spur liquidity in Nigeria’s Autonomous Foreign Exchange Market (NAFEX), augmenting price discovery to enable a market-driven fair value for the naira.”

She said that the CBN viewed increasing formal remittance flows— one of the major sources of foreign exchange, accounting for over 6% of GDP—as a means of reducing the historical volatility in Nigeria’s exchange rate caused by external factors, such as fluctuations in foreign investment and oil export proceeds.

The increase in the number of IMTOs is one of the primary actions initiated by the CBN’s remittance task force, overseen by Governor Cardoso as a collaborative unit pulling together specialists to work closely with the private sector and market operators to facilitate the ease of doing business in the remittance ecosystem in Nigeria.

The task force was established as a direct result of an executive learning session with IMTOs during the World Bank/IMF Spring Meetings held in Washington DC, United States of America, in April 2024.

The task force will meet regularly to implement strategy and monitor the impact of its measures on remittance inflows.

Promo: Access Bank Gives Customers N200m, Three SUVs

Mohammed Shosanya

The 16th season of DiamondXtra, a savings and reward account where customers of Access Bank are rewarded with several prizes has finally been launched.

The event which took place on May 8th at Access Bank branch in Abuja, rewarded over 15,000 of its customers with N200 million in cash prizes, 3 brand new cars, and various other rewards.

The bank,which has been running the reward scheme since 2008, explained that the program is set asides to show appreciation by giving back to its loyal customers.

In his welcome address at the launch, Mr. Emeka Uzowuru,the Regional Director for North Central,Access bank, expressed delight on what the brand had been able to achieve over the years.

“As we launch the 16th season of Diamond Xtra reward, we are overwhelmed with gratitude and pride, the resounding success of the past seasons. And with the support of our esteemed customers, and unparalleled dedication of our colleagues, to date we have rewarded over 26,000 customers with outstanding sum of 6.5 billion naira”,he said

He further revealed how the brand has thrived well among competitors. “Despite challenges and attempts by competitors to mimic what we do, DiamondXtra remains unrivaled in the industry,” Mr. Uzowuru noted.

Among the DiamondXtra winners, Mr. Akowe John, an accountant who won a prize of N20,000, shared his excitement.

“Access bank is a wonderful bank And I must appreciate them for the encouragement. Truly they are doing well. I didn’t even believe that it would be my turn, but I thank God for what they have done and they should continue to wax stronger in the financial industry”, Mr John said.

Another winner, Mrs ijeoma Okeke expressed her joy at emerging as one of the winner of the 16th season of DiamondXtra rewards.

“I came to the event just to see what going on, I never knew I would be among the people that will win, cause towards the end I had lost hope, not until I heard my name, I was so excited. And that made me believe in access bank, and I will continue to upgrade my account with them”,Mrs Okeke enthused.

CBN Directs PoS Operators To Register With CAC Before July 7

Mohammed Shosanya

The Central Bank of Nigeria (CBN) has ordered all Point-of-Sale operators in the country to register their businesses with the Corporate Affairs Commission (CAC) in two months.

This was disclosed in a statement after a meeting between Fintechs and the Registrar-General/Chief Executive Officer, CAC, Hussaini Magaji (SAN) in Abuja on Monday, May 7.

The CAC boss said the two-month timeline for the registration, which will expire on July 7, was not targeted at any groups or individuals but was “in line with legal requirements and the directives of the Central Bank of Nigeria.”

The statement said: “The Corporate Affairs Commission and Fintech companies in Nigeria, better known as PoS operators, have agreed to a two-month timeline to register their agents, merchants, and individuals with the CAC in line with legal requirements and the directives of the Central Bank of Nigeria.

“The Corporate Affairs Commission and Fintech companies in Nigeria, better known as PoS operators, have agreed to a two-month timeline to register their agents, merchants, and individuals with the CAC in line with legal requirements and the directives of the Central Bank of Nigeria.

“The agreement was reached today during a meeting between Fintechs and the Registrar-General, CAC, Hussaini Ishaq Magaji, in Abuja.”

Forex: CBN Sells Fresh Dollars To BDCs at N1,021

Mohammed Shosanya

The Central Bank of Nigeria has resumed the sales of dollars to Bureau De Change operators.

It conveyed this in a circular referenced TEM/FEM/PUB/001/013 uploaded to its website on Tuesday and signed by its Director, Trade and Exchange Department Dr Hassan Mahmud.

The apex bank said it is set to sell $10,000 to BDCs at N1,021 per dollar and directed the operators to sell at a spread not more than 1.5 per cent above the CBN rate.

The current rate is 7.27 per cent less than the previous price. This current release is hoped to further strengthen the local currency.

The statement read, “We write to inform you of the sale of $10,000 by the CBN to BDCs at the rate of 1,021/$. The BDCs are in turn to sell to eligible end users at a spread not more than 1.5 per cent of the purchase price.”

This recent move follows the CBN’s resolve to continue to defend the naira as stated by the bank earlier.

The CBN directed all eligible BDCs to commence payment of naira deposit into the designated CBN accounts from April 22, 2024.

It also asked the operators to submit proof of payment and other documents at the appropriate CBN branches for disbursement.

CBN Slashes Loan-To-Deposit Ratio To 50%

Mohammed Shosanya

The Central Bank of Nigeria, CBN has reduced the Loan to Deposit Ratio, LDR of banks to 50 per cent from 65 percent.

The reduction was announced through a circular to Deposit Money Banks titled “Re: Regulatory Measures to Improve Lending to the Real Sector of the Nigerian Economy”.

The circular was signed by Acting Director, Banking Supervision Department, CBN, Mr. Adetona Adedeji.

In line with the new measures, the CBN has reduced the loan-to-deposit ratio by 15 percentage points, down to 50 per cent.

This move aligns with the CBN’s current monetary tightening policies and reflects the increase in the Cash Reserve ratio rate for banks.

All Deposit Money Banks are now mandated to adhere to this revised LDR.

The CBN stated that average daily figures will be utilised to gauge compliance with this directive.

While DMBs are encouraged to maintain robust risk management practices in their lending activities, the CBN has committed to continuous monitoring of adherence and will adjust the LDR as necessary based on market developments.

Adedeji implored all banks to acknowledge these modifications and adjust their operations accordingly. He emphasised that this regulatory adjustment is anticipated to significantly influence the banking sector and the wider Nigerian economy.

The circular read in part, “Following a shift in the Bank’s policy stance towards a more contractionary approach, it is crucial to revise the loan-to-deposit ratio policy to conform with the CBN’s ongoing monetary tightening.

“Consequently, the CBN has decided to decrease the LDR by 15 percentage points to 50 per cent, proportionate to the rise in the CRR rate for banks.

“All DMBs must maintain this level, and it is advised that average daily figures will still be applied for compliance assessment.

“While DMBs are urged to sustain strong risk management practices concerning their lending operations, the CBN will persist in monitoring compliance, reviewing market developments, and making necessary adjustments to the LDR. Please be guided accordingly.”

CBN Expedites Measures To Strengthen Naira Against Dollar

Mohammed Shosanya

The Central Bank of Nigeria (CBN),has announced two fresh strategies aimed at strengthening the Naira.

One is the prohibition of the use of foreign currency as collateral for Naira loans.

The second is the slash in the amount it sells the dollar to licensed Bureau De Change operators.

Thesee were contained in separate circulars by the Acting Director of the Banking Supervision Department, Dr. Adetona Adedeji and the Director of the Trade and Exchange Department, Dr. W.J Kanya.

In the circular by Kanya, the CBN said it sold $15.88 million to 1,588 eligible Bureaux De Change (BDCs).

The circular, addressed to the Association of Bureau De Change Operators of Nigeria (ABCON) President Aminu Gwadabe, explained that it sold a dollar at N1,101.

The BDCs are to sell at N1,116.15 or 1.5 per cent margin above the purchase rate.

The previous dollar purchase rate for BDCs was N1,251/$.

According to Kanya, each of the eligible BDCs will access $10,000.

The circular reads: “We write to inform you of the sale of $10,000 by the CBN to BDCs at the rate of N1101/$1.

“The BDCs are in turn to sell to eligible end users at a spread of not more than 1.5 per cent above the purchase price.

“All eligible BDCs are, therefore, directed to commence payment of the Naira deposit to the under-listed CBN Naira Deposit Account Numbers from today (yesterday), April 08, 2024, and submit confirmation of payment with other necessary documentation for disbursement at the appropriate CBN branches.

“All BDCs are strongly advised to continue to abide by the rules and conditions as stipulated in our earlier letters/circulars.”

According to the circular by Adedeji, banks can no longer accept deposits denominated in foreign currencies like USD, EUR, or GBP as security for loans issued in Naira.

The ban extends to most foreign currency-based financial instruments, excluding those specifically permitted by the CBN.

The circular outlined two specific exceptions to the new regulation: Nigerian government-issued Eurobonds can still be used as collateral for Naira loans.

Guarantees provided by reputable foreign banks, including Standby Letters of Credit, will also remain acceptable forms of collateral.

The directive to banks provides a timeframe to address existing loans secured by non-compliant collateral like foreign currency deposits other than Eurobond or foreign bank guarantees.

Banks now have 90 days to “wind down” these loans, meaning they must restructure the loan to utilise acceptable collateral as defined by the new regulation.

If restructuring is not feasible, the bank must take steps to recover the outstanding loan balance.

The circular reads in part: “The CBN has observed the prevailing situation where bank Customers use Foreign Currency (FCY) as collaterals for Naira loans.

“Consequently, the current practice of using foreign currency-denominated collaterals for Naira loans is hereby prohibited, except, where the foreign currency collateral is: Eurobonds issued by the Federal Government of Nigeria; or Guarantees of foreign banks, including Standby Letters of Credit.

“In this regard, all loans currently secured with dollar-denominated collaterals other than as mentioned above should be wound down within 90 days, failing which such exposures shall be risk-weighted 150 per cent for Capital Adequacy Ratio computation, in addition to other regulatory sanctions.”

CBN Stops Foreign Currencies As Collateral For Naira Loans

Mohammed Shosanya

The Central Bank of Nigeria has tolf all banks in Nigeria to stop the use of foreign currencies as collateral for naira loans.

It disclosed this in a circular titled “The use of foreign-currency-denominated collaterals for naira loans” with ref number: BSD/DIR/PUB/LAB/017/004.

The apex bank’s acting Director, Banking Supervision Department, Adetona Adedeji,signed the circular which was uploaded to its website on Monday.

The apex bank said it had observed the use of FCY by bank customers as collateral for naira loans and, therefore, prohibits it with immediate effect.

It directed banks to reduce all existing loans with foreign currency collaterals to 90 days or attract a 150 per cent capital adequacy ratio computation as part of the bank’s risk.

“The Central Bank of Nigeria has observed the prevailing situation where bank customers use foreign currency (FCY) as collaterals for Naira loans.

“Consequently, the current practice of using foreign currency-denominated collaterals for Naira loans is hereby prohibited except where the foreign currency collateral is Eurobonds issued by the Federal Government of Nigeria or guarantees of foreign banks, including standby letters of credit.

“In this regard, all loans currently secured with dollar-denominated collaterals other than as mentioned above should be wound down within 90 days, failing which such exposures shall be risk-weighted 150% for Capital Adequacy Ratio computation, in addition to other regulatory sanctions,” the circular read.

The CBN maintained that it is on a mission to ensure that there is adequate foreign exchange in the market even as the naira is being strengthened.

CBN Unveils N500bn, N200bn Minimum Capital Base For Banks

Mohammed Shosanya

The Central Bank of Nigeria (CBN) on Thursday,unveiled new minimum capital requirements for banks, pegging the minimum capital base for commercial banks with international authorisation at N500 Billion.

Acting Director, Corporate Communications Department, Mrs. Hakama Sidi Ali,who confirmed this,said the new minimum capital base for commercial banks with national authorisation is now N200 Billion, while the new requirement for those with regional authorization is N50 Billion.

She also disclosed that the new minimum capital for merchant banks would be N50 Billion, while the new requirements for non-interest banks with national and regional authorisations are N20 Billion and N10 Billion, respectively.

A circular signed by the Director, Financial Policy and Regulation Department, Mr. Haruna Mustafa, to all commercial, merchant, and non-interest banks and promoters of proposed banks emphasized that all banks are required to meet the minimum capital requirement within 24 months commencing from April 1, 2024, and terminating on March 31, 2026.

According to the circular, the move, initially disclosed by the CBN Governor, Olayemi Cardoso, in his address to the Annual Bankers’ Dinner in November 2023, was to enhance banks’ resilience, solvency, and capacity to continue supporting the growth of the Nigerian economy.

The apex bank urged banks to consider injecting fresh equity capital through private placements, rights issues and/or offers for subscription; mergers and Acquisitions (M&As); and/or upgrade or downgrade of license authorisation.

The circular further disclosed that the minimum capital shall comprise paid-up capital and share premium only. It stressed that the new capital requirement shall not be based on the Shareholders’ Fund.

“Additional Tier 1 (AT1) Capital shall not be eligible for meeting the new requirement. Notwithstanding the capital increase, banks are to ensure strict compliance with the minimum capital adequacy ratio (CAR) requirement applicable to their license authorisation.

“In line with extant regulations, banks that breach the CAR requirement shall be required to inject fresh capital to regularise their position,” it added.

The CBN circular said the minimum capital requirement for proposed banks shall be paid-up capital, adding that the new minimum capital requirement shall apply to all new applications for banking licenses submitted after April 1, 2024.

It noted that the CBN would continue to process all pending applications for banking licenses for which a capital deposit had been made and/or an Approval-in-Principle (AIP) had been granted. However, it said that the promoters of such proposed banks would make up the difference between the capital deposited with the CBN and the new capital requirement no later than March 31, 2026.

The CBN said all banks are required to submit an implementation plan (clearly indicating the chosen option(s) for meeting the new capital requirement and various activities involved with their timelines) no later than April 30, 2024.

The CBN would monitor and ensure compliance with the new requirements within the specified timeline.

Access Holdings’ Profit Hits N729bn

Mohammed Shosanya

Access Holdings Plc (“The Group”) has announced its audited Consolidated and Separate Financial Statements for the year ended December 31, 2023.

In the year under review, the Group recorded a robust growth in its Profits Before Tax, posting a healthy N729 billion, representing 335% year-on-year (YoY) increase from 2022.

Its earnings also surged by 87% YoY to N2.59 trillion, up from N1.38 trillion in 2022. The growth was primarily driven by a 100% increase in interest income and a 67.9% growth in non-interest income.

The Group’s Net Interest Income also recorded strong performance, soaring by 93.5% YoY to N695.4 billion, compared to N359.6 billion in the previous year. The yield on earning assets also rose remarkably from 9.2% in 2022 to 12.8%.

Access Holdings’ Loans & Advances expanded by 60.5% YoY to N8.9 trillion, accompanied by an improvement in the Non-Performing Loan Ratio, which decreased to 2.8% from 3.2% in 2022. The Group closed the year with N2.18 trillion in Shareholders’ Funds, marking a significant 77.5% growth from N1.23 trillion in FY 2022.

Speaking on the performance, Bolaji Agbede, Acting Group Chief Executive Officer, Access Holdings Plc, said the Group’s strong performance in 2023 reflects our commitment to delivering value to our shareholders and stakeholders amidst challenging operating environments.

He added:”The significant growth in our earnings is a testament to the resilience, strategic focus, and efficiency of our team, and reflects the diversity of our offering across banking, pension, insurance, and payments driven by robust risk management, best-in-class corporate governance, and cutting-edge technology. As we look ahead, we remain committed to driving sustainable growth, consolidating our footprint, and accelerating the attainment of our 2027 strategic objectives.”

Its regulatory ratios strengthened in 2023 as Capital Adequacy Ratios for the Group, and its flagship subsidiary, Access Bank, stood at 19.01% and 21.09%, respectively. The Liquidity Ratio remained robust at 51.8%, well above the regulatory threshold.

Roosevelt Ogbonna, Managing Director/CEO, Access Bank commented: “As we reflect on the results of 2023, characterised by robust growth, strategic acquisitions, and expansion into key trade hubs, I am excited about the prospects for Access Bank. Our relentless focus on customer-centricity, digital innovation, and operational excellence has positioned us strongly to capitalise on emerging opportunities. As we enter the consolidation and efficiency phase of our Africa and international expansion strategy, we remain committed to driving sustainable growth, enhancing shareholder value, and delivering exceptional banking experiences to our customers across Africa and beyond.”

Access Holdings’ other subsidiaries also posted strong results, as Access Pensions Limited recorded a 75% growth in gross revenues, amounting to N12.3 billion, while Hydrogen Payment services posted an operating income of N2.1 billion and a PBT of N161 million.

Access Holdings Plc acquired Megatech Insurance Brokers Ltd. (now known as Access Insurance Brokers Ltd.) and successfully completed a US$300million capital injection into Access Banking Group, which acquired several entities including Finibanco Angola S.A., and select Standard Chartered Bank operations in Africa.

Its UK subsidiary also opened a branch in Paris and received regulatory approval to commence operations in Hong Kong.

The Group has proposed a final dividend of N1.80 kobo per share for the 2023 financial year, bringing the total dividend payment to N2.10 kobo per share with a total value of N74.6 billion.

Aigboje Aig-Imoukhuede, Chairman, Access Holdings, said: “As we navigate this transformative period, we remain confident in the leadership of the Group to continue this upward trend and set the standard for financial service groups in the continent. Access Holdings has a rich history of excellence, and we will continue to deliver unparalleled value to our stakeholders.”

CBN Increases Interest Rate To 24.75%

Mohammed Shosanya

The Central Bank of Nigeria CBN’s Monetary Policy Committee (MPC) on Tuesday announced a significant increase in the benchmark interest rate to 24.75%

Speaking to journalists after the MPC meeting, CBN Governor Yemi Cardoso,stated the committee’s commitment to curbing inflation and restoring the purchasing power of Nigerians.

He outlined the various policy adjustments implemented.

The most significant change is the substantial increase in the MPR to 24.75%. This makes borrowing more expensive, aiming to reduce spending and slow economic growth, ultimately bringing down inflation,he said.

According to him,the apex bank has also adjusted the Cash Reserve Ratio (CRR) for commercial banks, maintaining it at 45%. However, the CRR for merchant banks has been increased from 10% to 14%.

Besides,the liquidity ratio remains unchanged at 13%. These measures aim to tighten control over the money supply in circulation, further dampening inflationary pressures.

Cardoso highlighted the importance of food security in the fight against inflation. He urged the federal government to fully implement its agricultural programmes, aiming to increase domestic food production and reduce reliance on imported food items, which can be susceptible to price fluctuations.

The increased interest rate will have a ripple effect throughout the Nigerian economy. Borrowers, including businesses and individuals, can expect to pay more for loans, potentially impacting investment and consumer spending.

However, the CBN’s actions are intended to bring down inflation in the long run, which would ultimately benefit Nigerians by stabilizing prices and protecting their purchasing power.

The MPC’s decision to aggressively raise interest rates reflects the seriousness of Nigeria’s inflation challenge.