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CBN BANS FOREX MARKET

CBN BANS FOREX MARKET

CBN BANS NINE BANKS FROM FOREX MARKET

By: OMOKHUAL PUAH

Central bank of Nigeria (CBN) has on Tuesday barred nine banks from the Forex Trading Market, for refusing to remit a total of $2.334 billion to Nigerian National Petroleum Corporation (NNPC) from the Treasury Single Account (TSA).

In a briefing with the Nigeria President Muhammadu Buhari, each of the nine affected banks have been mandated to move their monies into the TSA as they await the prospects of further fines.

In a report by THISDAY Tuesday afternoon, the nine suspended banks include the United Bank for Africa (UBA) Plc – $530 million, First Bank of Nigeria (FBN) Ltd. – $469 million, Diamond Bank Plc – $287 million, Sterling Bank Plc – $269 million, Skye Bank Plc -$221 million, Fidelity Bank Plc – $209 million, Keystone Bank Ltd. – $139 million, First City Monument Bank (FCMB) Ltd. – $125 million, and Heritage Bank Limited – $85.5 million.

The suspension which started after CBN restricted the flow of dollars to commercial banks in March has forced the banks to delay hard-currency loan and trade repayments and increased their risk of default.

In the words of Diran Olojo, a spokesman for First City Monument Bank (FCMB), “it is the problem of dire macroeconomic situation and illiquidity in the forex markets, not a willful non- compliance by the banks and the banks are working hard with the CBN to resolve the issue”.

In an appeal made by the executives of the affected banks, it was stated that “the remittances were delayed by the dollar illiquidity of the Nigerian system and so, the CBN should sell us the dollars, by debiting our various accounts so that we could return the monies to the TSA”.

The executives further pleaded that the CBN gives them more time to refund the huge amounts, because “a large amount of the funds were loaned to the power sector, oil sector and the gas sector. Since the most amount was issued to the international oil companies (IOCs) to patch up the government failures in terms of arrears, the government should try to fund its cash calls obligations, so that the IOCs will be able to refund us and in turn remit the TSA”.

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