Central Bank of Nigeria Suspends 9 Banks from Forex Market
- CBN suspended the banks from the interbank currency market for failing to remit money owed to the government.
Finance Magnates has learned that CBN, Nigeria's central bank, has suspended nine banks from the interbank currency market for failing to remit money owed to the government, according to a report in Reuters today.
Suspension in Force
A director at one of the affected lenders said his bank informed all board members of the suspension on Tuesday, adding it held $125 million of the total sum.
The suspension follows the tightening of restrictions by the central bank on the flow of dollars to domestic lenders in March which forced the banks to delay hard-currency loan and trade repayments and increased their risk of default.
The banks have collectively failed to remit $2.1 billion, the government's share of dividends from the state-owned gas company, Nigerian National Petroleum Corporation (NNPC), which they were supposed to pay into the government's account at the central bank.
The banks for which suspension will remain in force until they remit all outstanding NNPC funds are United Bank for Africa ($530m), FirstBank of Nigeria ($469m), Diamond Bank ($287m), Sterling Bank ($269m), Skye Bank ($221m), Fidelity Bank ($209m), Keystone Bank ($139m), FCMB ($125m) and Heritage Bank ($85m).
A banker reportedly commented: "We could not trade today. The suspension is meant to pass on the pressure to banks to make Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl but this is foreign currency and we have to source the dollars."
Financial Crisis
Nigeria has experienced its worst financial crisis in years as a decline in oil revenues impacts on public finances and the naira. The central bank has said recession is likely.
CBN floated the currency in June in order to attract investment, allowing the naira to fall by 40 percent against the dollar but the central bank has remained the main supplier of dollars as foreign investors continue to sit on the sidelines.
The bank has been selling dollars virtually on a daily basis to boost interbank trading and Liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent but it reduced its sales volume this week after it settled two-month outright forwards it sold in June.
CBN reportedly paid $1.2 billion for currency forwards it sold in June at 280 per dollar, further draining its dollar reserves. The reserves are now down to $25.7 billion, their lowest in over 11 years.
Finance Magnates has learned that CBN, Nigeria's central bank, has suspended nine banks from the interbank currency market for failing to remit money owed to the government, according to a report in Reuters today.
Suspension in Force
A director at one of the affected lenders said his bank informed all board members of the suspension on Tuesday, adding it held $125 million of the total sum.
The suspension follows the tightening of restrictions by the central bank on the flow of dollars to domestic lenders in March which forced the banks to delay hard-currency loan and trade repayments and increased their risk of default.
The banks have collectively failed to remit $2.1 billion, the government's share of dividends from the state-owned gas company, Nigerian National Petroleum Corporation (NNPC), which they were supposed to pay into the government's account at the central bank.
The banks for which suspension will remain in force until they remit all outstanding NNPC funds are United Bank for Africa ($530m), FirstBank of Nigeria ($469m), Diamond Bank ($287m), Sterling Bank ($269m), Skye Bank ($221m), Fidelity Bank ($209m), Keystone Bank ($139m), FCMB ($125m) and Heritage Bank ($85m).
A banker reportedly commented: "We could not trade today. The suspension is meant to pass on the pressure to banks to make Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl but this is foreign currency and we have to source the dollars."
Financial Crisis
Nigeria has experienced its worst financial crisis in years as a decline in oil revenues impacts on public finances and the naira. The central bank has said recession is likely.
CBN floated the currency in June in order to attract investment, allowing the naira to fall by 40 percent against the dollar but the central bank has remained the main supplier of dollars as foreign investors continue to sit on the sidelines.
The bank has been selling dollars virtually on a daily basis to boost interbank trading and Liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent but it reduced its sales volume this week after it settled two-month outright forwards it sold in June.
CBN reportedly paid $1.2 billion for currency forwards it sold in June at 280 per dollar, further draining its dollar reserves. The reserves are now down to $25.7 billion, their lowest in over 11 years.