Connect with us

FINANCIAL SERVICES

CBN sequesters N321.6 billion from banks in new CRR Debits

Information gathered by Nairametrics reveals about 17 banks had their vaults debited by the apex bank in CRR sequesters.

Published

on

The Central Bank of Nigeria has hit commercial banks (deposit money banks) with a debit of N321.6 billion in Cash Reserve Ratio (CRR) related sequesters.

The cash reserve requirement is the minimum amount banks are expected to leave retained with the Central Bank of Nigeria from customer deposits. In January, the CRR was increased by 5% to 27.5%  by the CBN Monetary Policy Committee (MPC) who explained that the decision was intended to address monetary-induced inflation whilst retaining the benefits from the CBN’s LDR policy.

Sources inform that  this debits occurred towards the end of the week as CBN steps up efforts to sweep excess liquidity from the banking system. Information gathered by themoneymetrics reveals about 17 banks had their vaults debited by the apex bank in CRR sequesters.

CRR debits have remained frequent since late last year when the CBN introduced policy measures that it hoped will force banks to lend more to the private sector. Between December 2019 and July 2020, A source  estimates about N4.8 trillion has been debited from bank deposits as CRR. Total banking reserves held by the CBN as at end of July was N11 trillion up from N6.2 trillion at the end of 2019. Some reports however estimate the figure at N2 trillion.

  • Recent published second quarter banking results also reveal the spate of debits. Union Bank of Nigeria reported its total cash reserve requirement increased from N296 billion as at December 2019 to N484.5 billion as at June 30th, 2020. This suggests the central bank has debited Union Bank N188 billion in additional CRR between January and June 2020. .
  • Sterling Bank reported that the CBN restricted about N215.5 billion of its customer deposits as of June 2020.
  • FBNH one of Nigeria’s largest banking entities also reported about N797 billion of its cash remained with the CBN in CRR debits as at June 2020.

What’s the big deal? Whilst banks have complained bitterly about the spate of debits and attendant effects on their deposits, their profits appear to remain robust despite the Covid-19 pandemic. In fact, the banking sector was one of the fastest-growing in the economy at about 28.41% in the second quarter and recorded a 24% growth in the first quarter of 2020.

This suggests the plausible reason for all the debits is perhaps as a monetary policy tool geared towards foreign exchange management. Since the CBN whittled down its OMO bills borrowings, it has resorted to pseudo capital controls to manage the forex liquidity.

To reduce the amount of naira chasing the dollar, the CBN offers higher interest rates on naira deposits. However, with interest rates at one of the lowest in recent years, sequestering excess banking funds appears a logical policy to reduce the ability of banks to engage in roundtripping.

Advertisement
Click to comment

Leave a Reply

FINANCIAL SERVICES

Federal High Court directs meeting to consider the transfer of GTBank into a Holding Company

A Federal High Court has directed that a meeting of the holders of GTBank Plc, be convened to consider the transfer of the bank to a holding company.

Published

on

The Board of Directors and management of Guaranty Trust Bank has disclosed that the Federal High Court of Nigeria on November 6, 2020, directed that a meeting of the holders of the fully paid ordinary shares of GTBank Plc, be convened on December 4, 2020 for the purpose of considering the transfer of the bank to a holding company.

This information was conveyed through a Notice of Court-Ordered Meeting by the bank, and published on the website of the NSE. It was signed by the bank’s secretary, Erhi Obebeduo, and the Nigerian legal counsel to the bank, Aluko & Oyebode.

According to the information contained in the disclosure, the court-ordered meeting of the holders of the fully paid ordinary shares of Guaranty Trust Bank Plc to be convened for the purpose of considering and if thought fit, approving, with or without modification, a Scheme of Arrangement pursuant to Section 715 of the Companies and Allied Matters Act, 2020 between the bank and the holders of the fully paid ordinary shares of 50 Kobo each in the bank.

The meeting will be held at the Oriental Hotel, 3, Lekki Road, Victoria Island, Lagos, Nigeria, at 10:00 a.m. or soon thereafter, at which place and time the Holders are requested to attend.

Resolutions to be proposed at the meeting

The following are some of the sub-joined resolutions that will be proposed, and if thought fit, passed as special resolution at the meeting:

  • The Scheme of Arrangement dated November 4, 2020, a printed copy of which has been produced for the meeting and, signed by the Chairman be and is hereby approved.
  • In accordance with the Scheme, the 29,431,179,224 ordinary shares of 50 Kobo each in the issued and paid-up share capital of the Bank held by the shareholders be and are hereby transferred to Guaranty Trust Holding Company Plc (the Holdco) in exchange for the allotment of 29,431,179,224 ordinary shares of 50 Kobo each in the share capital of the Holdco to the shareholders in the same proportion to their shareholding in the Bank credited as fully paid without any further act or deed.
  • In accordance with the Scheme and pursuant to the prospectus issued by the Holdco, each existing holder of the Global Depositary Receipts issued by the Bank (the Existing GDRs) receive, as consideration for each existing GDR held, one new Global Depositary Receipt issued by JP Morgan Chase Bank N.A. (JP Morgan Chase), the Depositary Bank for the Holdco GDR programme (the Holdco GDRs).
  • The Board of Directors of the Bank be and is hereby authorised to take all necessary actions to delist the shares of the Bank from the official list of The Nigerian Stock Exchange.

 

Continue Reading

FINANCIAL SERVICES

CBN reviews appointment requirements for CCOs in Banks

The CBN has reviewed the appointment criteria for CCOs in Merchant Banks and Regional Banks.

Published

on

The Central Bank of Nigeria has reviewed the appointment criteria for Chief Compliance Officers in Merchant Banks and Regional Banks (Commercial and specialized).

This is according to a circular issued by the apex bank dated October 9, 2020, and signed by its Director of Financial Policy and Regulation Department, Kevin Amugo.

According to the latest notice, Merchant banks and Regional banks are hereby granted dispensation to appoint CCOs on a grade not below an Assistant General Managers. However, the CCOs will report directly to the ECO of the financial institutions who have sole responsibility for compliance matters in the bank.

Backstory

This latest action by the CBN is the sequel to consultations and engagement with stakeholders emanating from its earlier circular referenced FPR/DIR/GEN/CIR/06/004 of September 28, 2016, in which the tentative requirements for Executive Compliance Officers and Chief Compliance Officers of deposit money banks were mooted.

Meanwhile, the requirements and responsibilities of Executive Compliance Officers remain as earlier communicated in the circular dated 28 September 2016.

A part of the recent circular signed by Mr. Kevin read thus,

“Further to the circular referenced FPR/DIR/GEN/CIR/06/004 of 28 September 2016 on the appointment of Executive Compliance Officers (ECO) and Chief Compliance Officers (CCO) of deposit money banks, the CBN has, after due considerations and presentations by stakeholders on the size, structure, operation, and dynamics of classes of operators in the sectors reviewed the requirements for the appointment of Chief Compliance Officers.”

Continue Reading

FINANCIAL SERVICES

CBN grants Greenwich Trust Limited operational license for merchant banking

CBN has upscaled Greenwich Trust Limited to the status of a merchant bank.

Published

on

The Central Bank of Nigeria (CBN) has upscaled Greenwich Trust Limited and granted it, operational license for merchant banking in the country.

According to an official statement released by the firm, the entity would be known as Greenwich Merchant Bank Limited. This license allows Greenwich Merchant Bank to upscale and offer such diverse services as corporate banking, investment banking, financial advisory services, securities dealing, treasury wealth and asset management, etc., making it possible to provide increased value to stakeholders beyond its previous scope.

Recall that the minimum capital requirements for establishing a merchant bank according to Merchant Banking Licensing Regulations in 2010 are N15 billion

With the addition of Greenwich Merchant Bank, Nigeria now has six merchant banks. The others are; FBN Quest, Coronation Merchant Bank, DSH Merchant Bank, Nova Merchant Bank and Rand Merchant Bank.

About Greenwich Trust Limited

Greenwich Trust Limited is an investment banking firm duly registered with relevant authorities such as the Nigerian Securities and Exchange Commission (SEC). It is a diversified firm with subsidiaries such as Asset management, GTL Properties, GTL Securities Limited, Cedar Express Limited and Meyer Plc.

Continue Reading
Advertisement
Advertisement
Advertisement
Advertisement unmute the video for sound
Advertisement
Advertisement

Facebook

Follow us on Twitter

Subscribe to Blog via Email

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 92 other subscribers

Trending