CBN to Review Bank’s Forex Transactions

Fri, Jan 9, 2015

By publisher

3 MIN READ

Banking Briefs

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THE Central Bank of Nigeria is to review the amount banks can hold in dollars for transactions in the foreign exchange market. CBN had in December stopped banks from holding any amount of their shareholders’ funds in dollars to curb speculative forex dealings. Godwin Emefiele, governor of CBN, told Bloomberg on Wednesday that the measure was only a stop-gap action to stabilise the Naira.

“I can tell you categorically it will no longer be one percent. It will be less than one per cent. The reason we put a stop to one percent is because we felt that it was too large to be held by banks as a trading position,” he said. The governor also said the CBN had no plans to change another rule adopted around the same time that dollars bought in the interbank market should be used within 48 hours or sold to the apex bank.

The Naira is “currently appropriately priced” and no new measures is being considered. “We are satisfied with the current adjustment that’s been done. It remains a free entry and free exit market,” he said.

The naira has been battered by the fall in the price of crude prices, which dropped 50 percent in the international market since June. The Naira depreciated almost 11 per cent in the past three months, the most among 24 African currencies tracked by Bloomberg.

The CBN had last month introduced several measures to bolster the national currency. On November 25, the central bank devalued the naira by eight per cent and raised the benchmark interest rate by 100 basis points in a bid to stem capital outflows and defend the naira. It also increased private sector deposits Cash Reserve Ratio from 15 to 20 per cent.

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Keystone Bank Going …

BY the end of the first quarter of this 2015, the Asset Management Corporation of Nigeria, AMCON, would have sold Keystone bank to whoever wants to buy it. The sale is coming barely four months AMCON sold Enterprise Bank and Mainstreet Bank, two of the three nationalised banks for a combined sum of N181.1billion, after bidding processes that lasted for several months.

Mustafa Chike-Obi, chief executive officer, AMCON, said on Wednesday that the disclosure in an exclusive interview with our correspondent in Lagos, said the February general elections had made the corporation to delay the sale of Keystone Bank till the second quarter of the year.

Heritage Bank won the bid to acquire Enterprise Bank for N56.1bilion, while Skye Bank was announced as the winner for Mainstreet Bank with a bid of N125billion.

Cedar One Investment Partners Limited and Fidelity Bank emerged as the first and second reserve bidders respectively for Mainstreet Bank.

The Central Bank of Nigeria had in the wake of the 2009 banking crisis established AMCON to take off non-performing loans from the banks’ books.

The CBN had on August 5, 2011, revoked the operating licenses of Afribank Plc, Spring Bank Plc and Bank PHB Plc, which it said, did not show enough capacity and ability for recapitalisation.

— Jan. 19, 2015 @ 01:00 GMT