In line with its threat to sanction commercial banks that failed to
comply with the federal government’s directive on the remittance of
government revenue to the treasury single account (TSA), the Central
Bank of Nigeria (CBN) last Friday fined First Bank of Nigeria Limited
(FirstBank) and United Bank for Africa (UBA) Plc the sum of N4.819
billion.
According to a circular obtained from banking industry sources, while
the CBN imposed a penalty of N1,877,409,905.12 on FirstBank, UBA
was fined N2,942,189,651.45 for its failure to comply with the federal
government’s policy.
An industry source explained that FirstBank concealed
N37,548,198,102.41 belonging to the Nigerian National Petroleum
Corporation’s (NNPC) instead of remitting it to the TSA as directed.
On the other hand, UBA concealed N58,843,793,029.05 of NNPC
funds, which attracted the penalty.
The source explained that the penalty was the equivalent of five per
cent of the funds they failed to remit respectively.
“The accounts of both banks with the CBN have been debited for the
unremitted amounts and the penalties,” she added.
Providing further insight, the source said at the last Bankers’
Committee held in Lagos early this month, the central bank officials had
impressed on the banks the need to comply with the directive, saying
that it had it on good authority that some banks were colluding with
some ministries, departments and agencies (MDAs) to conceal their funds.
In response, the bank chief executives said that they had a directive
from the Accountant-General of the Federation to a Director in the
CBN exempting some MDAs from transferring their funds to the TSA.
The chief executives of both banks were said to have been present at
the meeting held at the central bank’s Lagos office on October 2.
“But the CBN rejected the claim, informing them that the letter was
written to a Director with the CBN and not the governor of the CBN
and that the governor had not received a counter-directive from the
presidency on the transfers. After the clarification, they all promised to
remit any outstanding amounts with them.
“However, a week after the meeting, CBN discovered that some banks
had still not complied and proceeded to call all tier 1 banks reminding
them that they must do so, otherwise they would be sanctioned.
“They responded again stating that the Office of the Accountant
General had again sent them a schedule asking them to disclose how
much of the funds belonging to MDAs had been transferred and how
much was still with the banks,” she explained.
Thereafter, the source said the CBN Director, Banking Supervision,
Mrs. Tokunbo Martins, then wrote to the banks asking that they
furnish it with information on any unremitted funds, after which it was
established that FirstBank and UBA had failed to remit N58.8 billion and
N37.5 billion respectively, leading to the imposition of the penalty of
N4.819 billion on both banks.
The source explained that FirstBank and UBA were being recalcitrant by
refusing to comply with the directive despite repeated efforts by the
CBN to get them to transfer the concealed funds.
She however clarified that the concealment was not a reflection on
their liquidity, as both banks are very liquid.
“The system is awash with liquidity and this has been reflected in the
NIBOR and deposit rates which have crashed. FirstBank and UBA as Tier
1 banks are both very liquid, so their decision to conceal the funds had
more to do with their collusion with the chief executives of the MDAs
than any confusing directive from the Accountant General,” she
explained.
However, an executive of FirstBank informed THISDAY last week that
there must have been some kind of “miscommunication” that led to the
non-transfer of the NNPC funds.
He explained that when the confusion arose from the circular from the
Accountant-General, CBN had itself directed that NNPC’s funds should
be retained with the banks for 18 days, pending the resolution of the
matter.
“The 18 days only expired last week, so we do not see how we failed to
comply with the directive or attempted to conceal the funds. This is
most unfortunate and occurred due to miscommunication from the
Accountant-General and the regulator,” he said.
The FirstBank executive further assured THISDAY that his bank does
not have a liquidity crisis, adding that FirstBank has a liquidity ratio of
50 per cent, 20 per cent above the CBN threshold of 30 per cent for
commercial banks in the country.
“Trust me, we are very liquid. We have a liquidity ratio of 50 per cent,
which is 20 per cent above the rate permitted by the CBN for banks.
“We have even informed our depositors that we are crashing deposit
rates to between 3 and 4 per cent because we have excess liquidity, so
we do not have a liquidity crisis in any shape or form,” he stated.
THISDAY had exclusively reported penultimate Sunday that the
presidency and the central bank were considering penalising two
prominent banks for failure to comply with the directive on the
transfer of funds to the TSA.
The penalties that were considered included the suspension of the chief
executives of the banks and its board of directors and/or imposition of
penalties.
THISDAY also gathered that some banks were hiding under the
authorisation letter from the Accountant-General of the Federation,
Alhaji Ahmed Idris, who tried to exempt certain agencies, and was using
that as a basis not to comply with the TSA.
But the CBN, in line with its September 9 circular, restated its resolve
to punish any commercial bank that failed to comply with the policy on
the TSA.
Meanwhile, the CBN has reiterated its resolve not to further devalue
the naira.
Speaking in an interview with journalists on the sidelines of his
investiture as a fellow of the Chartered Institute of Bankers of
Nigeria in Lagos at the weekend, the Deputy Governor (Corporate
Services), CBN, Mr. Adebayo Adelabu, said the official position of the
central bank on naira devaluation had been made public.
“We all are aware of the official position of the central bank about
this, that there would not be devaluation for now,” Adelabu said.
When asked if the central bank would consider the advice by the Emir
of Kano and a former CBN Governor, Muhammad Sanusi II, calling on
the central bank to devalue the nation’s currency, Adelabu said: “Like I
mentioned earlier, we have made our official position known about naira
devaluation to the public, there could be comments from different
people, but we have stated our official position on that.”
Speaking earlier, the deputy CBN governor said the nation was feeling
the effect of the slump in crude oil price, adding that Nigeria’s policy
makers failed to diversify the economy during the time of oil price boom.
This, he said was responsible for the pains being felt in the country.
“We all know what is happening globally, and because we don’t operate
in an island, what is happening in the global economy is affecting our
economy, our communities and even the families.
“The dwindling price of oil and the reduction in oil production are all
affecting us and have led to a drop in the country’s revenue.
“Because we rely so much on oil as the primary revenue earner for the
country, we have seen where we have found ourselves. Failure to plan,
they say is planning to fail. We lost the opportunity to diversify when oil
price was high.
“It is periods of boom that we were supposed to have diversified our
economy, instead we did not. We thought it was going to remain
unchanged forever. Now that we are learning the hard way, I believe
we don’t need any teacher to teach us,” he added.
Adelabu also stressed the need for growth of the agriculture sector and
for Nigerians to start patronising local products so as to stimulate
economic growth.
The Emir of Kano last week advised the CBN and the presidency to
reconsider their stance against naira devaluation, saying the country
could not continue to live “in denial.” He also called for a complete
removal of the subsidy on fuel.
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