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CBN Seeks Shell Banks Abolished In Nigeria

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The Central Bank of Nigeria (CBN) has called for the abolition of shell banks in the country, saying they serve as institutions for money laundering.

Shell banks are institutions that carry out activities where they are not licensed.

Mr Godwin Emefiele, CBN governor, made the request in Abuja on Tuesday at a public hearing organised by the House committee on Banking and Currency on a Bill to amend the Banking and Other Financial Institutions Act (BOFIA) and other bills.

He said that the shell banks, apart from being used for money laundering, distort the banking system and might pose a problem to regulatory agencies.

Emefiele, represented by the Director, Legal Services Department, Mr Johnson Akinwunmi said “we wish to propose the introduction of new subsections 3(6) and (7) for the proscription of shell banks in response to the latest recommendations of the Financial Action Task Force (FATF) on money laundering.”

Similarly, the CBN is also seeking additional powers to revoke licences of banks and “power to inject funds into a falling bank by way of equity participation up to a level that guarantees control by CBN”.

The additional powers, according to the governor, is to enable the CBN acquire equity investment institutions and its ability to ensure a sound financial system.

The CBN also backed the House of Representatives in imposing stiffer penalties and terms of imprisonment of certain offences on erring commercial banks and their staff.

But in his presentation, the Director of Legal/board secretary, Nigeria Deposit Insurance Corporation (NDIC), Mr Belema Taribo opposed the proposed fines saying they were too high.

“The NDIC, as a deposit insurer supports the passage of the bill into law as the current fine of N1000 does not meet contemporary realities.

“However, it is our submission that the proposed penalty of N200,000 is above 100 per cent increment from the current penalty. In view of the above, we propose a fine of N5000.”

On the issuance of licence, NDIC proposed that the CBN should seek its consent before granting an application for banking licence.

“This is to enable the corporation to have a prior evaluation of the applicants with regard to insurance of deposits.”

In his welcome address, Chairman of the House Committee on Banking and Currency, Rep. Jones Onyereri, said that increase in penalties to the bank operators would streamline the operations of such banks to conform to international best practices.

He said that the proposed amendments to the Bofia Act 2017 were initiated by three lawmakers, which include Reps. Daniel Reyeneiju (Delta-PDP), Betty Apiafi (Rivers-PDP) and Jones Onyeriri (Imo-PDP).

Some of the penalties in the proposed amendments to the BOFIA Act 2017 include a fine of N20 million on banks that fail to comply with the conditions of the licence, a fine of N20 million on any director that fails to declare any property he/she owns that runs contrary to the Act.

“A fine of N10 million against a director or manager that fails to keep a book of account and a fine of N2 million on banks that fail to publish its annual report of its general meeting in two reputable national dailies among others”

While declaring the public hearing opened, the Speaker, Mr Yakubu Dogara, said the House opted for stiffer penalties of millions of Naira as fine for commercial banks which engaged in an illegal deduction of spurious charges on customers accounts domiciled in such banks.

Dogara, who was represented by the House Deputy Minority Leader, Rep. Chukwuka Onyema, said that the process of law making was dynamic noting that bank customers have not stop compiling of spurious charges on their accounts.

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AfDB Supports Gabon’s Optic Fiber Backbone Project

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The African Development Bank and the Gabonese National Agency for Numerical Infrastructure and Frequency (ANINF) have signed agreements a feasibility study for the country’s component of the Central African Backbone (CAB) project.

The project is an integrated, innovative and transformative infrastructure which consists of completing the 901.8 km fiber optic connectivity to cover 14 missing links on the Gabonese national backbone.

The project will enhance regional integration in the Central Africa region through fiber optic infrastructure enabling cross-border interconnection exchange with neighboring countries –  Congo, Cameroon, and Equatorial Guinea. It will open up opportunities that will integrate Gabon in the information and communications community, among other initiatives poised to close the digital divide especially in rural areas and empower marginal communities.

The total project preparation cost is US$ 900,000 provided by the Bank through the NEPAD Infrastructure Project Preparation Facility Special Fund (NEPAD-IPPF) which enables African countries to prepare bankable regional infrastructure projects to promote integration to support socio-economic transformation. The Bank will coordinate the preparation, structuring, and packaging of the project as lead arranger to ensure subsequent funding and implementation.

The CAB-Gabon project is considered to be among the most innovative digital projects that the Bank plans to implement.  Sponsors will be identified to participate in the project under a win-win collaborative partnership with global players to invest in the best ICT technologies.

The envisaged large internet broadband will boost regional integration with Gabon endowed with the largest ICT hub in Central Africa and able to attract international companies within the central free trade zone with innovations in various sectors. Digital innovations that that can be derived from the project will include services such as the duty-free money transfers.

The financing of fiber optics and e-government infrastructures (datacenters) in Central Africa will significantly lower the cost of internet fees considered to be the highest on the global scale and will add competitiveness to regional exchanges and provide an important demonstration effect for new public and private sector infrastructure projects in the region.

The Agreement was signed on 20th February 2018 by the Director General of ANINF, Bernard Bongo Odimba and Mr. the Bank’s Director-General for Central Africa,  Ousmane Dore.

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CBN Mandates Banks to Settle Customers’ Complaints within Two Weeks

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The Central Bank of Nigeria has directed banks and other financial institutions to settle customers’ complaints on issues of overcharge, unauthorised deductions and other matters within two weeks.

The CBN Head of Complaints Management Division, Mr. Tajudeen Ahmed, said this in an interview with the News Agency of Nigeria on Thursday in Abuja.

He said the CBN would ensure that bank customers get a redress on issues of excess charges or unauthorised withdrawals.

Ahmed reiterated the apex bank’s commitment to eradicating excess and arbitrary charges.

According to him, the CBN has since issued a circular which could be found on its website, showing all legitimate bank charges.

He said that any charge outside what is stated in the circular is not allowed.

“The consumer protection department issued guidelines to banks dated August 16, 2011, directing all banks and other financial institutions to resolve all customer complaints within two weeks of receipt.

“Before the expiration of that complaint, the financial institution is expected to be engaging the customer on a continuous basis to update him or her on the status of the complaint.

“If it is not resolved within the deadline given, then such a person is encouraged to draw the attention of Central Bank of Nigeria to the complaint,” he said.

Ahmed advised customers with unresolved complaints to contact the CBN by writing to the Director Consumer Protection Department or send an email to cbd@cbn.gov.ng.

He also advised dissatisfied bank customers to visit any branch of the CBN closest to them to make their complaints.

“The CBN continually engages the banks to find out if their conduct and practices are fair to their customers in order to stimulate people’s confidence in the banking system.

“Non-adherence to that normally results to regulatory sanctions, as the case may be,” he said.

Ahmed also faulted banks for setting a limit on ATM withdrawals.

“I have also observed and noted this. Don’t forget that at the beginning, it wasn’t like this. Over time, we started having this problem.

“One of the reasons is that the quantum of N500 denomination is much more than that of N1,000 denomination.

“When we approached the banks about these problems, they said the machines become easily faulty when it is set to dispense up to N30,000 to N40,000 units.

“However, CBN has directed that the machines that allow payment of up to N30,000 to N50,000 should be installed.

“This is still ongoing. The Banking and Payment Department of the CBN is championing it,” he said.

Also, the Head of Consumer Protection Division, Mrs. Hadija Kasim, said bank customers could also avoid some of these issues by inculcating the habit of cashless policy.

She reminded the public that there were various methods to make payments rather than carrying cash.

“Let’s not forget that ATM cards can also be used on Point of Sale (POS) terminals.

“We are encouraging people that unless it is absolutely necessary, they should reduce the carriage of cash.

“Cashless transactions are more convenient, safer and you will avoid the problem of overcharges,” she said.

Kasim also advised bank consumers to use bank transfer channels for transactions in cases where sellers do not have POS.

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Nigerian Bank Investors Lose N100Bn in 2 Days

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Investors with shares in the banking sector on the Nigerian Stock Exchange (NSE) have lost over N100.8 billion in two trading days of the week, a report this morning by Vanguard said.

 

It said that while 11 out of the 16 banks in the NSE began losing prices in the market on Monday, the remaining joined by Tuesday, except United Bank for Africa Plc (UBA).

 

The report listed banks that appreciated to include: Access Bank (5 kobo) per share to close at N12.56 per share from N12.60 per share, GTBank gained N1.00 per share to close at N47.50 per share, from N46.50 per share, Fidelity Bank gained (8kobo) per share to close at N3.28 per share from N3.20 per share and Jaiz Bank gained 4 kobo per share to close at N1.04 per share from N1.00 per share.

 

However, during Tuesday trading session, all the banks’ share prices dropped except UBA which gained 20 kobo per share to close at N12.20 from N12.00 per share it closed on Monday.

 

The report blamed the trend on the recent directive by the Central Bank of Nigeria (CBN) that restricted dividend payments by banks with high Non Performing Loans (NPLs) and low Capital Adequacy Ratio, CAR from paying dividend to their shareholders.

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