E-Financial
CBN to Charge Protection Fees on CNI-ABS
Central Bank of Nigeria (CBN) says it will charge protection fees from investors in its Non-Interest Asset Backed Securities.
According to the Nation, one of the features of the CBN Non-Interest Asset Backed Securities (CNI-ABS), contained in a draft framework issued recently by the Apex bank on Non-Interest Asset Backed Securities, is that “the CBN shall charge Wakala fee”
According to the online library, “Wakalah literally means protection, delegation, or authorization.”
Legally, wakalah refers to a contract in which a person who has complete legal capacity authorizes another to conclude a certain well‐defined permissible contract on behalf of that person.
Wakalah is a term in Islamic finance that denotes an agency contract, where one party appoints another to conduct a defined legal action on his behalf, for a specified fee or commission.
From the 2021 if the contents of the draft framework appeals to individuals or institutions interested in the CBN Non-Interest Asset Backed Securities (CNI-ABS), the CBN plans to charge: 10.00 per cent of the underlying return for 1 to 30 days investment; 7.50 per cent for 31 to 90 days; 5.00 per cent for 91 to 180 days; and 2.50 per cent for 181 to 365 days.
The circular covering the draft framework signed by Angela A. -Ejembi (PhD), director, Financial Markets Department stated that “the increased investments in Sukuk issued by multilateral organisations and the rising participation of non-interest financial institutions at the CBN windows has made it mandatory that the CNI-ABS to be operationalized”.
Angela A. -Ejembi stated that “the Central Bank of Nigeria developed the CBN Non-Interest Asset Backed Securities (CNI-ABS) to deepen the Nigerian financial markets, increase financial inclusion and provide a liquidity management instrument that is compliant with the principles of non-interest finance in Nigeria”.
The CBN is now asking for “observations and comments” on the exposure draft of the framework for the operationalization of the Central Bank Of Nigeria Non-Interest Asset Backed Securities. These observations and comments are expected to be with the CBN on Friday, 8th January, 2021.
The structure of the CBN Non-Interest Asset Backed Securities (CNI-ABS) include: Full or partial conversion (into local currency) of the value of CBN investments in Islamic Development Bank (IsDB) and/or International Islamic Liquidity Management Corporation (IILM) sukuk, or any other sukuk from multilateral organisations where Nigeria is a member.
Other structures of the CNI-ABS are: Securitisation of the value of CBN investment based on the maturity profile of the underlying security which shall serve as the issue account, for auction purposes; auction of the securitised assets to eligible institutions; transfer allotment of auction amount to eligible institutions based on their subscription; and transfer of earnings received related to the securitised assets to eligible institutions based on their holdings, less all amounts outstanding. This shall be net of applicable charges as may be approved from time to time.
Others are: the assets shall meet the condition of tradability in shariah; the investor shall enter into a unilateral binding undertaking to sell the nominal to the CBN at maturity; upon exercise of unilateral binding undertaking, the asset becomes exclusively owned by the CBN who reserves the right to hold or reissue it to the market.
The draft framework also stated that “the bid applications shall not carry any rate. All successful bids shall be satisfied at a rate of return corresponding to the earnings on the underlying security. The rate of return shall be based on tenor and amount invested, and shall be subject to applicable (Wakala) charges/fees.
A single exchange rate will apply (based on Wa’d) for issuing, maturity and return of each issue relative to the underlying asset and will be determined at the beginning of each auction.
Another interesting thing investors have been asked to assess is the settlement terms. According to the CBN, “settlement shall be on a T+0 basis. Auction shall take place on any approved business day, while cash settlement and securities allotment shall take place on the next business day.”
On the settlement day, the CBN is expected to: debit the operating accounts of all successful institutions at the auction; credit CBN designated account with the value; debit CNI-ABS issue account and credit the institution’s securities account. The CBN shall be the depository of the securities.
The CNI-ABS will have the following features: It shall be a tradable instrument; its rate shall be determined by the returns on the underlying asset; its maturity shall be on any day of the week and shall be matched with the coupon payment date of the underlying asset; it shall qualify as a liquid asset for the eligible institution’s assets.
Other features are that: returns received during the period but before maturity of an issue shall be held in trust in an account that does not yield any interest to the CBN; where an issue matures before receipt of coupon by the CBN, the Bank shall pay the accrued return as advance/loan at zero interest rate in anticipation of expected return.
Federal High Court in Lagos has fixed July 1, 2025, for the commencement of trial in a money laundering case involving Cititrust Holdings PLC and three of its subsidiaries.
The subsidiaries are Cititrust Funding PLC, Cititrust Credit Limited and Cititrust Financial Services Limited,
The companies are facing an eight-count charge filed by a team of prosecutors from the Economic and Financial Crimes Commission (EFCC), comprising Anasoh Henry Onyekachi, Frankklin Ofoma, Abdulhamid Lamido Tukur, and A.A. Usman.
According to the charge, between 2021 and 2023, the companies, all incorporated in Nigeria, allegedly operated investment management services without a valid licence from the Central Bank of Nigeria (CBN).
This act contravenes Section 57 of the Banks and Other Financial Institutions Act (BOFIA) 2020 and is punishable under Section 57(5) of the same legislation.
The prosecution also alleged that the companies conducted a Collective Investment Scheme without registering with the Securities and Exchange Commission (SEC), another violation of regulatory requirements.
In one of the counts, Cititrust Credit Limited is specifically accused of failing to report high-value financial transactions to the Nigerian Financial Intelligence Unit (NFIU).
These transactions include a N20 million transfer on January 7, 2021; a N200 million transfer on April 4, 2021; and a N200 million lodgement on January 29, 2021.
Additionally, both Cititrust Credit Limited and Cititrust Financial Services Limited are alleged to have made a single transfer and lodgement respectively of N42 million into their bank accounts on January 29, 2021, without proper disclosure to relevant authorities.
The alleged offences are in breach of Sections 11(1)(b) and 11(3) of the Money Laundering (Prohibition) Act 2022, as well as Section 54(1) of the Investment and Securities Act 2007, and are punishable under the respective laws.
The court is expected to begin full proceedings on July 1.
Ecobank Nigeria’s long-term issuer credit rating has been downgraded to ‘CCC-’ from CCC, with the outlook placed at negative by S&P Global Ratings. This is a resultant effect of the $150 million bond buyback offer on the bank’s $300 million Senior Unsecured Eurobond.
Part of the tender offer made by Ecobank includes an early tender premium of $12.50 for every $1,000 in principal (equivalent to 1.25%), with the anticipated settlement date set for July 8, 2025. The offer also requests bondholders’ consent to eliminate the capital adequacy covenant on the outstanding notes.
These actions also led S&P to downgrade the $300 million Eurobond from ‘CCC’ to ‘CCC-’. Although S&P notes that it does not consider the tender offer a distressed debt restructuring.
However, this assessment is at risk of changing if the bank does not receive the promised capital injection from the parent group, Ecobank Transnational Incorporated (ETI).
Following the naira devaluation, Ecobank was unable to meet the regulatory Capital Adequacy Ratio (CAR) requirement, as its CAR dropped to 7 per cent. This was below the 10 percent regulatory minimum. The breach of the CAR caused the bank to seek the consent of its bondholders to pause the capital adequacy notes on the Eurobond notes till September 2025.
Following this development, the bank received a $50 million prepayment on promissory notes from its parent company, ETI, along with early repayments on certain foreign currency loans. However, it has been insufficient in restoring the capital adequacy to regulatory levels.
According to S&P, the bank is expected to receive another $50 million capital injection from its parent group before August 2025. However, the ratings agency notes that if the bank is unable to receive this capital injection, it will inevitably default on its bonds. A situation that would cause a further downgrade to ‘CC’.
It was recommended that Ecobank Nigeria consider raising $150 million through additional Tier-1 instruments to strengthen its liquidity buffers. Additionally, the bank was advised to intensify efforts to recover its foreign currency-denominated loans.
Fidelity Bank Plc, leading financial institution has reaffirmed its commitment to corporate social responsibility with the donation of food and essential items to the Old People’s Home in Yaba, Lagos.
The donation was made possible through the generosity of the bank’s Nexus Inductees Class, under its Corporate Social Responsibility initiative known as the Fidelity Helping Hands Programme (FHHP).
Through the FHHP, staff across Fidelity Bank branches nationwide identify crucial interventions needed in their immediate community and raise funds to execute them. The bank’s management then matches this contribution with an equal amount and disburses it for the selected project.
Commenting on the donation, Divisional Head, Brand and Communications, Fidelity Bank Plc, Dr Meksley Nwagboh, emphasized the bank’s unwavering commitment to impacting its host communities positively noting that the community is an essential part of the bank success story.
“Today’s donation is a token of our appreciation for our incredible parents and guardians who have raised outstanding individuals that trust us with their banking needs.
“Our donation to the Old People’s Home reflects our deep commitment to supporting the well-being and dignity of our senior citizens.
“We are honored to contribute to a cause that ensures they receive the care, comfort, and respect they deserve.” Nwagboh stated.
Appreciating the gesture from the bank, the Director-in-Charge of the Home in Yaba, Adetutu Ipaye, said “Community support initiatives such as this from Fidelity Bank is vital to sustaining our mission and enhancing the quality of life for the elderly.
“We urge other organizations to follow in the Bank’s footsteps as this kind of support will go a long way to ensure that the elderly live with dignity and comfort”.
One of the beneficiaries from the home, Mr. Kamoru Adeyetu noted that, “Your presence today has brought us immense joy, and our greatest happiness lies in seeing the younger generation thrive. Beyond the gifts, your visit means the world to us and please remember to visit us regularly.”
Ranked among the best banks in Nigeria, Fidelity Bank Plc is a full-fledged Commercial Deposit Money Bank serving over 9.1 million customers through digital banking channels, its 255 business offices in Nigeria and United Kingdom subsidiary, FidBank UK Limited.
The Bank is the recipient of multiple local and international Awards, including the 2024 Excellence in Digital Transformation & MSME Banking Award by BusinessDay Banks and Financial Institutions (BAFI) Awards; the 2024 Most Innovative Mobile Banking Application award for its Fidelity Mobile App by Global Business Outlook, and the 2024 Most Innovative Investment Banking Service Provider award by Global Brands Magazine. Additionally, the Bank was recognized as the Best Bank for SMEs in Nigeria by the Euromoney Awards for Excellence and as the Export Financing Bank of the Year by the BusinessDay Banks and Financial Institutions (BAFI) Awards.
Lebara, New Operator Enters Nigerian Telecom Arena, Sells Minutes, Not Airtime
EFCC Drags Cititrust to Court over Unreported ₦200mTransfers
ARCON to Tackle Digital, Recommits to Ethical Standards
Africa Gears Up For Digital Sovereignty At 13th Edition Of Digital Africa Conference 2025
Over 7m Streaming Accounts’ Credentials were Leaked in 2024 – Report
Telecom2 days agoMTN Says New N6.98 USSD Charge Won’t Affect Airtime Recharge
E-Business18 hours agoOver 7m Streaming Accounts’ Credentials were Leaked in 2024 – Report
E-Financial18 hours agoS&P Global Ratings Downgrades Ecobank Nigeria’s Credit Rating to CCC-, Outlook Negative
- General News2 days ago
Study Reveals 7% of Industrial Organizations Tackle Vulnerabilities Only When Necessary
Telecom2 days agoNnaemeka Ani Calls on African Techies to Rewrite the Narrative
E-Financial2 days agoSofri Rejigs Digital Platforms for Better Customer Experience
General News2 days agoNITDA, NCFRMI Forge Strategic Alliance for Inclusive Digital Transformation of Displaced Nigerians
Telecom18 hours agoPIN Pushes for Equitable Digital Governance at World Internet Forum