E-Financial
Nedbank of SA Buys $493m Stake in Ecobank
South Africa’s Nedbank said on Thursday it will acquire a 20 percent stake in pan-African lender Ecobank Transnational for $493 million in cash, ending months of speculation it could walk away from the deal over governance concerns.
The acquisition gives South Africa’s fourth-largest lender badly needed access to fast-growing sub-Saharan Africa, where it has lagged behind rivals. But the deal also puts it in the position of sharing its influence with Ecobank’s other strategic investor, Qatar National Bank (QNB).
QNB, which also harbours ambitions for African expansion, last month became the top shareholder in Ecobank with over 23 percent, although it is due to pare that back to 20 percent.
“Nedbank will be investing a very substantial amount of their energies into a business where they own a 20 percent stake and another bank with considerably deeper pockets owns an equal stake,” said Chris Steward, head of financials at Investec Asset Management.
“It’s a little bit like: ‘do you really want to renovate this house and make it look beautiful when you’re only renting ?'”
Togo-based Ecobank has a presence in nearly 40 sub-Saharan countries and is particularly strong in West African countries such as Nigeria, where its ATMs are a common sight on bustling streets and where it has a stock market listing.
Nedbank, which is majority owned by British insurer Old Mutual, gained the right to buy the stake under the terms of a 2011 loan to Ecobank. But a crisis over corporate governance that led to the departure of Ecobank’s chief executive in March raised questions about whether the deal would go through.
Nigeria’s Securities and Exchange Commission (SEC) launched an investigation last year after Ecobank’s financial director said she had been pressured to mis-state financial results. The regulator criticised weaknesses in the board’s ability to monitor management and oversee ethical behaviour.
Ecobank has made great strides on governance since, said Smit Crouse, Nedbank’s managing executive for Africa.
“We carefully watched how Ecobank, specifically their board and management, dealt with their governance issues,” Crouse said. “They’ve gone about it very diligently. They’ve been very transparent in terms of their communication.”
Nedbank said it will pay $493.4 million for 4.5 billion new Ecobank shares, valuing Ecobank at 10.93 U.S. cents a share, a 4 percent discount to its price on the Nigerian Stock Exchange at the end of September.
But shares in Nedbank fell 1.8 percent to 214 rand on news of the deal, as some investors worried that Nedbank was overpaying, even with that discount.
“I think they are taking the view, ‘we want this and we’re going to pay up to get it’,” said Abri du Plessis of Gryphon Asset Management in Cape Town.
“In the short term it may be a bit expensive but in the longer term, it should be good value.”
The acquisition is the biggest by a South African bank in six years, according to Thomson Reuters data. It is Nedbank’s biggest purchase since 2002, when its predecessor acquired lender BOE Ltd for $742 million.
Under the deal Ecobank will repay its $285 million loan to Nedbank, meaning it will be left with $208.4 million in cash.
E-Financial
CBN Permits BDC Operators to Buy FX from NAFEM During Festive Season
Central Bank of Nigeria (CBN) has announced that eligible Bureau de Change (BDC) operators will have temporary access to the Nigerian Autonomous Foreign Exchange Market (NAFEM) to purchase $25,000 weekly. This arrangement, aimed at addressing seasonal foreign exchange (FX) demand, will be effective from December 19, 2024, to January 30, 2025.
In a statement signed by T.G. Allu, CBN’s acting director of trade and exchange, the apex bank said BDC operators would buy FX from authorized dealers—banks licensed by the CBN—exclusively to meet retail market demand.
“To meet expected seasonal demand for foreign exchange, the CBN is allowing temporary access for all existing BDCs to the NAFEM for the purchase of FX from Authorized Dealers, subject to a weekly cap of $25,000,” the statement read.
BDC operators must fully fund their accounts before accessing the market at prevailing NAFEM rates, choosing only one authorized dealer for transactions under this arrangement. A maximum price spread of 1% is allowed for retail pricing by BDCs, and all transactions will be reported to the CBN’s Trade and Exchange Department.
The CBN reiterated that personal travel allowance (PTA) and business travel allowance (BTA) remain available through banks for legitimate travel needs. The bank emphasized that all FX transactions must be conducted at market-determined exchange rates.
“The CBN remains committed to a fully functional foreign exchange market and will continue to provide liquidity when necessary to manage price volatility,” the statement added.
Earlier in September, the CBN approved FX sales to eligible BDC operators at a rate of N1,590 per dollar to cater to demand for invisible transactions, reflecting ongoing efforts to stabilize the FX market.
E-Financial
Diaspora Remittances to Nigeria Reach $4.22 Billion in 2024, Says CBN
Central Bank of Nigeria (CBN) has announced that diaspora remittances through international money transfer operators (IMTOs) reached $4.22 billion between January and October 2024.
This figure represents a 61 percent increase, or $2.62 billion more than the amount recorded during the same period in 2023.
CBN Governor Olayemi Cardoso shared the figures during an interactive session with the Senate Committee on Banking, Insurance, and Other Financial Institutions at the National Assembly on Wednesday. “The year-on-year increase reflects significant growth,” Cardoso noted.
He also reported that remittances rose from $336 million in September 2024 to $402 million in October 2024 on a month-to-month basis.
Cardoso expressed optimism about continued growth in remittance inflows, saying, “The remittance inflows would continue to rise by the end of the year, given the current trajectory.”
He attributed the surge to improved efficiency in the remittance system, the positive effects of President Bola Tinubu’s policies, and increased trust among Nigerians in the diaspora to contribute to national development.
In addition to remittance updates, Cardoso addressed the state of Nigeria’s external reserves, which he said had grown to $42.01 billion as of December 12, 2024, from $38.35 billion on September 30, 2024.
“External reserves rose largely due to receipts from crude oil-related taxes and third-party receipts in Q3 2024,” he explained.
He added that Nigeria’s external reserves could fund over nine months of goods and services imports, surpassing the international benchmark of three months. “Our external reserves level is a robust buffer against shocks,” Cardoso said.
On the issue of cash shortages, the CBN governor reiterated the enforcement of the new policy imposing a fine of N150 million on any bank branch found distributing new naira notes illegally to currency hawkers.
Cardoso also shared his outlook for the Nigerian economy in 2025. “Distinguished Senators, as we conclude this briefing, I want to highlight that despite the challenges facing our economy, there are clear reasons for optimism,” he said.
“The gradual stabilisation of the forex market, ongoing banking sector recapitalization, and positive growth trends in key sectors, especially the services sector, indicate a path toward recovery and stability.”
This comes as the CBN continues to implement measures to strengthen the economy. On October 17, the apex bank reported that remittance inflows had risen to almost $600 million by the end of September, while on June 25, it granted eligible IMTOs access to trade on the official FX window.
E-Financial
Fraud in Bank Branches Surges by 31 Percent in Q2 — FITC
The Nigerian banking sector has witnessed a concerning rise in fraudulent activities, with incidents of fraud in bank branches increasing by 31 percent in the second quarter of 2024.
This alarming statistic was disclosed by the Financial Institutions Training Centre (FITC) in its Fraud and Forgeries report, highlighting significant challenges to the integrity of the country’s financial system.
Fraudulent activities in Nigerian banks led to a staggering N42.33 billion in reported losses during the first half of 2024.
This sharp rise was driven by escalating fraud across multiple channels, most notably within physical bank branches.
The FITC report revealed that fraud in bank branches rose dramatically to N42.2 billion in the second quarter, compared to N133.9 million in the first quarter.
The FITC data also pointed to a massive 1,560.3 percent increase in computer and web fraud. Losses in this category surged from N24 million in the first quarter to N400.8 million in the second quarter.
In contrast, mobile fraud witnessed a significant decline, dropping by 59 percent from N216.4 million in the first quarter to N88.7 million in the second quarter.
Interestingly, no cases of ATM-related fraud were recorded during the period under review.
The figures also indicate a shift in fraudulent activities involving various financial instruments. Card fraud saw a notable decline of 47.66 percent, with cases dropping from 21,469 in the first quarter to 11,231 in the second quarter. Conversely, cheque-related fraud rose by 36.67 percent, increasing from 30 cases in the first quarter to 41 in the second quarter.
Mobile fraud recorded an even steeper decline in value terms, dropping by 99 percent from N21.6 billion in the first quarter to N216.36 million in the second quarter.
These figures suggest evolving strategies among fraudsters, with some methods becoming less prevalent while others gain traction.
Amid the rising tide of fraud, legal actions have also intensified. In one notable case, an Abuja Federal High Court issued a 30-day freeze on 818 bank accounts linked to a N10 billion cyberattack on a Nigerian bank.
The court’s directive, issued on October 15, 2024, was based on a motion filed by the police against James Akagwu Isaac and other suspects, including several financial institutions.
Analysts say the surge in fraudulent activities underscores the urgent need for heightened vigilance, enhanced security measures, and robust regulatory interventions in Nigeria’s banking sector.
While the decline in some fraud categories, such as mobile and card fraud, offers a glimmer of hope, the sharp rise in branch-based and web-related fraud highlights the evolving tactics of fraudsters.
To combat these threats effectively, experts recommend that banks must invest in advanced fraud detection systems, conduct regular staff training, and strengthen internal controls.
Collaboration between financial institutions, law enforcement agencies, and regulators will also be crucial in mitigating the impact of fraud and safeguarding the financial ecosystem.
The FITC report serves as a stark reminder of the vulnerabilities within the banking sector and the need for proactive measures to address them. Without sustained efforts, the rising trend of fraud could pose significant risks to Nigeria’s economic stability and the trust of consumers in the financial system.
Credit: Tribune
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