Nine Nigerian Banks Banned from Forex Trading and Their Reactions

The news came as a shock when the Central Bank of Nigeria (CBN) banned nine local banks from forex trading. CBN has banned these banks until the time they are going to pay the entire outstanding funds of Nigerian National Petroleum Corporation, NNPC into the Treasury Single Account (TSA). According to the news, these nine banks were banned because they concealed a huge sum of $2.12 billion that actually belonged to NNPC. The banks further failed to pay the funds into TSA according to the guidelines of the federal government.

nine-nigerian-banks

About the Banned Banks

The nine banks that have been suspended include the following:

  1. Fidelity Bank ($209m)
  2. Heritage Bank ($85m)
  3. Diamond Bank Plc ($287m)
  4. FirstBank of Nigeria (FBN) ($469m)
  5. FCMB ($125m)
  6. Sterling Bank Plc ($269m)
  7. Keystone Bank ($139m)
  8. United Bank for Africa (UBA) ($530m)
  9. Skye Bank Plc ($221m)

Among these listed nine banks, three are old generation banks while the rest six are new generation banks.

Without a doubt, all these banks will not be permitted to start forex trading unless they remit the entire due amount to NNPC. The news has also revealed that the governor of CBN was in Lagos recently to meet the managing directors of the banks. He was there to guide the directors on the further developments. In addition to this, the meeting included the discussion on the banks that were not on the list and the need of further investigations to resolve the same.

The Reaction of the Bank Officials

Of course, the announcement has stunned the bank officials. A couple of officials have remarked that NNPC was actually expected from TSA. They added that around 13 government agencies were exempted by the federal government from the TSA arrangement. They were excused from the electronic and mop-up drill of government funds from all the commercial banks. The office of the Accountant-General of the Federation (OAGF) gave the news about the circular exempting the agencies. These agencies are known are known as profit-oriented government business units paying a dividend to the federal government of Nigeria.

The Exempted Agencies

The name of the exempted agencies includes Bank of Agriculture, National Communication Satellite Limited, Niger Delta Power Holding Company/National Integrated Power Project, Ajaokuta Steel Company Ltd. And Federal Mortgage Bank of Nigeria just to name a few out of many. The others include Nigerian export-import bank, urban development banks and Transcorp Hilton Hotel. In addition to this, it is known that the Federal Mortgage Bank of Nigeria have remained to be classified as an MDA funded from the Federation Account. Further, the NNPC business unit is answerable for managing the investment of the federal government and other funds.

The bottom line is that the banned banks are still coming up with their justifications. For instance, the UBA has reacted in an affirmed yet polite manner by saying that the bank has remitted the NNPC completely. The bank was further thankful to the business partners and customers who have reached the bank on account of this report. The statements of other banks are yet to be recorded.

The Central Bank of Nigeria

Established by the CBN Act of 1958, the Central Bank of Nigeria started operating on 1 July 1959. Among its major objectives, the Central Bank of Nigeria acts as a banker of last resort as well as a financial adviser to the government. This role of the Central bank has proved to be very exhausting for them. They have been dragged into murky waters a number of times.