Tag Archives: Banks

ACCESS–DIAMOND BANK M&A: Banks’ share prices skyrocket

Regulators feign ignorance, say deal not concluded….

Following the announcement of the acquisition of Diamond Bank Plc by Access Bank Plc yesterday investors have swooped on the shares of both banks pushing them to the top of the Nigerian Stock Exchange, NSE, top gainers and volume transaction chart at close of trading yesterday.

Diamond Bank shares which had been on free fall in the past few weeks rose 9.47 percent to N1.04 from N0.95, while Access Bank’s shares appreciated by 9.40 percent to N8.15 from N7.45 per share.

Also, 70.98 million units of shares were traded in 129 deals in Diamond Bank, making it the most active stock in volume terms in the banking sector, while 13.62 million units were traded in Access bank in 254 deals.

Meanwhile, capital market authorities, the Securities and Exchange Commission, SEC, and the Nigerian Stock Exchange, NSE, have both indicated that the deal is not yet approved adding that it is just a notice of intention to merge.

Responding to the enquiries from Vanguard NSE stated:

“As an operator of a market, The Exchange’s role is to ensure appropriate disclosures around the discussions between the two listed Banks and related matters in accordance with the rules and regulations of The Exchange.

“Our approval of press releases from listed companies does not extend to approval of the substance of such press releases unless we discern from the face of such intended release that information contained in it is manifestly inaccurate. “Otherwise, our role is to permit the release of information so that shareholders are empowered to form a view and make investment decisions based on such releases and all other information available in the public domain.

“In line with our process, as you may have seen, we approved press releases from both Diamond Bank Plc and Access Bank Plc earlier today (Monday).

“There is a clear process of approvals for mergers, including approval of shareholders of both entities at a court ordered meeting of shareholders, regulatory approvals of the Central Bank of Nigeria (CBN) as well as the Securities and Exchange Commission (SEC) since both companies are public companies.

“It is only when these approvals have been granted that an application can be filed with The Exchange.

“The Exchange will review such application when it receives it; taking into consideration its rules on such application, regulatory approvals, Board and shareholders approvals and any other relevant matter in line with its rules.

“As the required approvals for the continuation of the proposed merger are primarily from the shareholders of the two entities, CBN and SEC, we advise that you share your concerns with the two statutory regulators and, if you are a shareholder, raise your concerns also during the relevant approval meeting.”

Also SEC in a statement said, “The Securities and Exchange Commission (SEC) is aware of the intention of Access Bank and Diamond Bank to go into a merger. Access Bank and Diamond Bank have both notified the Commission and the general public. It is a notice to merge, they have not merged yet. SEC is awaiting their application on the matter.”

Shareholders reaction

Reacting, Shehu Mallam Mikaili, National President, Constance Shareholders Association of Nigeria, said, “To me, it is a welcome development because it will protect the interest of shareholders instead of the assets of the Bank (Diamond) being taken over by the CBN.”

Speaking in the same vein, Mr Patrick Ajudua, National Chairman, New Dimension Shareholders Association, NDSA, said, “We are not against the merger in this case because we still have our investment protected in the enlarged entity. Rather than face the unacceptable situation of Skye Bank, we are pleased with this development. Therefore, the take over of Diamond by Access Bank is okay by us. The banks in question will both seek the approval of their shareholders before the deal will be consummated since they are both listed on the exchange.”

Igbrude Moses, National Secretary, Independent Shareholders Association of Nigeria, ISAN, said, “If the board and management of Diamond Bank think that the only way to sustain the bank is to merge with another bank, so be it, but they should make sure that all the stakeholders are carried along to avoid litigation. CBN, NSE and any other regulator concerned should ensure that minority shareholders are carried along and not short changed in the whole arrangements. They should also ensure that the process is transparently carried out.”

He advised that the aim of building the biggest bank in Nigeria or Africa should not overshadow the consideration of ensuring that the acquiring institution has the capacity to manage the enlarged entity.

He said that shareholders are becoming weary and skeptical of banks stocks due to issues of constant take overs in the banking industry.

Access, Diamond Bank management speak

Uzoma Dozie, CEO, Diamond Bank, assured that the proposed combination, which is expected to be completed by first half of 2019, with Access Bank would create one of Africa’s leading financial institutions.

He said: “There is clear strategic rationale for the proposed merger and strong complementarities between the two institutions.”….

(Expecting The Deal To Be Completed By First Half Of 2019)


Ten Kenya financial institutions probed

A total of 10 financial institutions suspected of handling money allegedly stolen from Kenya’s National Youth Service (NYS) will be investigated, the director of criminal investigations has confirmed to Reuters news agency.

Nine are commercial banks and one a financial co-operative society, the local Daily Nation newspaper reported.

The list of lenders, according to the newspaper, included Barclays Bank, Standard Charted and East Africa’s biggest bank by assets, KCB Group.

George Kinoti, the director of criminal investigations, told Reuters the list was accurate.

About 40 civil servants and 14 private sector individuals were charged on Monday over the alleged theft of $78m (£59m) from the youth agency.

Today, about 200 people marched through the capital, Nairobi, to condemn “high level” corruption in Kenya.

Daily Nation

CBN mandates banks to sell forex to customers over the counter

Asks banks to access dollars from CBN thrice a week

Nigerians travel-ling overseas can now heave a sigh of relief following the release of new Central Bank of Nigeria (CBN) directives that make it much easier for people in this category to access foreign exchange for their travelling needs.

A statement Saturday night by the apex bank’s Acting Director, Corporate Communications, Isaac Okoroafor, stated that in a bid to ensure that eligible travelers are able to access foreign currency and make liquidity available in the market, the CBN had issued the following instructions to banks:

“All Deposit Money Banks are mandated to buy and sell foreign currency to travelers (both customers and non-customers) upon presentation of relevant valid travel documents such as visa and tickets over the counter. All travelers shall be attended to immediately at the bank’s counters. Any contravention will be sanctioned by the CBN.

“All Bureaux de Change (BDCs) shall henceforth access dollars from the CBN on Monday’s, Wednesdays and Fridays. It is compulsory that all BDCs access currency at least three times weekly.”

The statement warned that BDCs that failed to access the FX window at least three times weekly would have their licenses reviewed by the CBN – emphasizing that compliance with the new directive was compulsory.

Banks are ripping us through ATMs, customers cry out

Abuja – Commercial Bank customers within the Federal Capital Territory (FCT) have decried excess charges by banks through Automated Teller Machine (ATM) withdrawals. Some customers who said they dreaded making withdrawals using other banks ATMs because of the continued charge of N65 for every transaction.

According to the customers, most banks within the city centre have programmed their ATMs to dispense only N10,000 or less per transaction, thus ripping off customers withdrawing more than that amount.

The customers complained that if they had to withdraw N100,000 or more through other banks ATM, it meant they would lose so much money. They, however, called on the Central Bank of Nigeria (CBN) and other relevant authorities to look into the matter so as to help poor Nigerians. Miss Agatha Young, a First Bank customer, said, “I live in Kubwa, one of the suburbs around the city centre and almost all the banks ATMs in my area dispense maximum of N10,000.

“Recently, I needed to withdraw N200,000 and my bank’s ATM was crowded, so I went to use another bank’s ATM only to discover that the machine was dispensing only N10,000 per transaction. “I was only able to withdraw N150,000 because other customers were waiting on the queue and I was tired of going through the same process. “I also discovered I was charged almost N1000 for that transaction as I had exceeded three withdrawal limit using the other bank’s ATM, which is outrageous’’. Mr Sunday Mgbede, a Gurantee Trust Bank customer, residing in Nyanya, another suburb around the city centre also said most of the ATMs in his area dispensed maximum of N10,000 per transaction.

“If you want to make withdrawals at weekends around the Nyanya/Mararaba axis, you will discover that only few ATMs are dispensing over N10,000 per transaction. “The concerned authorities should please look into this matter because people are suffering, there is no money in the country, yet banks want to make profit off customers.

“Even the N65 charge which CBN authorised should be charged after three transactions, I am not sure the banks follow the rule due to the debit alerts we receive after withdrawals’’. Another customer of First Bank, Erica Jonah who narrated her experience, said she used her ATM card to withdraw N100,000 from another bank and discovered the machine was programmed to dispense N10,000 per transaction and was charged N65 per every transaction. Jonah said that was not her first experience, describing the practice by banks involved in it as fraudulent. She also called on regulatory bodies in the industry to look into the matter with a view to curbing such excesses by banks involved in the practice. Meanwhile, Mrs Gift Agbo, a former banker, said most ATMs used by banks in the country were not designed for Nigeria’s currency and that is why the amount it dispensed was limited. “Some of these machines are old and not programmed for the kind of money we have in the country.

“The notes which many banks put in the machines also limits the amount that can be dispensed by the machines.

“I am sure this problem can be resolved if Nigerian banks invest in customised machines that are suitable for our environment and currency,’’ she said. In its reaction, CBN Consumer Protection Department said it had received several complaints from bank customers over the low withdrawal limit set by banks on their ATMs. Mr Fada David, thevSenior Manager, Complaints Management Division of the Department, assured customers that the apex bank was working to make sure that such complaints were addressed. “Yes we have received complaints from people saying they could withdraw for example N40,000 from bank A yet they are not able to get that much if they carry a card of Bank A to bank B ATM.

“First of all, I want the public to know that withdrawal from any ATM at all is not supposed to attract any charges until you withdraw more than three times in a month. “If you are using your bank’s ATM, you are at liberty to withdraw as many times as you like in a month without incurring any charges. “Also, we want to encourage customers to engage their banks to find out why there is such a withdrawal restriction on ATMs,’’ he said. David also urged customers to embrace the cashless policy and use other payment methods such as POS, internet and other Mobile banking applications; to reduce over dependence on cash.

“You can use other payment channels for goods and services. You can go to the market, buy something and use your mobile app, pay for that product. “Unless it is absolutely necessary that you need to take cash, consumers can take advantage of a lot of other payment channels to pay for goods and services and do other transactions,’’ he said. David said that bank customers also have the responsibility to improve the way their bank serves them by officially writing to complain about bad services. According to him, it is only then will the bank address the issue to make sure that their customers are happy with the services being rendered. (NAN).

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Africa Trending

​Six Banks In Danger

Dr Ernest Addison, BoG Governor
The fate of six local banks (names withheld) hangs in the balance after the takeover of uniBank by the Bank of Ghana (BoG) on Tuesday.

The Central Bank, it would be recalled, hinted that as many as nine banks (two foreign-owned) were facing liquidity challenges after conducting a survey in the banking industry some time ago.

Even though the Central Bank gave the affected banks time to put their house in order and chart a clean path, the financial institutions failed to take advantage of the opportunity until reality started dawning on them.

As a result of that, two distressed financial institutions – UT Bank, a listed company, and Capital Bank owned by Ato Essien, who has been linked to other deals in the financial sector – were taken over by GCB Bank.

On Tuesday, KPMG was appointed by the Bank of Ghana as an official administrator to manage uniBank for six months after which it would return to private management.

Analysts believe that allowing the directors of the collapsed banks to go scot-free without any serious sanction would not instill discipline in the financial sector.

In July last year, the Central Bank gave the nine ailing banks until September 2017 to improve their financial position and reporting.

The financial crisis started in 2015, with some analysts blaming it on the premature exit of Dr Henry Wampah as Governor of BoG.

A careful look at the Central Bank’s statistical bulletin – which gives details of the Bank of Ghana’s expenditure in a financial year – showed that the support extended to the banks shot up significantly in August 2014.

The bank’s line item of Claims by Deposit Mobilization Banks (DMB) showed a sharp increase from GH¢487 million to over GH¢1 billion in June 2015 and increased to GH¢5.2 billion as at January 2017, after which it reduced to about GH¢4.6 billion in May last year.

The defunct UT and Capital Banks got significant amounts of the funds to help them in their daily operations because they were seriously under-capitalised.

UniBank’s Diagnosis

In the case of uniBank, the BoG said in a report on the state of the banking system that it had faced severe insolvency and liquidity challenges over the past two years, with persistent clearing deficits resulting in extensive reliance on the Bank of Ghana’s Emergency Liquidity Assistance (ELA) instrument since 2015.

“As a result, BoG is heavily exposed to uniBank to the tune of GH¢2.2 billion, of which GH¢1.6 billion is unsecured. The bank also faces a significant capital shortfall. On March 20th, 2017, BoG directed uniBank, per a letter, to submit a capital plan and resolve its significant undercapitalization within 180 days from the date of the letter, in accordance with Section 106(1) of the Banks and SDIs Act 2016 (Act 930).

“Since then, uniBank’s Capital Adequacy Ratio (CAR) has rather deteriorated into the negatives from September 2017, and in a much more distressed condition with CAR of negative 24.02% and capital deficit of GH¢1.18 billion as of December 2017. This notwithstanding, the bank has continued to increase its asset base (granting new loans to clients) to GH¢6.1 billion in December 2017 from GH¢4.9 billion in September — amidst increasingly poor loan asset quality.

“The bank’s gross loans increased by GH¢760.67 million within the same period. As a result, its Non-Performing Loans (NPLs) have remained high, further eroding the capital base of the bank and presenting liquidity challenges. The reserve ratio (a measure of liquidity) has remained consistently below 1.0 percent since October 2017, compared to the regulatory minimum of 10 percent, resulting in a constant liquidity shortfall and continued reliance on the BOG’s Emergency Liquidity Assistance facility.”

Meanwhile, the BoG continues to license more microfinance institutions and upgrade savings and loans to conventional banksk.

DAILY GUIDE is also investigating circumstances under which a bullion van loaded with cash for one of the collapsed banks disappeared with the driver.


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​Naira crashes to N415/USD1, ban on banks lingers

Amidst lingering dispute between Central Bank of Nigeria, CBN, and eight banks banned from participating in the inter-bank foreign exchange market, the local currency, Naira, has suffered further bashing, depreciating to N415/ USD1 yesterday in the parallel market, bringing total weekly loss to N20 per dollar.

But the inter-bank market registered moderate stability as mid-day trading rate hovered at N315/ USD1 after depreciating to N316.

The developments were coming against the inability of eight out of the nine banks banned from the interbank market failed to resolve the issues with the apex bank and the Nigerian National Petroleum Corporation, NNPC, over the weekend.

The affected banks are First Bank of Nigeria Plc, FCMB Plc, Diamond Bank Plc, Skye Bank Plc, Heritage Bank Limited, Keystone Bank Limited, Fidelity Bank Plc and Sterling Bank Plc.

Chief executives of the banks have been meeting with the apex bank since Wednesday up till yesterday but no solution was reached as Vanguard learnt that CBN was insisting the banks should return the NNPC foreign exchange deposits to the Treasury Single Account, TSA, before they could be allowed to return to the market.

Consequently, pressures continued to build against the Naira exchange rate with the local currency depreciating against all major international curren-cies at the weekend.

The local currency had reversed its four-day straight gains on Tuesday after the ban was announced, but banks’ forex dealers, however, told Vanguard that the renewed pressure on the Naira had more to do with scarcity than the ban placed on some banks.

They also said that many dealers and buyers were speculating that the apex bank was showing some desperation in controlling access to foreign exchange and weakening its intervention with supply of foreign exchange to the market, a situation which drove negative sentiments in the market.

Parallel market dealers corroborated the scarcity concern when they told Vanguard that though they do not have demand pressure, the supply was also not coming in as the banks have not been fulfilling the directives of the CBN to sell to Bureau de Changes, BDCs.

They explained that the initial moderation in rates last week when CBN gave the directive has given way to further apprehension when the banks refused to comply fully.

But amidst these CBN was able to settle the USD152.48 million of Naira futures contracts it sold in two months ago which matured on Thursday at an exchange rate of N279/ USD1.

The apex bank also executed a fresh 12-month contract at N241/ USD1 which is scheduled to mature on Aug. 16, 2017.

The apex bank suspended the banks from forex transactions on Tuesday for failing to remit money they received from NNPC into the TSA.

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  4. Source: Vanguard

​CBN orders banks to sell 60% forex to manufacturers

The Central Bank of Nigeria, CBN, yesterday, ordered Authorised Dealers (banks) to allocate 60 per cent of their total Foreign Exchange, forex purchases from all sources (interbank inclusive) to manufacturers and 40 per cent to other users for the purpose of trade and other obligations.

CBN Governor, Mr Godwin Emefiele

The CBN, in a circular titled “Foreign exchange sales to end users” signed by Acting Director, Trade and Exchange Department, W.D. Gotring said “Following the review of the returns on the disbursement of foreign exchange to end users, it has been observed that negligible proportion of foreign exchange sales are being channelled towards the importation of raw materials for the manufacturing sector

“Against this background and in order to address the observed imbalance, the Authorised Dealers are hereby directed to henceforth dedicate at least 60 per cent of their total foreign exchange purchases from all sources (interbank inclusive) to end users strictly for the purposes of importation of raw materials, plant and machinery. The balance of 40 per cent should be used to meet trade obligations, visible and invisible transactions.”

Gotring, further stated that the Authorised Dealers should continue to publish weekly sales of foreign exchange to end users in the national newspapers and to render statutory returns on same to the CBN promptly.

In another circular titled Re: Transactions in “free funds” by authorised dealers, the apex bank stated that it has noticed that some Authorised Dealers have continued to buy and sell foreign exchange referred to as “free funds” despite the provision of the circular referenced TED/ AD/29/2004 dated March 4, 2004 on the subject.

To this end, the Gotring said “Against the background, Authorised Dealers are to note that dealing in foreign exchange without appropriate documentation which includes relevant entries, blotters, physical documents and non-disclosure to the Regulatory Authorities is a breach of extant regulations.”

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  4. Source: Vanguard