CBN suspends 9 banks from forex transactions

By Omoh Gabriel

Diamond, Skye, FirstBank, Keystone, others listed

LAGOS— The Central Bank of Nigeria, CBN, yesterday, suspended nine banks from further dealing in foreign exchange transactions, until they remit all outstanding Nigerian National Petroleum Corporation, NNPC, funds in their vaults into the Treasury Single Account, TSA.

The nine banks were barred for concealing $2.12 billion belonging to the NNPC, and failed to remit the funds into the TSA as directed by the Federal Government.

The action of the apex bank, however, is seen in some quarters as contradicting an earlier circular on the issue exempting NNPC from TSA.


The circular addressed to the Director, Banking and Payments System Department of the CBN, with FD/LP2015/C/ADC/20/1/ /DF as reference number, was dated September 14, 2015. It was signed by M. K. Dikwa for the Accountant-General of the Federation, Federal Ministry of Finance, Funds Department, Abuja.

The banks, which suspension would remain in force until they remit all the funds to the TSA, are United Bank for Africa (UBA) ($530m); FirstBank of Nigeria (FBN) ($469m); Diamond Bank Plc ($287m); Sterling Bank Plc ($269m); Skye Bank Plc ($221m); Fidelity Bank ($209m); Keystone Bank ($139m); FCMB ($125m) and Heritage Bank ($85m).

The CBN officials said further disciplinary actions awaited the erring banks after remitting the funds in full to the government’s coffers.

Vanguard gathered that CBN governor was in Lagos, yesterday, for meetings with banks’ Managing Directors to brief them on the development. It was further learned that at the meeting, issues were raised concerning some of the banks that were not listed but it was later learned that further investigations on their transactions were to be carried out.

It was also learned that President Muhammadu Buhari had been briefed on the matter before the sanctions being imposed on the defaulting banks were arrived at.

The nine banks comprise three old generation banks and another six new generation banks.

The TSA of the government was established in August 2015, with the government saying it would help check leakages in the system.

The apex bank’s decision to bar the banks comes two months after it released the highlights of the much awaited flexible foreign exchange market policy.

The highlights, which are key notes and agreements reached by the CBN, were released on Wednesday, weeks after the Monetary Policy Committee, MPC, announced the introduction of the policy. After its meeting of May 24, the CBN said the policy would allow banks retain a small portion of foreign exchange for critical transactions.

Banks officials react

Speaking on the issue, some of the banks officials said the understanding was that NNPC was exempted from the TSA. They said the Federal Government had exempted 13 government agencies from the TSA arrangement related to electronic or e-collection and mop-up exercise of government funds from commercial banks.

A circular exempting the agencies was communicated to the CBN from the Office of the Accountant-General of the Federation (OAGF). The exempted agencies of government are “profit-oriented government business entities that pay dividends to the Federal Government of Nigeria.”

Exempted agencies

The exempted agencies are: NNPC, Power Holding Company of Nigeria  (PHCN),   Bank of Industry (BoI), Nigeria Railway Corporation,  Federal Mortgage Bank of Nigeria, Bank of Agriculture, Niger Delta Power Holding Company/National Integrated Power Project, National Communication Satellite Limited, Galaxy Backbone Ltd and Ajaokuta Steel Company Ltd.

Others are Urban Development Bank, Nigerian Export-Import Bank and Transcorp Hilton Hotel.

The circular, entitled: “Approval to exempt some MDAs in line with the e-collection mop-up exercise,” read: “Approval is hereby granted to your bank (CBN) to exempt the accounts of   13 MDAs (category six) as listed below the mop-up in line with the e-collection circular no. HCFSF/428/S.1/120 dated 7th August 2015 as these are profit-oriented government business entities that are to pay their dividends into the Treasury Single Accounts whenever they are declared.”

The circular urged the CBN to “note that in line with the presidential approval, the following, as it relates to  NNPC as listed above (S/No.9) under Category 4 should also apply:

“That National Petroleum Invetsment Management Services (NAPIMS) remains classified as an MDA that is funded from the  Federation Account under Category 4 of the Circular, being the NNPC business  unit  responsible for the management of the Federal Government’s investment in upstream activities and funded from direct proceeds of oil and gas revenue.

“That NNPC will continue to preserve the status with respect to NAPIMS’ Operations Account as well as Escrow Account for Third Party financing, in view of the Joint Venture (JV) cash funding currently being experienced; and  that all other NNPC’s commercial/business entities as re-classified as ‘Profit Oriented Public Corporations/Business Enterprises’ under Category   6 of the Circular which requires that only dividends from these entities be paid into the TSA.”

When contacted, Mr Ohi Alegbe, the then spokesman for the NNPC, had said the NNPC would continue, as it had always done, to remit its accruals into the Federation  Account but that the JV cash-call obligations with its partners would use commercial banks and not the CBN.

Chinedu Moghalu of NEXIM confirmed that NEXIM had been exempted from the TSA scheme while Shola Adeyemo of Transcorp Hilton Hotel said the firm was “aware of such a directive.”

An official of BoI, who pleaded not to be named, said as a developmental institution, BoI did not fall into that category. He noted that BoI managed intervention funds on behalf of the CBN as a result, the BoI  will have to be exempted from the TSA arrangement.

It will also be recalled that the NNPC had denied any wrongdoing over its failure to remit about $13.294 billion to the federation account over a nine-year period, stating that the funds were utilized legally in running its operations, while the balance of the funds had been transferred to the CBN.

UBA, Diamond banks react

Reacting to the development, UBA said in a statement issued last night:  “Our attention has been drawn to report of the ban of UBA from the foreign exchange market by the CBN over the non-remittance of NNPC/NLNG dollar deposits.

“We wish to state very categorically that UBA has completely remitted all NNPC/NLNG dollar deposits. We thank all our numerous customers, business partners and other stakeholders who have reached out to us on account of this report.”

Competence sources close to Diamond Bank revealed that the bank never hid the account from the CBN and had always been open about it.


CBN suspends 9 banks from forex transactions on Vanguard News.


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