Nairametrics
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Industries
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Tech News
  • Economy
    • Nairalytics
    • Macro-Economic News
    • Research Analysis
    • Budget
    • Public Debt
  • Business News
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
No Result
View All Result
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Industries
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Tech News
  • Economy
    • Nairalytics
    • Macro-Economic News
    • Research Analysis
    • Budget
    • Public Debt
  • Business News
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds
No Result
View All Result
Nairametrics
No Result
View All Result
Home Business News

$8.1 billion refund could cost banks, MTN a whopping N1.9 trillion in FX differentials

NairametricsbyNairametrics
4 years ago
in Business News, Company News
CBN Gov Godiwn Emefiele

Dr. Godwin Emefiele

Share on FacebookShare on TwitterShare on Linkedin

The Central Bank of Nigeria (CBN) on Wednesday fined four banks a total of N5.86 billion for allegedly breaching Nigeria’s extant laws and forex rules when they facilitated illegal repatriation of funds to South Africa on behalf of MTN.

The Apex bank also requested that they refund the sum of $8,134,312,397.63 which “was illegally repatriated on behalf of your company (MTN) by the aforementioned banks between 2007 and 2015.”

What could this cost the banks and MTN

Asides the potential need to pay penalties of about N5.8 billion, the 4 banks and MTN are also on the hook to refund a whopping $8 billion to the coffers of the CBN. While $8 billion is expected to be refunded to the CBN the true cost to the CBN might be about 66% of this amount in terms of differentials.

To refund the amount, the banks and MTN will refund the $8.1 billion while the CBN credits them with the naira equivalent. The CBN did not state what the exchange rate for the refund will be but the worst case scenario is that it could cost the banks and MTN as much as N1.9 trillion. 

How did we arrive at this

The average official exchange rate at the time was about N124/$1 compared to N365/$1 today. Thus, while the banks and MTN might have to source the $8.1 billion at an exchange rate cost of N365, the CBN might refund the naira equivalent at N124/$1.

Banks/MTN  FX in USD  ROE Naira equivalent
Outflow
Buys FX          8,134,312,397.63 366    2,977,158,337,532.58
Inflow
Receives from CBN          8,134,312,397.63 124    1,008,654,737,306.12
Net Inflow/(Outflow)  (1,968,503,600,226.46)

 

What this means

  • This in effect is costing the banks about $5.3 billion or 66% of the $8.1 billion in FX loss.
  • This is an astronomically high cost to incur by any of the companies accused individually or combined.
  • The attendant cost is as depicted above is enough to render these companies bankrupt regardless of how long the CBN spaces the refund.
  • This basically opens a huge window for the CBN and the government to negotiate this refund.
  • It could also pave the way for a legal redress if they do not reach a mutually agreed solution to this matter.

Related

Tags: CBNMTN

Comments 3

  1. Muyiwa says:
    August 30, 2018 at 9:36 am

    If it’s MTN’s money to repatriate in the first instance, can’t they just be fined for usage of wrong COCI. Instead of asking them to return the money and be exposed to huge foreign exchange difference?

    Reply
  2. Anonymous says:
    August 30, 2018 at 10:44 am

    MTN should just refund the $8billion. They should source for it outside the country and return. The issue of N127/$1 does not arise. Just refund the money taken away in dollars

    Reply
  3. Kokoro Dudu says:
    August 31, 2018 at 12:03 am

    The problem is that MTN scammed the country. If the shareholder’s loan was a loan, then they should have been paid just principal + interest and not dividends.

    Reply

Leave a Reply Cancel reply

HFM
Mega Millions
Mega Millions
Patricia





NM newsletters

Business News | Stock Market | Money Market | Cryptos | Financial Literacy | SME |

Recent News

  • 3 reasons most Nigerians may ignore Starlink and stick with their mobile operators
  • Why Nigerians are obsessed with cash
  • Finance Minister says Federal Government is set to activate full potentials of mining sector

Follow us on social media:

Recent News

Starlink is now in Nigeria, but for only those earning dollars

3 reasons most Nigerians may ignore Starlink and stick with their mobile operators

February 6, 2023
Why Nigerians are obsessed with cash

Why Nigerians are obsessed with cash

February 6, 2023
  • Home
  • Exclusives
  • Markets
  • Industries
  • Economy
  • Business News
  • Financial Literacy
  • Lifestyle
  • Opinions

© 2023 Nairametrics

No Result
View All Result
  • Home
  • Exclusives
    • Financial Analysis
    • Corporate Stories
    • Interviews
    • Investigations
    • Metrics
  • Markets
    • Currencies
    • Cryptos
    • Commodities
    • Equities
      • Dividends
      • Stock Market
    • Fixed Income
    • Market Views
    • Securities
  • Industries
    • Company News
    • Consumer Goods
    • Corporate Updates
    • Corporate deals
    • Corporate Press Releases
    • Energy
    • Entertainment
    • Financial Services
    • Hospitality & Travel
    • Manufacturing
    • Real Estate and Construction
    • Tech News
  • Economy
    • Nairalytics
    • Macro-Economic News
    • Research Analysis
    • Budget
    • Public Debt
  • Business News
  • Financial Literacy
    • Career tips
    • Personal Finance
  • Lifestyle
    • Billionaire Watch
    • Profiles
  • Opinions
    • Blurb
    • Op-Eds

© 2023 Nairametrics