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NSE to dialogue with CBN over banks’ recapitalisation plans

The Nigerian Stock Exchange (NSE) will dialogue with the Central Bank of Nigeria (CBN), in order to implement fresh recapitalisation for banks.

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NSE

The Chief Executive Officer (CEO) of the Nigerian Stock Exchange (NSE), Oscar Onyema, has disclosed that The Exchange will dialogue with the Central Bank of Nigeria (CBN), in the implementation of a fresh recapitalisation for banks.

Onyema stated this at the recently-held Rand Merchant Bank (RMB) Nigeria Economic and Business Conference in Lagos.

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As capital base in the banking sector continues to weaken, Onyema said the full picture of the recapitalisation plan is, at the moment, unclear to the Nigerian Stock Exchange.

Oscar Onyema

CEO, NSE, Oscar Onyema

Defending why the NSE is very much concerned about banks’ recapitalisation in the country, Onyema stressed that the last banking sector recapitalisation in 2005, raised the sophistication and liquidity of the Nigerian capital market.

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“We are still studying the pronouncement that was made last week; we are not quite sure what it means, but what I can say is that historically if you look at the last big recapitalization efforts for the banking sector, the capital market was greatly used for raising the financing and indeed it was very beneficial to the capital market to the extent that the market became more sophisticated and a lot more players came into the market from the investors perspective.

“Till today, the financial sector is still one of the most liquid sectors listed on the stock exchange. So, we know that potentially, it could be very beneficial to the capital market.”

[READ MORE: Prestige Assurance to raise fresh capital by offering 14 billion shares]

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Prior to this, Governor Godwin Emefiele of the Central Bank of Nigeria had announced the apex bank’s intention to recapitalise commercial banks in the country.

The CBN boss said the move is aimed at repositioning Nigerian banks in order that they may be among the top 500 banks in the world. The plan is also aimed at reducing the risks and the possible impact of any economic crises that may befall the financial sector.

[READ ALSO: NAICOM suspends insurance firms’ recapitalisation]

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Why is this important? The move by the apex bank is largely due to the need to mitigate the crises in the financial sector, as well as improve the current state of commercial banks’ capital base of N25 billion which has substantially weakened.

To better understand the situation, take into consideration the recent merger/acquisition of Diamond Bank Plc by Access Bank Plc in 2018 which became necessary mainly due to the financial crises that befell the former lender.

Furthermore, the take-over of Skye Bank Plc by the Asset Management Company of Nigeria (AMCON) in 2018, coupled with other deficiencies in capital adequacy and liquidity requirements in the sector, really give credence as to why it has become important to recapitalise the sector.

Patricia

Famuyiwa Damilare is a trained journalist. He holds a Higher National Diploma (HND) in Mass Communication at the prestigious Nigerian Institute of Journalism (NIJ). Damilare is an innovative and transformational leader with broad-based expertise in journalism and media practice at large. He has explored his proven ability in the areas of reporting, curating and generating contents, creatively establishing social media engagements, and mobile editing of videos. It is safe to say he’s a multimedia journalist.

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Tech News

3 startups to get N3 million grant each in the COVID-19 virtual hackathon 

The hackathon hopes to identify accessible and cost-effective E-Learning solutions for public schools.

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The Nigerian Communications Commission has announced that 3 finalist startups will get a grant of N3 million each at the end of the COVID-19 virtual hackathon 

These three startups will be selected from submitted entries that meet all the criteria and provide adaptable digital solutions for addressing the present and future impacts of pandemic and epidemic diseases 

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The solutions must be novel, clearly explained, with proof of concept  

NCC announced this through a statement published on its Twitter handle.  

The grant, it said, will enable the three startups with the most promising digital solutions to produce a prototype within 2 months of receipt.  

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According to the statement, submitted entries are expected to provide solutions in sectors such as health, digital communications, education, transportation.  

For those in health, the solutions should find a way to empower frontline healthcare workers or prevent, trace, and contain the spread in Nigeria.  

Solutions in digital communications are expected to aid the sustenance of economic activities and people-to-people communication while encouraging social distancing without compromising productivity. 

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The hackathon also hopes to identify accessible and cost-effective E-Learning solutions for public schools, as well as improved safety measures in public transportation in Nigeria.  

Interested tech hubs, startups and innovative digital SMEs can still submit entries on or before July 17, 2020.  

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Financial Services

CBN expands scope of regional banks in Nigeria, gives compliance timeframe

The aim of this directive is to expand the reach of the regional banks across the country, the CBN said.

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Regional Banks

The Central Bank of Nigeria (CBN) has expanded the scope of regional banks in the country, by requiring them to open branches in at least one additional geopolitical zone outside of the existing geopolitical zones where their operating licenses cover.

A circular that was issued earlier this week by the apex bank said this new directive is in accordance with “section 8 (g) of the CBN Scope, Conditions & Minimum Standards for Commercial Banks Regulations no [1] 2010 as revised on September 4, 2019.” 

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The new directive took effect on Friday, June 26, 2020. In other words, all the regional banks are expected to have become aware of this development since then. They now have a timeframe of six months to establish their presence in the geopolitical zones outside of where they currently operate.

It should be noted that prior to this time, regional banks in the country typically operated in at least two geopolitical zones of the federation. However, in line with the new expansion, the CBN shall now prescribe an additional geopolitical zone for each of these regional banks, thereby making the coverage area three geopolitical zones per regional bank.

Meanwhile, the CBN said the aim of this directive is to expand the reach of the regional banks across the country, whilst ultimately promoting financial inclusion. Note also that the new directive affects all regional banks, both the ones engaged in commercial banking and non-interest banking. Some part of the circular said:

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“Effective the date of this circular, all banks with regional authorisation shall be required to operate from one additional geopolitical zone as may be prescribed for each institution by the CBN, without prejudice to the existing requirement of the minimum of two (2) geopolitical zones of the federation. The essence is to promote spread and balance of the regional banks across the country.

“The compliance timeline to establish operational footprint at the advised zone shall not exceed six (6) months from the issuance of the regulatory advice to each regional bank by the CBN.”

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Economy & Politics

Nigerian and US Authorities battle former Enron Nigerian Subsidiary over $80 million Yacht

Both Nigerian and American governments have opposed Enron Nigeria’s appeal. 

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19 years after the bankruptcy of Enron Corporation, one of the biggest corporate bankruptcies in American history, a former subsidiary of the company is battling Nigerian and American Authorities over the sale of a yacht valued at over $80 million acquired by Nigerian businessman Kolawole Aluko. 

The yacht was seized by the US Government in 2018 after prosecutors say it was bought with the proceeds of bribes paid to Nigeria’s former Minister of Petroleum, Diezani AlisonMadueke. 

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The yacht was later auctioned for $37 million in 2019. The Nigerian government also dropped claims to the proceeds of the sale recently and a Texas Court ordered all proceeds should be retained by the US Government. 

However, a former unit of the Bankrupt Enron, Enron Nigeria Power Holdings claims its entitled to the proceeds and demands $22 million in a bid to get an arbitration awarded to them against the Nigerian government for suspending a contract signed with Enron in 1999 to build and operate a Power plant. 

(READ MORE: Nigeria leads Africa combined in Q2 2020 on BTC P2P)

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Enron Nigeria claims the Nigerian government dropped claims to the proceeds of the yacht’s auction in an attempt to fraudulently transfer assets to stop creditors from accessing them. Saying Nigeria dropping its claims was a recognition of the factual and legal basis” in a DOJ court filing. 

Both Nigerian and American governments have opposed Enron Nigeria’s appeal. 

Enron Nigeria Power Holdings Ltd is owned by ex-Enron staff involved in the negotiations for the Power Plant contract in Nigeria and was bought out of bankruptcy for $750,000 in 2004 by a Cayman Islands registered company. 

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An arbitration ruling in 2012 awarded Enron Nigeria Power Holdings $11.2 million including interest in damages against the Nigerian government. 

The DOJ says Mr. Aluko bought the yacht for $82 million in 2013 and funded a lavish lifestyle for Alison Madueke in exchange for NNPC contracts valued at over $1.5 billion. 

Aluko and his business partner, Olajide Omokore are also accused of laundering illicit revenues into and through the United States

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