Connect with us
nairametrics
UBA ads

Business News

Stockbrokers won’t agree whether CBN’s SDF policy will make banks great again

FSDH, CSL Stockbrokers, and Moody’s argue the Central Bank of Nigeria’s (CBN) new Standing Deposit Facility (SDF) policy.

Published

on

CBN warn banks against enforcing insurance covers on borrowers

The new policy of Central Bank of Nigeria (CBN) on Standing Deposit Facility (SDF), has drawn arguments from stakeholders of the country’s financial and banking sectors.

While some stakeholders showed support for the new measures put in place, others argued that the Central Bank should have prioritised addressing the reasons behind lenders’ reluctance to lend to the country’s economy.

UBA ADS

[READ MORE: Our view on CBN’s revision of SDF guidelines by CSL Capitals]

Arguments: Reacting to the new measure, the Head of Research and Strategy at the FSDH, Ayodele Akinwunmi, made known that the policy would make the apex bank have access to more funds from the banking system at no cost than before.

CBN's SDF Policy, FSDH

Head of Research and Strategy at the FSDH, Ayodele Akinwunmi

GTBank 728 x 90

According to Akinwunmi, the new policy would reduce the interest income of banks going forward. He also said it would force banks to trade more with one another in the interbank market than before, adding that it might also reduce the cost of managing system liquidity for the CBN.

“In addition, interbank interest rates may drop further as a result of increased system liquidity. This is part of the efforts of the CBN to increase banks’ credit to the real sector of the economy in order to stimulate the growth of the economy.”

In what seems to be similar to FSDH’s stance, analysts at CSL Stockbrokers Limited maintained that the new policy fails to address the fundamental issues behind banks’ reluctance to lend and would only result in banks looking for innovative ways to get around the rules.

According to the CSL Stockbrokers, the low-risk appetite among banks for lending to the real sector could be attributed to the high risks in the operating environment which hinders the survival of SMEs and the profitability of businesses in general.

Expressing confidence in the new policy, a banking analyst at Moody’s, Peter Mushangwe, said the latest measure signalled the Central Bank’s intention to stimulate lending to the real economy.

app

According to Mushangwe, in Moody’s view, the new directive is unlikely to force Nigerian banks to grow their lending aggressively.

devland

(READ ALSO: Emefiele reacts to allegations that CBN has multiple exchange rates)

“Assuming banks would lend out amounts above the new N2 billion placement ceiling, the additional lending would be only N5.5 billion per bank, and will likely be less than one of the total loans outstanding. In our view, the additional liquidity will likely move to the interbank market rather than lending.”

The new CBN’s policy: The Central Bank had directed that banks’ daily deposits placement through the CBN’s Standing Deposit Facility, shall no longer exceed N2 billion

This new policy was made known in a circular titled, “Guidelines on accessing the CBN Standing Deposit Facility.”

Penalty for not adhering: According to the circular signed by the Director of Financial Markets Department of the apex bank, Angela Sere-Ejembi, daily deposits by any bank in excess of N2 billion shall not attract interest payments.

app

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.

Click to comment

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Economy & Politics

Nigeria’s Bonga crude oil export terminal shutdown

Nigeria’s crude oil output is going to drop further, following the shutdown of the Bonga crude oil export terminal, which is operated by Shell Nigeria Exploration..

Published

on

Bonga crude oil

In what appears like a temporary setback, especially in this era of global oil market crisis, Nigeria’s crude oil output is going to drop further.
This is after the shutdown of the Bonga crude oil export terminal, which is operated by Shell Nigeria Exploration and Production Company (SNEPCO).

According to Reuters, the Bonga crude oil export terminal will be shut for routine maintenance for 2 weeks and is expected to be done in a record time.

UBA ADS

In a statement from Shell, the oil firm said that the maintenance of Bonga floating production storage and offloading unit (FPSO) started in May 21.

The oil production firm said, ‘’The scope includes statutory recertification and critical asset integrity activities and the exercise would run until July during which there will be a few days of total shutdown’’.

The Bonga crude oil export terminal was scheduled to load four cargoes in June or 127,000 barrels per day, an increase from the 123,000 barrel per day that was done in May.

GTBank 728 x 90

The repairs of the crude oil terminal appear to be behind schedule as Nairametrics had reported that Shell had schedule to carry out the maintenance on the facility earlier with the expectation that it will be ready for use in March.

This exercise is expected to help ensure sustained production and reduced unscheduled production deferments. The turnaround maintenance should involve inspections, recertification, testing and repair of equipment as well as engineering upgrades with Nigerian companies and subsea professional playing key roles.

A major focus is the Bonga floating, production, storage, offloading (FPSO) vessel, which is at the heart of Bonga operations. It has a production capacity of 225,000 barrels of oil and 150 million standard cubic feet of gas per day.

Bonga is Nigeria’s first deep water development in depths of more than 1,000 metres and is located 120km offshore Nigeria. SNEPCO expanded the project with further drilling of wells in Bonga phases 2 and 3 and through a subsea tie-back that unlocked the nearby Bonga North West field in August 2014. Bonga Phase 3 achieved first oil October 2015.

The Bonga is operated by SNEPCO in partnership with Total, Nigerian Agip Exploration Limited, Esso Exploration and Production Nigeria (Deep Water) Limited under a production sharing contract with NNPC.

app

devland
Continue Reading

Business News

Global oil market to re-balance in 2 months’ time

In the meantime, OPEC+ wants to keep the existing production output cuts beyond the June expiry date as part of efforts to rebalance the market. Countries like Saudi Arabia, the United Arab Emirates (UAE) and Iraq, have all reaffirmed their commitment to this effect.

Published

on

Crude oil prices, bonny light

With the uncertainty that still prevails in the global oil market due to the prevailing coronavirus pandemic, analysts have been coming up with different forecasts on the future of the market. The latest forecast is that the market will most likely recover by July 2020.

Crude oil prices and oil demand plunged over the past few months as a result of the pandemic. However, with the lifting of global lockdowns and gradual reopening of global economies, oil prices are expected to rebound. Russia’s energy minister, Alexander Novak, said the global oil supply and the oil demand will most likely rebalance by July.

UBA ADS

In the meantime, OPEC+ wants to keep the existing production output cuts beyond the June expiry date as part of efforts to rebalance the market. Countries like Saudi Arabia, the United Arab Emirates (UAE) and Iraq, have all reaffirmed their commitment to this effect.

In his analysis earlier today, OPEC’s Secretary-General, Mohammed Barkindo, urged OPEC+ members not to flout the output cut. According to him, OPEC+ members must remain committed to production cuts despite signs that oil demand is beginning to recover.

(READ MORE: Oil price gains likely to halt over demand uncertainty, as US-China tension intensifies)

GTBank 728 x 90

Global oil market to rebalance in 2 months’ time

On its part, Russia had agreed to cut down its oil production to 8.5 million barrels of crude per day in May and June, down from 10.5 million barrels.  There is a possibility that the country could extend the current level of output cut beyond June, a situation that is expected to serve as a major boost in the rebalancing of the oil market.

Last week, the International Energy Agency (IEA) said that it had seen signs that the oil market would rebalance quicker than originally expected after the United States and OPEC implemented the agreed output cut. The development came as a big relief to Nigeria because the rebound of oil prices and the rebalancing forecast will help reduce the country’s fiscal pressure and boost its revenue.

Note that the Brent crude and Bonny light crude sold for about $36 per barrel and over $33 per barrel respectively. These are above the revised budget oil benchmark of $25 per barrel for the 2020 budget.

app
Continue Reading

Business

LIRS further extends deadline for filing annual tax returns by one month

“We constantly debated what other measures could be taken as an organization to support individuals and businesses at this time, hence, the additional one-month extension from June 1, to June 30, 2020.” – Ayodele Subair

Published

on

LIRS further extends deadline for filing annual return by one month

The Lagos State Internal Revenue Service (LIRS) has again extended the deadline for filing of Annual Tax Returns from May 31 2020 to June 30, 2020.

This is part of the state government’s effort to provide relief to taxpayers in light of the economic impact of the Covid-19 pandemic. With this development, annual returns for individuals, both employees and self-employed persons, can be filed anytime before June 30, 2020.

UBA ADS

In a press release signed by Monsurat Amasa, the head of LIRS’ Corporate Communications Department, the agency urged taxpayers to take advantage of the magnanimity of the government and file their returns. The LIRS’ Executive Chairman, Mr. Ayodele Subair, explained the extension thus:

“As the Lagos State Government keeps abreast of global best practices in containing the Covid-19 pandemic and eases the effects of an economic downturn on taxpayers and residents of the State, LIRS had initially extended the deadline for filing annual tax returns for two months, from the statutory March 31st of every fiscal year to May 31, 2020.  

“We constantly debated what other measures could be taken as an organization to support individuals and businesses at this time, hence, the additional one-month extension from June 1, to June 30, 2020.”

GTBank 728 x 90

(READ MORE: COVID-19: Lagos issues new guidelines, considers full reopening of economy)

He further explained that taxpayers can file the annual returns from the comfort of their homes and offices using the LIRS eTax platforms. They can also generate assessment and payment schedule, and other tax administration matters on the same platform. Updates on business operations and alternative payment platforms are to be found on the verified handles, and the LIRS website.

Continue Reading