Financial Services
Union Bank seals $40 million partnership with IFC
Union Bank has secured a partnership deal with IFC to boost trade.
Union Bank has announced its partnership with the International Finance Corporation (IFC), a member of the World Bank Group. The partnership enabled the bank to receive funding facility worth $40 million from the group, targeted at boosting access to finance for local businesses, increasing international trade, and helping to protect the nation’s economy from the accompanying harsh impact of the pandemic.
The partnership is under the IFC’s Global Trade Finance Program (GTFP), and as part of the terms of its arrangement, it would offer the confirming banks partial or full guarantees, covering payment risk on Union Bank’s trade-related transactions. The guarantees are transaction-specific and are backed up by a variety of underlying instruments including letters of credit, trade-related promissory notes, guarantees, etc.
(READ MORE: CBN launches framework for advancing women’s financial inclusion in Nigeria)
What they are saying
Commenting on the partnership, the Chief Executive Officer of Union Bank, Mr. Emeka Emuwa, stated that, “Union Bank is pleased to join the IFC’s Global Trade Finance Program. This is a significant achievement as we continue to expand our trade financing offerings to our corporate customers.
Commenting further, he noted that, “Even in these peculiar times, we remain focused on contributing to economic growth by developing tailored solutions that help our customers harness the teeming opportunities that still exist in the Nigerian market.”
Why this matters
The partnership will enable the bank to leverage on the network of GTFP’s members which are currently close to 300 major international banks, thereby expanding access to finance and reducing cash collateral requirements for Nigerian businesses.
The funding facility will thereby enable the sustained flow of trade credit into the Nigerian market, especially at a critical time like this when the country needs to generate more forex through exports and imports.
Financial Services
CBN to drive implementation of zero balance account opening in banks
The CBN has urged the DMBs to allow zero balance for the opening of new accounts.
The Central Bank of Nigeria (CBN) has urged the Deposit Money Banks (DMBs) to allow zero balance for the opening of new accounts, as part of the efforts to promote greater financial inclusion across the country.
In addition, the banks are also expected to simplify their account opening processes, while adhering to Know-Your-Customer (KYC) requirements in the push towards financial inclusion.
READ: This is where PSB, CBN got it all wrong
READ: CRR: Banks suffer N917.5 billion debits in latest CBN action
This disclosure was made in the Monetary, Credit, Foreign Trade and Exchange Policy Guidelines for 2020/2021 fiscal year, which was issued by the Central Bank of Nigeria (CBN).
While stating that these measures are part of the efforts to encourage banks to intensify deposit mobilization during the 2020/2021 fiscal years, the apex bank also encouraged banks to develop new products that would provide greater access to credit.
READ: Nigeria @ 60: The Banking Sector and the Nigerian economy
A part of the report reads, “As part of its effort towards promoting greater financial inclusion in the country, the bank shall continue to encourage banks to intensify deposit mobilization during the 2020/2021 fiscal years. Accordingly, banks shall allow zero balances for opening new bank accounts and simplify their account opening processes, while adhering to Know-Your-Customer requirements.
READ: Lagos Rail Mass Transit: House of Assembly approves N153 billion for construction
“Banks are also encouraged to develop new products that would provide greater access to credit.”
In addition, the apex bank said that the Shared Agency Network Expansion Facility (SANEF), which was established to enhance the provision of financial services access points in under-served and unserved locations and drive financial inclusion through agent banking, would continue in the 2020/2021 fiscal years.
READ: CBN launches framework for advancing women’s financial inclusion in Nigeria
It states that banks, mobile money operators, and super-agents would continue to render returns in the prescribed formats and frequency to the CBN.
Exclusives
CRR: Banks suffer N917.5 billion debits in latest CBN action
The central bank debited Nigerian banks N917.5 billion last week in its latest CRR action.
Nigerian banks suffered a total of N917.5 billion in new CRR debits from the Central Bank of Nigeria. Reliable sources inform Nairalytics Research that the latest debits occurred in the week ended October 23rd, 2020.
The cash reserve requirement is the minimum amount banks are expected to leave retained with the Central Bank of Nigeria from customer deposits. In January, the CRR was increased by 5% to 27.5% by the CBN Monetary Policy Committee (MPC) who explained that the decision was intended to address monetary-induced inflation whilst retaining the benefits from the CBN’s LDR policy.
READ: CBN says 17 banks to restructure over 32,000 loans
CRR Debits for Nigerian Banks.
Nairalytics Data
READ: Union Bank suffers N188 billion in CRR debits as at June 2020
From the data, Zenith Bank topped the list with N285 billion followed by UBA with N160 billion. The rest of the FUGAZ, Access, FBN, and GTB were debited N140 billion, N95 billion, and GTB N55 billion respectively. The FUGAZ also suffered a N1.9 trillion debit in CRR sequesters in the second quarter of 2020 (April – June) alone.
READ: Nigeria’s forex devaluation timeline – 2020
Nigeria’s central bank has since 2019 debited Nigerian banks a chunk of their deposits as part of a mutually inclusive cash reserve requirement (CRR) and Loan to Deposit Ratio policy that is targeted at coercing banks to lend more to the private sector.
READ: CBN reviews minimum interest rates on savings deposit to 1.25%
Last month, Nairametrics reported that the CBN now holds a total of N6.57 trillion in CRR debits from the nation’s top 5 banks a whopping 43% higher than the N4.58 trillion held in March and more than double the N3.5 trillion CRR debits as of December 2020. CRR debits in the third quarter of 2020 will be revealed when banks release their results in the coming days and weeks.
READ: Nigeria’s telecom sector posts double digit growth of 18.1%, manufacturing, others contract
Meffynomincs: CBN under the leadership of Godwin Emefiele has deployed several heterodox policies as it strives to stimulate the economy and manage the exchange rate crisis in the absence of strong fiscal support.
- Interest rates on fixed deposits and money market instruments have fallen to single digits despite the galloping inflation rate.
- Last month, the CBN monetary policy committee admitted it was no longer combating inflation but will direct its policies towards stimulating lending to the private sector hoping this will spur local production.
- This policy has placed banks in the crosshairs with the Apex bank exposing them to CRR debits if they cannot use customer deposits to spur lending.
ENDSARS
#EndSARS: Access Bank announces N50 billion interest-free facility for businesses
Access Bank Nigeria Plc has announced plans to offer N50billion interest-free credit facility to individuals and businesses.
Access Bank Nigeria Plc. has announced N50 billion in support of Nigerians through interest-free loans and grants to support communities, the youths, and micro, small and medium-sized businesses.
READ: Access Bank gets regulatory approval to become a Holding Company
READ: Banks lay-off 2,477 staff during lock-down
This information was disclosed by the bank through its official LinkedIn page.
The bank’s official statement read thus,
“Now more than ever, we remain committed to our purpose of impacting lives positively. In light of the recent occurrences, we will be supporting Nigerian businesses with 50 Billion Naira interest-free loans and grants. Watch this space for more information.”
READ: Access, GTBank, two others pay PWC & EY N1.5 billion as Audit fees in H1 2020
Why it matters
The impact of the pandemic, coupled with the hijacked #EndSARS protests that led to the looting of businesses and destruction of properties has thrown so many Nigerians into debts.
READ: $70 billion per annum will be needed to tackle pandemic induced poverty – World Bank
READ: WTO DG: US, EU divided over Nigeria’s Okonjo-Iweala and South Korea’s Yoo
This show of support from Access Bank will help alleviate and stimulate economic activities, as well as produce many positive multiplier effects on the economy.
READ: #EndSARS: Popular hacking group, Anonymous allegedly hacks Nigerian Govt. websites
COVID-19 Update in Nigeria
Oyo sets up N500 Million fund each for youth entrepreneurs, compensation for victims of police brutality
Federal Government declares Thursday October 29 public holiday, to mark Eidl-Mawlid
FG disburses MSMEs Survival Fund in Lagos, Kano, FCT and 9 other states
VP Osinbajo leads Committee to address unemployment, poverty among others
COVID-19 Update in Nigeria
Daily Parallel Market Exchange Rate – ₦461/$1
ASUU discloses why it is yet to call off nationwide strike
Guinness Nigeria Plc jostles to improve from its insipid 2020 financial year
CACOVID reacts to looting of food items, explains why distribution of palliatives was delayed
