The Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC) have been empowered to set up a Banking Sector Resolution Fund to ensure the safety of depositors’ funds and operate as a bridge bank to strengthen struggling banks back to health.
The CBN is expected to inject the sum of N10 billion ($26 million) or any amount that will be determined by its board into the fund every year.
According to a report from Thisday, this disclosure is contained in the Banks and Other Financial Institutions Act (BOFIA) 2020 which was just signed by President Muhammadu Buhari.
Section 74 of the BOFIA states that without prejudice to the provisions of the Asset Management Corporation of Nigeria (AMCON) Act, the Resolution Fund shall be domiciled with the central bank, and into which shall be paid all contributions and agreed levies.
According to the Act, the CBN Governor, Mr. Godwin Emefiele, with the approval of the board of the bank, is to determine the date of commencement of the fund.
This new arrangement is, however, separate to that of AMCON which was established to buy bad debts following the banking crisis that happened in 2009.
In the new act, each bank is expected to make annual contributions that are equivalent to 10 basis points of their total assets or a percentage that the CBN will still have to finalize.
The new regulation states, “This will be based on the financial institutions’ total assets as at the date of their audited financial statements for the immediately preceding financial year published pursuant to this Act, and which shall be payable on the commencement date, and on or before the 30th day of April in each subsequent calendar year following the commencement date.”
The funds are expected to be used to offset operating costs of a bridge bank, to pay the costs of transferring the whole or any part of the business of a bank, specialized bank, or other financial institution pursuant to a resolution measure.
The new act also states, “The Resolution Fund shall not be subject to tax and accordingly, all monies accruing to, payments made from, and instruments and transactions relating to the Resolution Fund shall be exempt from all forms of taxes, levies, duties, charges, or imposition howsoever described.
“Any annual levy paid by a bank, specialized bank or other financial institution in pursuance of this Act, shall be deductible for the purposes of the companies’ income tax of the paying bank, specialized bank or other financial institution under the Companies Income Tax Act.
“A bank, specialized bank or other financial institution that is in default of payment of the levy imposed under this Act or any part thereof, shall be prohibited from paying dividends or other purpose of the Resolution Fund,” it added.
This new regulation is expected to act as a relief to some smaller or medium-sized banks who sometimes struggle during the global financial crisis like the one that happened in 2016 or the one that hit that Nigerian financial system in 2009, which led to the collapse of some financial institutions.
Nairametrics had reported that President Muhammadu Buhari, some days ago assented to the Banks and Other Financial Institutions Act (BOFIA) 2020, with several new provisions to enhance the effectiveness of the country’s financial system.
It also strengthens the regulatory and supervisory framework for the financial industry and provides additional tools for managing failing financial institutions and systemic distress to preserve financial stability.
Conoil’s 30,000 bpd facility forced to shut down by host community
Conoil Producing Limited has had its crude oil production flow station at Ango field Bayelsa that it is operating shut down.
Indigenous oil exploration and production company, Conoil Producing Limited, has had a crude oil production flow station at Ango field in Koluama, Southern Ijaw Local Government Area of Bayelsa State shut down by the host community.
This follows the protest by aggrieved members of the community over the oil firm’s insensitivity to its social obligations towards the people.
According to a report from the News Agency of Nigeria (NAN), the protesting members of the community had besieged the facility and told the oil workers to shut the facility and leave the site of the 30,000 barrels per day capacity flow station.
The oil workers at the onshore facility connecting oil wells within the swamps and creeks at Koluama were escorted out of the area by speedboats by armed security men.
What a community leader in Koluama is saying
A community leader in Koluama 1, Chief Young Fabby, on Tuesday, said that the facility was shut to protest the oil firm’s insensitivity to its social obligations to the people.
He said the aggrieved community shut operations at the flow station on Monday and sacked oil workers deployed to run the oil facility following Conoil’s failure to renew the Memorandum of Understanding (MOU) which expired in 2020.
Chief Fabby said, “The Koluama clan was compelled to take the action following the refusal of the oil company to dialogue on several outstanding issues amongst which is the MoU which expired for more than one year.
“All entreaties through established channels have been rebuffed. Secretary of Koluama kingdom Oil/Gas Committee, Jonathan Amabebe, had drawn attention to the refusal of Conoil and this is regrettable,” he said.
Although officials of Conoil have yet to react to the incident, the Commandant of Nigeria Security and Civil Defence Corps (NSCDC) in the state, Mrs Christiana Abiakam-Omanu, confirmed the development.
She said that members of Conoil’s host communities were at the oilfield to protest, but that only the operator of the field (Conoil) could confirm if it was shut or not.
What you should know
- Conflicts between the oil-producing communities in the Niger Delta region of the country and the oil-producing firms have become quite regular and is a huge challenge to uninterrupted oil production in that area.
- The complaints by the host communities against these oil firms include environmental degradation, incessant oil spillages, neglect of their corporate social responsibilities and so on.
- This has often led to disruption/ stoppage of operations, closure of flow stations and rigs, vandalism/destruction of facilities, molestation/abduction of oil company staffs, temporary seizure of oil company assets like vehicles and boats and so on.
AFEX Commodities Exchange announces the listing of cashew on its trading platform
AFEX’s addition of cashew is to diversify investment options available on its exchange.
AFEX Commodities Exchange Limited has announced the listing of Cashew on its platform, in a bid to diversify available investment options and create more wealth.
This is according to a disclosure issued by AFEX today and seen by Nairametrics.
According to the notice, the addition will help to expand the list of existing commodities available at the exchange which include;
- Paddy Rice
In addition, the Exchange notified the investing public that the new commodity will be made available on the exchange’s trading platform, ComX.
Why it matters
AFEX Commodities Exchange in the recent disclosure rationalized the need to list cashew on its platform. It hinged this on the lucrative nature of the commodity, noting that it has a lot of untapped potentials.
According to the disclosure, cashew exports in Nigeria are highly profitable, with a yearly export volume of over $167 million, and untapped yearly potential of over $115.8 million. Therefore, listing the commodity on the AFEX Exchange provides opportunities for investors to gain exposure to the commodity and maximize their returns on investment.
What you should know
- AFEX Commodities Exchange had earlier announced the issuance of its debut Warehouse Receipt Backed Commercial Paper- The first of its kind in Africa.
- AFEX Commodities Exchange is Nigeria’s first licensed private commodities exchange established in 2014. It provides a final resting place for commodities using a three pronged approach of production region, logistics differential and final commodity price.
- ComX is the proprietary trading platform of AFEX. It serves as a market for investors, financiers as well as other market participants.
- AFEX Commodities Exchange posted a turnover of N11.46 billion for Q4 2020, indicating an increase of 5,228.4% QoQ.
Nairametrics | Company Earnings
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