Banking: FG Finally Makes Lagos, Commercial, Financial Capital of Nigeria, Takes Tough stands Against Banks

By Elizabeth Chukwuma and Lateef Adegbite

Ali Ndume, Senate Chief Whip, and other northern political gladiators who are opposed to the relocation of some operations of the Central Bank of Nigeria, CBN, under the close watch of Olayemi Michael Cardoso, may have to do a rethink.

The Senate Chief Whip had said that that Cardoso, the CBN, governor and his management team decision to relocate some of the apex bank operations to Lagos, the nation’s commercial nerve center was influenced by ‘’political cartels’’ within the Bola Ahmed Tinubu’s government who are misleading him on implementing bad policies that would further counter-develop the northern part of the country.

The Borno state born politician may have won the heart of  other Senators from the region, who in the guise of  the Northern Senators Forum, NSF,  were said to have threatened  to drag the CBN and the government  to Court of the relocation  of some apex bank offices to Lagos  were not reversed.

 Mohammed .A. Yakasai, a retired Director, in CBN, had said that there was no basis for northern political gladiator’s opposition to the relocation of some operations of the bank to Lagos. The former CBN, retired Director was said to have told those that cares to listen that the planned relocation of some units of the apex bank was not the initiative of the current governor of the CBN.

Sanusi: Former Governor of CBN, who initiated moves to relocate some CBN, Departments to Lagos

The former apex Bank Director had said that the plan had been on drawing board since the era of Sanusi Lamido Sanusi, the deposed Emir of Kano, as the governor of the bank. According to him, it was the blueprint of the then Sanusi’s regime because they believe that the Federal Capital Territory, FCT, of the bank ,  cannot accommodate  everything.   

The former CBN governor may have prepared the ground to relocate the departments that are supervisory in nature to Lagos for effectiveness and to minimize cost of operations. It was not surprising why the Sanusi’s Administration in the bank demolished the ban old head office in Lagos and built a modern a befitting modern office building to accommodate all the departments that would be relocated to the country’s Finance and Commercial Headquarters.

Chukwuma Soludo,a Professor of Economics , an erstwhile governor of the apex bank and now governor of the south eastern state of Anambara and Godwin Emefiele , immediate past governor of the bank  could keep to the vision of relocating the approved departments  slated to move to Lagos   because of the rigours  of Lagos  . He had alluded to the fact that what the Nigerian apex bank has done was not different from what obtains in other parts of the global economy.

 He had cited the North American country of the United States, US, where Washington DC.  Is the political Capital of the country whle New York is the Commercial and Financial capital, Asian countries of China, where Beinjing is the country’s capital while shanghai is the commercial and Finance capital. 

The situation is not different from Canada, a neighbouring country of the US,  where Ottawa is the capital  and Toronto is the business and financial capital of the country or the South Africa, in the African Continent where and Financial capital. Pretoria is the capital and Johannesburg is the country’s commercial. There is no gain saying the act that all the nation’s 23  major Financial institutions like Access  Bank forly Skye Bank,Bank,  Citibank,  Ecobank Nigeria plc,  FCMB,  Fidelity,  First Bank plc, Globus Bank Limited, GTB, Heritage Banking  Company  Ltd,  Key Stone Bank , Polaris formerly Skye Bank, Providus Bank, Stanbic IBTC  Bank Ltd,  Standard Chartered Bank of Nigeria Ltd and Sterling  Bank plc, have their Head offices in the sprawling city of Lagos, as obtained in other world world major Commercial centres.

Others like  Sun Trust Bank Nigeria Limited,  Tita Trust Bank, Union Bank of Nigeria  plc, UBA plc,  Wema Bank and Zenith including Unity Bank plc, also have their Head offices in the south  west state  city of Lagos, where there  there are two major seaports, Lagos ports of Apapa and Tincan Island and an international airport including a major international border route , at Seme,  a border community between Nigerian and the neighbouring Benin Republic, described as the busiest in the African Continent.

 This may have informed why Yakasai, the former CBN, Director, who could not hide his feelings would want the likes of  Senator Ndume, a ranking Senator of Federal Republic of Nigeria, who would want northers to believe that he is fighting for their interest not to ethnicise a pex bank’s Management decision to relocate  the banking supervision and other Financial Institutions Supervisions   operations, Consumer Protection Department , Payment System Management  Department  and Financial Policy Regulations  Department but to support it.     

 Many see the relocation of the penciled down departments of the apex Bank as the beginning of restoration of discipline in the system.  This is evident with the recent directive of the CBN Authorities to the Money Deposit Banks, MDB, to sell their excess US dollar stock put at about $5 billion. The apex Bank was said to have given the Banks a deadline of Thursday April 1, 2024, to the Deposit Money Banks, DMBs to comply with the directive which was said to have been geared to stabilize the country’s volatile foreign exchange rate. The apex Bank Leadership were said to have warned the DMBS against hoarding the excess foreign currencies for profit.

 Going by officials report of the CBN,  some  Commercial  banks ,  were instrumental to the continued  slump of the naira against the US dollar and other major foreign currencies including the British pound sterling  ‘’hold long-term  foreign exchange positions to enable them profit  from the volatile movements of the country’s foreign  rates at both the Autonomous and the Parallel, popular, Black market foreign exchange rate market markets.

The apex Bank could enforce the newly introduced set of guidelines aimed at reducing the risks associated with these practices that had been the norm over the years in the Banks because the relevant Departments that could do are now on ground in Lagos, the nation’s Commercial and Finance Capital.     

The  MDBs were said to be making huge profits from the country’s volatile movement in foreign exchange sales over the years may have haven known that that the game is up and to avoid losing their operating License over the unwholesome practice in the sale of Forex when the Senate’s Committee on Banking , Insurance  and other Financial  Institutions  invited Cardoso, CBN, governor to appear before it over the sharp decline  of the Local currency  in the country’s foreign exchange market on Tuesday,  January, 30, 2024.

Cardaso” Governor, CBN

With  the CBN, official window of selling forex reporting  that the naira had slumped to an  all-time low as it has hit  N1,520 to the US dollar  on Wednesday , January 31, 2024,  may have given Cardoso and his Management team room   to quickly find answers and solutions   to stabilize  the naira  and restore confidence in the nation’s economy to avid playing into the hands of the Senate  and Hajia Hadiza Bala Usman, a former Managing Director of Nigerian Ports Authority, NPA, during Buhari’s Administration, and now pecial Adviser to President  Tinubu on Policy and Coordination , who has the mandate to assess and evaluate  the performance of the Political appointees serving in the MDAs including the ministers.

It was not surprising why the Apex  bank  had  ordered the Deposit Money Banks, DMB, to sell  their excess dollar stock  put at about $5 billion latest on Thursdy, February 1, 2024. The CBN Authorities may have taken the bold initiative as part of moves to stabilize the nation’s forex market. The Banks regulatory Authority was said to have warned the operators against ‘’hoarding excess foreign exchange currencies for profit’’.

The DMBs, may have known that the game is up when each got a copy of the CBN circular titled, ‘’ Harmonisation of Reporting Requirements on Foreign Currency Exposures of Banks and further warning the banks   against ‘’reporting false exchange rates.  The CBN circular, which was said to have been signed by  Hassan Mahmud,  Director of Trade and Exchange and Rita Sike, Representative  of the  Bankerss’ Bank Director , Banking Supervision , had noted  with concern  ‘’the growth  in foreign  currency exposures  of the  Banks  through their  Net Open Position , NOP, .

The CBN , top officials who may have spoken the mind of the Cardoso, the governor, noted  that NOP,  has created  an incentive  for the Commercial Banks   ‘’to hold  excess long  foreign exchange positions ,  which exports the Banks  to foreign   fraudulent practices and  risks.

The apex Bank was said to have also issued prudential requirements that must follow religiously without cutting corners. A top of the CBN, disclosed that a key focus of these prudential requirements is the management of the NOP which measures the difference between the Bank’s foreign currency assets and whAt it owes companies and individuals in foreign exchange currencies.

Cardoso and his Mnagement Team may have dampened the enthusiasm of the Commercial Banks, which are dealers of the country’s forex when it directed that ‘’the NOP must not exceed 20% short or 0% long of the Bank’s shareholders’ funds. The apex Bank was said to have made t categorically clear to the Banks that the calculation   must be done  using ‘’Gross Aggregate Method ‘’, which Financial analyst had said provides  a comprehensive view  of the  Bank’s  foreign currency exposure.

The apex Bank Leadership may have dampened the enthusiasm of the Banks which are always making huge  profits from forex sales  when the Institutions  with current  NOPs  exceeding the Limits that ha been set by it are required  ‘’to adjust their positions  to comply  with the new regulation  by Thursday, February 1,  2024.

It further stated that Banks must calculate their daily and monthly NOP and foreign Currency Trading Position using the template provided by the CBN.   This may have informed why there were huge forex transactions  which had been experiencing a free fall since May 29, 2023, when Bola Ahmed Tinubu announced the unification of the  the official and parallel foreign exchange market rates that the hit the all –time low of N1,520.00 to the US, dollar.

In a related development, Patience Oniha, Director General, Debt Management Ofice, DMO, had said that the Nigerian government will soon get a breather from the foreign and local debt quagmire put at about $114.350 billion . This because  Tinubu’s Administration, according to the DMO,  Chief Executive Officer, CEO,has made total repayment of $3.070  billion  in debts  owed to the Asian country of China, t World Bank and other othermulti-lateral Financial Institutions, particular, the Paris Club and  London Club.

 In sustaining the repayment  of the country’   foreign debts and funding the official foreign exchange window,  President Tinubu, who believes that the Nigerian National Petroleum Corporation , NNPC, now baptized as Nigerian National Petroleum Company Limited, NNPCL,  with the passage of the Petroleum Industry Bill, PIB, by the National Assembly which was signed into Law by former President Buhari in August 2020, may he has mandated the CBN to take over   responsibility  of Crude Oil Sales  from NNPCL. 

The oil octopus, which over the years   has maintained sole control over the country’s crude oil sales and forex only rendered accounts to the Federal government.    Under the new platform,   which had been described by former Vice Atitku Abubakar, during Olusegun Obasanjo, as ‘’illegal’’.  Under the new arrangement which  had  made it clear  that NNPCL, must  provide all receipts of payments of crude oil sales to the apex  Bank ‘’for proper vetting and documentation’’ . The new policy arrangement, according to an insider was said ‘’to have effectively blocked   the gap in the country‘s crude oil sales and undeclared receipts as CBN.   

.This may have informed why Cardoso, the CBN, governor could beat his chest that   ‘’the coordinated effort  will greatly enhance  the Commercial Banks foreign exchange flows  and further boost the country’s freign exchange reserves’’.  This is evident with the  recent release  of $500 million  to various  sectors of  the economy by the CBN to address  the backlog  of verified  forex  transactions.`

The apex Bank  was said to have  also released  $64.44 million  to settle all  the verified debts accumulated by the Buhari’s Administration in the nation’s aviation sector, which an insider had brought  the total clearance  of all  verified  foreign airlines claims to $136.3 million,

Unconfirmed report  had said that about $700 million  of the Foreign airlines claims  remains blocked  with he the DMBs,  awaiting to be clered.                

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