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Banks Agree on N105Bn Sinking Fund to Clean Up Banking Mess

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Deposit Money Banks (DMBs) in the country have agreed to set aside some N105 billion for a sinking fund to cover the cost of cleaning up the system after the 2008-2009 banking sector crisis and further consolidate on the system’s post-crisis stability gains achieved in the industry over the last three years.

They consequently have signed the Resolution Cost Trust Fund Deed which requires them to contribute 0.5 per cent of their total assets and 33 per cent of their off-balance sheet items to the Asset Management Corporation of Nigeria’s (AMCON’s) sinking fund.

The Central Bank of Nigeria (CBN) and banks had in 2011 signed a memorandum of understanding (MoU) on the establishment of the sinking fund, having realised that funds under AMCON’s management and eligible bank assets might not be enough to meet the resolution cost of restoring financial stability.

Going by the DMBs’ total assets which stand at N21 trillion, the sum to be set aside would amount to about N105 billion from the banks to help cover the cost of the banking crisis of two or three years ago.

Mrs. Agnes Tokunbo Martins, CBN director, banking supervision, addressing journalists after the Bankers’ Committee meeting in Abuja yesterday, explained that what had hitherto existed to mitigate the devastating effects of the crisis in the sector was a memorandum of understanding between the CBN and the DMBs on how to clean up toxic loans from their balance sheets, adding that with the signing of the deed, they have now formally agreed on the percentage and other ratios to be used in contributing to the sinking fund.

She said: “One major event that took place today was the signing of the Resolution Cost Trust Fund Deed. This deed is between the banks and, basically, the intention is to cover the cost of the banking crisis that we had about two or three years ago.

“Initially what we had in place was a memorandum of understanding where the banks on their own agreed to contribute 0.3 per cent of their total assets to clean up the banking system at that time.

“But today the deed has been signed and what is in the deed is that the banks have agreed on their own to contribute 0.5 per cent of total assets and 0.5 per cent of 33 per cent of their off-balance sheet assets to the sinking fund.

“The whole intention that is to ensure that going forward the banking system is safe and there is no incidence whereby we have to fall back on tax payers’ money.”

Godwin Emefiele, group managing director, Zenith Bank Plc, Mr.  said the committee would monitor the policy and step up efforts to ameliorate the impact on the economy.

He said the committee was not unaware of the fact that the increase on the CRR would hike both lending and deposit rates but assured customers that the trend would be reversed through renewed deposit mobilisation by banks.

Emefiele said the financial institutions were left with no other option, than to mop up deposits from the private sector, particularly the yet-unbanked segment.

He argued the 50 percent hike on CRR on public funds became necessary to ensure stability in the foreign exchange market as well as avoid the depreciation of the naira.

Also speaking on the cashless policy, Mr. Philip Oduoza, group managing director/chief executive, United Bank for Africa (UBA), said the initiative was on course, adding the banks had continued to reduce the cost of doing business in the banking halls.

He said following the introduction of the cashless policy, electronic transactions had improved significantly to N13.6 billion as at July from about N8.3 billion when the policy commenced.


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FG Makes u-Turn on Bank Account Re-Registration

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Federal government on Friday apologised for asking all account holders in financial institutions in the country to re-register their personal details.

FG makes u-Turn on Bank Account Re-Registration

Recall that the federal government had on Thursday ‎ordered that all persons holding accounts across financial institutions and insurance firms should complete and submit self-certification forms to their respective financial institutions.

The notice issued by the government to that effect read, ‎“This is to notify the general public that all account holders in Financial Institutions (Banks, Insurance Companies, etc.) are required to obtain, complete, and submit Self – Certification Forms to their respective Financial Institutions.

“Persons holding accounts in different financial institutions are required to complete and submit the form to each one of the institutions. The forms are required by the relevant financial institutions to carry out due diligence procedures, in line with the Income Tax Regulations 2019.‎”

The directive raised eyebrows, as account holders already possessed Bank Verification Numbers.

Following widespread condemnation that trailed the directive, the Federal Government backtracked on Friday, saying the fresh guidelin‎e was not for all Nigerians.

The government attributed the development to misinformation.

The clarification issued by the government on Friday read, ‎“We apologise for the misleading tweets (now deleted) that went up yesterday, regarding the completion of self-certification forms by Reportable Persons. The message contained in the notice does not apply to everybody. ‎FIRS will clarify Nigerians on the objectives of the directive.”

Also on Friday, FIRS, in a statement posted on Twitter, explained that the guidelines were only for non-residents, as well as people paying tax in more than one country.

Parts of the FIRS statement read, “The Self Certification Form is basically to be administered on Reportable Persons, holding accounts in Financial institutions, that are regarded as “Reportable Financial Institutions” under the CRS.

“Reportable persons are often non-residents and other persons, who have residence for tax purposes in more than one jurisdiction or country.”

“The information that indicates an account holder is a resident for tax purposes in more than one jurisdiction, is expected to be available to Financial Institutions during account opening processes, for the KYC and AML purpose.”


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Stanbic IBTC Bank Disowns Lagos ATM Fraudster

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Stanbic IBTC Bank PLC has disowned Tope Olajide, 22-year-old fraudster arraigned for theft of customers deposits.

Stanbic IBTC Bank Disowns Lagos ATM Fraudster

The Bank said this in a statement on Wednesday.

The statement said: “The attention of the management of Stanbic IBTC Bank PLC has been drawn to news currently circulating in the media, about the alleged arraignment of staff of the Bank on charges bordering on the theft of customers deposits.

“The Bank would like to clarify that the defendant, a 22-year-old Tope Olajide, IS NOT, and was at no point in time an employee of Stanbic IBTC Bank PLC.

“The alleged culprit was apprehended around 7:30 am, on Thursday, 27 August 2020, by security operatives after he was exposed by CCTV footage using ATM cards he had allegedly stolen and converted, to make withdrawals from the accounts tied to the stolen ATMs.

“The CCTV footage also showed the alleged culprit pretending to assist customers at ATMs whilst also attempting to fraudulently dispossess the customers of their ATMs.

“He was subsequently arraigned before an Ikeja Magistrate Court on Monday, 14 September, for stealing the debit cards of two customers and using them to unlawfully withdraw the sum of N427,000.

“The Bank would also like to implore members of the public to be security conscious when conducting transactions at ATMs. Customers are advised to report any suspicious actions around them to security operatives who are usually stationed around the Bank’s ATMs, when carrying out transactions at any of our ATM locations.

“As an organisation, we hold dear the values of integrity, and we will continue to prioritise the safety of our customers effectively.”


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Buhari Okays Establishment of CBN-Led Infraco

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President Muhammadu  Buhari has approved the establishment of an   Infrastructure Company (Infraco) to be driven by the Central Bank of Nigeria (CBN) in partnership with the African Finance Corporation (AFC) and the Nigerian Sovereign Investment Authority (NSIA).

Buhari Okays Establishment of CBN-Led Infraco

Mr. Godwin Emefiele, CBN governor

This is coming  on the heels of the foreign reserves’ slump to $36 billion following a cocktail of monetary policy interventions by the apex bank to cushion the scathing effects of the COVID-19 pandemic on the economy.

Mr Godwin Emefiele, CBN governor, made these disclosures in Abuja at the annual conference of the Chartered Institute of Bankers of Nigeria (CIBN) with the theme: Facilitating a Sustainable Future: The role of Banking and Finance.

According to him, Infraco would enable the use of private and public capital to support infrastructure investment that will have a multiplier effect on growth across critical sectors.

“This entity would also be able to raise funds from the capital markets and mobilise long term finance to address some of our infrastructure needs, while providing reasonable returns to investors. “We believe this well-structured fund can act as a catalyst for growth in the medium and the long run. The support of the banking community will be important in achieving this objective.

“A well-built infrastructure system, comprising hard infrastructure such as roads and ports, and soft infrastructure such as broadband penetration, can have a multiplier effect on growth by enabling the expansion of business activities in the country”, he explained.

On foreign reserves, Emefiele attributed its crash to the decline in foreign exchange earnings and subsequent adjustments in the value of the naira to the dollar.


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