TSA: Banks accuse CBN of discrimination

Okey Onyenweaku and Felix Oleyede

Nigerian Banks have accused the Central Bank of Nigeria (CBN) of deliberately favouring some of the Deposit Money Banks and allowing others to fall into the trap of violating the Treasury Single Account (TSA) guidelines of the Federal Government of Nigeria.

They are of the view that the apex Bank may have paved the way for its favoured financial institutions to return all the funds of the Nigerian National Petroleum Corporation (NNPC)/Nigerian Liquefied Natural Gas (NLNG) dollar before clamping down on the nine banks, which they claimed had failed to abide by the directive of the federal authorities.

Sources close to the banks told Business Hallmark that they are surprised at the behaviour of the apex bank as it continues to favour some financial institutions.

The source said that the CBN’s biases was clear and queried why would act at the time it acted after pandering in favour of some of the banks.

The CBN had last Tuesday, barred nine banks from trading in forex for failing to return a total of $2.334billion of Nigerian National Petroleum Corporation (NNPC)/ Nigerian Liquefied Natural Gas (NLNG) dollar deposits to the Federal Government’s Treasury Single Account (TSA) domiciled with them in accordance with last year’s directive of the Presidency.

The affected banks are the United Bank for Africa (UBA) Plc – $530 million, First Bank of Nigeria (FBN) Ltd. – $469 million, Diamond Bank Plc – $287 million, Sterling Bank Plc – $269 million, Skye Bank Plc -$221 million, Fidelity Bank Plc – $209 million, Keystone Bank Ltd. – $139 million, First City Monument Bank (FCMB) Ltd. – $125 million, and Heritage Bank Limited – $85.5 million.

More worrisome is that the erring banks may still face the prospect of further financial fines, despite their exclusion from trading from forex yet to be made public.

A few banks have been penalized with hefty fines by the federal government for failing to comply with order to remit all accounts of MDAs to the TSA.

The banks have appealed the sanction by the central bank, saying that the remittances were delayed by the dollar illiquidity in the system while requesting the apex bank to sell them the dollars by debiting their accounts to enable them return the respective amounts to the TSA.

Meanwhile, UBA claimed it has remitted all NNPC funds under its custody,

In a press statement issued Tuesday night, UBA stated that: “Our attention has been drawn to report of the ban of UBA from the foreign exchange market by the CBN over the non-remittance of NNPC/NLNG dollar deposits.”

“We wish to state very categorically that UBA has completely remitted all NNPC/NLNG dollar deposits,” the bank’s corporate communications head, Charles Aigbe, argued in the statement.

Analysts predict that barring nine money deposit banks from participating in the foreign exchange interbank market would worsen the scarcity of dollar situation in the country.

Dr Vincent Nwani, Director, Research and Advocacy, the Lagos Chamber of Commerce and Industry (LCCI) told Business Hallmark that the suspension of the banks would aggravate the existing scarcity of forex and further weaken the naira.

The central bank last November sanctioned First Bank and UBA, which were forced to pay fines of N1, 877, 409, 905.12 and N2, 942, 189, 651.45, respectively for flouting the TSA directives. The penalties represented five per cent of the unremitted funds.

Skye Bank Plc also suffered a similar fate when it was hit with a N4 billion fine, representing 10 per cent of the funds belonging to MDAs.

Other banks that paid fines for TSA infractions last year were Zenith Bank Plc (N60.1m), Guaranty Trust Bank Plc (N60.05m) and Sterling Bank (N13m).

Shareholders are becoming increasingly jittery over the exclusion of their banks from participating in foreign exchange market.

Customers of the banks have also expressed fear that the development may have grave consequences on their businesses if they are no longer able to assess forex from their banks.

The whole industry has been thrown into serious crisis as a result this development.