Following the Central Bank of Nigeria (CBN)’s suspension of nine banks (now eight as United Bank for Africa (UBA) has been cleared) from participating in foreign exchange (forex) transactions, investors on the floor of the Nigerian Stock Exchange (NSE) continued to dump the shares of the suspended banks. Consequently activity on the banking sector was affected negatively.
The restriction order was announced Tuesday last week by the CBN as part of measures to compel management of the banks to remit all Nigerian National Petroleum Corporation (NNPC) funds in their vaults to a dedicated Treasury Single Account (TSA) with the apex bank.
After the trading session on Friday, investors in the week under review exchanged a total of 607.59 million shares valued at N5.86 billion on banking sector contrary to a 795.31 million shares worth N5.78 billion exchanged in 5,978 deals the previous week.
Specifically, Diamond Bank Plc, First City Monument Bank Plc (FCMB) and Sterling Bank Plc were the most affected on Wednesday in the week under review as investors traded with sentiment.
While Diamond Bank Plc recorded the highest drop in its share price, as investors’ lost 8.94 per cent or 0.11kobo from N1.23 it opened on Wednesday to close at N1.12, FCMB came second after dropping 5 per cent or N0.06 from N1.20 to N1.14. Sterling Bank share price lost 2.91 per cent or N0.03 from N1.03 to N1.00, while Skye Bank Plc depreciated by 1.54 per cent to N0.64 N0.65.
On Thursday, Skye Bank Plc declined more by recording 7.8 per cent drop, closely followed by Fidelity Bank (3 per cent), FBN Holdings (1.9 per cent), Diamond Bank and FCMB (0.8 per cent).
Already, UBA has been re-admitted by the CBN. Heritage Bank and Keystone Bank are not listed on the floor of the Exchange.
In a statement on Thursday, First Bank said: “As you are aware, there have been a number of media reports referencing the temporary suspension of First Bank from the Nigerian foreign exchange market on account of failure to comply with the Treasury Single Account (TSA) policy.”
The statement added: “First Bank wishes to confirm, that it has been and remain in compliance with all tenets of the TSA policy. The bank also wishes to state categorically that there has been full disclosure to the CBN and other regulatory authorities at all times.”
Clarifying its position to customers, Heritage Bank said: “The Central Bank of Nigeria’s recent announcement of temporarily suspending nine commercial banks, including Heritage Bank, from accessing the foreign exchange market is a systemic challenge for the banking sector, which cuts across all banks.
As a financial institution, we have continued to build on foundation of sound corporate; maintained a full disclosure of outstanding TSA funds of the CBN, and worked diligently to fulfil our obligations. We will continue to remit funds towards our commitments to the CBN, even under these challenging market conditions.
“As a customer-eccentric bank, it is necessary to inform our customers of the recent developments in the industry. Be rest assured that we have engaged with relevant stakeholders, with the support of CBN to resolve this industry-wide systemic issue quickly. We understand the importance of helping you as our customers to find foreign exchange to help grow your businesses and promote economic growth in Nigeria.
“We want to guarantee our teeming banking customers that there will be no impact at all. There will be some impact on establishing new trade lines through the foreign exchange market and your relationship manager will be able to help you with best-advice if you need to do this.”