Abuja, August 24, 2016 – The Central Bank of Nigeria (CBN) has banned nine deposit money banks (DMBs) from the foreign exchange market for withholding more than $2 billion belonging to the Nigerian National Petroleum Corporation (NNPC) from the Treasury Single Account (TSA).
The banks are First Bank of Nigeria (FBN)- $469m; Diamond Bank Plc-$287m; Sterling Bank Plc-$269m; Sky Bank Plc -$221m; Fidelity Bank -$209m; Keystone Bank- $139; First City Monument Bank (FCMB) -$125m; and Heritage Bank-$85m.
The bank said in a circular signed by its Acting Director, Trade & Exchange, W.D. Gotring that President Muhammadu Buhari has been briefed on the breach by the banks, and the banks have all been mandated to move the monies to the TSA before any consideration for their re-entry into forex trading.
“The CBN has noticed that some Authorised Dealers have continued to buy and sell foreign exchange referred to as ‘free funds’ despite the provision of the circular of March 4, 2004 on the subject,” he said and cautioned the lenders that their action was a breach of extant regulations.
“Against the background, authorised dealers are to note that dealing in foreign exchange without appropriate documentation, which includes relevant entries, blotters, physical documents and non-disclosure to the Regulatory Authorities is a breach of extant regulations”. Accordingly, authorised dealers shall deal in eligible transactions only, and not engage in any foreign exchange transactions on terms inconsistent with the extant laws and or regulations,” he said.
The banks, further findings showed, are engaging in round tripping, taking advantage of the huge forex gaps between the official and the parallel markets.
