NSE: Investors dump banks’ shares on CBN’s suspension
Activities at the Nigerian Stock Exchange (NSE), on Wednesday witnessed massive investors’ dumping of banks shares, following the Central Bank of Nigeria suspension of nine lenders from foreign exchange transactions for failing to remit $2. 125billionNNPC’s funds into the Treasury Single Account (TSA) of the federal government.
The CBN had on Tuesday suspended FCMB, First Bank , United Bank for Africa (UBA), Heritage Bank, Keystone Bank, Skye Bank, Diamond Bank , Sterling Bank, and Fidelity Bank for withholding the funds.
Consequently, shares of Diamond Bank fell the most, shedding 7.32 percent in early trade, followed by Sterling bank which dipped by 3.88 percent. FCMB fell 2.5 by per cent, FBN shares shed 1.5 percent, while Skye Bank was down 1.54 percent.
According to the central bank, the banks had failed to remit $2.1 billion, which was the government’s share of dividends from the state-owned gas company NLNG. The banks were supposed to pay the money into the government’s account at the CBN.
President Muhammadu Buhari had last year ordered that all government accruable revenues be paid into one single central bank account as part of his pledge to fight graft.
UBA absolved itself of any wrong doing on the issue saying it did not withheld any government funds.
“We wish to state very categorically that UBA has completely remitted all NNPC/NLNG dollar deposits,” Charles Aigbe, the bank’s spokesman said in an email.
FCMB also said it was working with the central bank to solve the issue, while the other banks either had no immediate comment or were not reachable for comment.
The suspensions came after the CBN tightened restrictions on the flow of dollars to domestic lenders in March. That has forced banks to delay hard-currency loans and trade repayments and increased their risk of default .
Nigeria, Africa’s largest economy, is presently experiencing its worst financial crisis in decades as the slump in oil revenues has significantly affected public finances and the naira. The CBN Governor has also said a recession was likely.
The apex bank had in June unpegged the naira to attract investment, allowing it to fall by 40 percent against the dollar. But foreign investors have remained on the sidelines, making the CBN the main supplier of dollars.
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