CBN Designates Eight Banks ‘Too Big to Fail’

The Central Bank of Nigeria (CBN) has designated First Bank of Nigeria Limited, Guaranty Trust Bank Plc (GTBank), Zenith Bank Plc, United Bank for Africa Plc (UBA), Access Bank Plc, Skye Bank Plc, Ecobank Nigeria and Diamond Bank Plc as “too big to fail”, owing to the fact that their failure could pose a systemic risk to the banking industry and the larger economy. The eight banks alone account for 75 per cent of the banking sector in terms of earnings, profitability assets, customer deposits and branch networks. Owing to their size and importance, THISDAY learnt that the CBN has adopted a more robust regulatory regime to monitor and scrutinise the eight banks, in order to ensure that they are healthy.
In furtherance of the objective, the central bank has asked the eight banks to increase their capital base in order to give them a buffer against internal and exogenous shocks. The Deputy Governor (Operations), CBN, Mr. Tunde Lemo, who confirmed the development, described the financial institutions as systemically important because of their size.
Lemo pointed out that any bank that accounts for five per cent of the banking system is systemically important. “What that means is that we have to take a closer look at them. It doesn’t mean that they are weak, it is just that we have to focus more attention on them because, God forbid, if something happens to any of them, it may affect the entire system,” Lemo said. When quizzed on the capital base that the respective banks are expected to have, the CBN deputy governor said: “It is not that they were asked to raise their capital base, it is just that when an institution is designated as systemically important, it is required to have more capital.” For Zenith Bank, its recently released results for nine months ending September 30, 2013 showed that its profit after tax stood at N64 billion with loans and advances of N1.1 trillion. The bank also reported gross earnings of N255 billion at the end of September 2013, up by 11 per cent from the N229 billion recorded in the corresponding period in 2012. Zenith Bank’s total market capitalisation on the
Nigerian Stock Exchange (NSE) stood at N675.024 billion yesterday. Also, GTBank’s profit after tax stood at N69.24 billion at the end of September 2013, as against N63.734 billion earned in the same period in 2012. GTBank’s total assets also stood at N1.875 trillion, compared to the N1.73 trillion as at December 2012. Its share price on the NSE closed at N25.99 per share yesterday, giving it a market capitalisation of N764.916 billion. In the same vein, UBA’s unaudited results for the nine months ending September 30, 2013 also revealed that its profit after tax climbed to N37.37 billion. With a market capitalisation of N257.255 billion on the NSE, its share price closed at N7.80 per share. For Access Bank, its recently released unaudited nine-month results showed gross earnings of N154 billion at the end of September 2013. Its profit before tax also stood at N35 billion. Access Bank’s market capitalisation on the NSE was N213.269 billion yesterday, while its shares closed at N9.32 per share. Skye Bank Plc’s gross earnings rose to N102 billion at the end of September 2013, while its profit after tax stood at N11.650 billion. Diamond Bank also posted a profit before tax of N25.6 billion, while its total assets stood at N1.377 trillion at the end of September 2013.
First Bank of Nigeria Limited is yet to release its third quarter results because of its holding company structure.

NEITI, PPPRA Trace 'Missing' N4.4bn Subsidy Money to CBN

CBN Building


The Nigeria Extractive Industries Transparency Initiative (NEITI) and Petroleum Products Pricing Regulatory Agency (PPPRA) have finally found the allegedly missing N4.423 billion petroleum subsidy money that was recovered as over-payment to 10 oil marketers.

Following the protracted dispute between the two organisations over the said fund, both agencies yesterday in a joint statement signed by their Executive Secretaries, Mrs. Zainab Ahmed for NEITI and Reginald Stanley for PPPRA, stated that the missing fund had been reconciled and traced to the Petroleum Support Fund (PSF) account domiciled with the Central Bank of Nigeria (CBN).

Both agencies had been at loggerheads over the funds, which findings from NEITI’s oil and gas audit report for the years 2009 to 2011 disclosed could not be accounted for by PPPRA.

The audit report had asked PPPRA to account for the money, which it recovered from the marketers as over payment but did not show evidence of remitting to the federation account, while PPPRA on the other hand denied knowledge of such fund and asked NEITI to among other things clarify information in its audit report before presenting to the public.

The statement confirming the new development, stated that the money was traced to the PSF within the CBN, stating that PPPRA had also agreed to subject itself to further discussions to address other outstanding issues in the 2009 to 2011 audit report.

“Following the sustained media engagement between PPPRA and NEITI, over the recently released 2009 to 2011 industry audit in the oil and gas sector, and the findings as they affect PPPRA, a joint meeting between the two agencies was held today, August 13, in Abuja, with the managements of the two agencies in attendance.

"The joint reconciliation meeting, after exhaustive and useful deliberations, resolved as follows; that the sum of N4.423 billion in dispute has been reconciled and traced to the PSF account domiciled with the CBN. That there is nothing outstanding against PPPRA on the said amount,” the statement read.