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CBN Bars First Bank, UBA, FCMB, Others From FX Market

FX Market

By Dipo Olowookere

Nine commercial banks operating in Nigeria were on Tuesday suspended by the Central Bank of Nigeria (CBN) from the interbank foreign exchange market.

The CBN wielded its big stick on the nine banks because they failed to remit $2.1billion owed to the government.

The affected financial institutions are Diamond Bank, FCMB, Fidelity Bank, First Bank, Heritage Bank, Keystone Bank, Skye Bank, Sterling Bank and United Bank for Africa (UBA).

Business Post learnt that the banks were barred from the market after the CBN tightened restrictions on the flow of dollars to domestic lenders in March. That has forced the banks to delay hard-currency loan and trade repayments and increased their risk of default.

“This is really a function of the dire macroeconomic situation and illiquidity in the FX markets rather than wilful non-compliance by banks,” said Diran Olojo, a spokesman for FCMB, one of the banks.

Olojo said the bank was working with the CBN to resolve the issue.

Reuter reports that the affected banks have failed to remit $2.1 billion, 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 single account at the central bank.

“We could not trade today,” one banker said. “The suspension is meant to pass on the pressure to banks to make payments (but) this is foreign currency and we have to source the dollars.”

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan.

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