Banking

Ecobank Denies Manipulating Figures to Boost Financial Results

Published

6 years ago

19/12/2018

ecobank Ecobank Transnational Incorporated ETI

By Dipo Olowookere

Togo-based Ecobank Transnational Incorporated (ETI) has refuted a media report claiming it tampered with its accounts in order to make shareholders feel the company was doing well.

In a report by South Africa-based Sunday Times, it was claimed the Financial Reporting Council of Nigeria (FRCN) was already looking into the matter raised by a former CFO of Ecobank’s card division, Altu Sadie, that the financial institution applied incorrect exchange rates, which resulted in it overstating balance sheet items and income statements.

It was reported that the principal manager in the directorate of inspection and monitoring at FRCN, Olumuyiwa Ajibade, confirmed that “The council is working on it (issue). That’s as much as we can divulge at this time.”

Reacting to the issue, Ecobank, in a statement made available to Business Post on Wednesday, December 19, 2018, denied the “unfounded allegations,” urging its “shareholders, creditors, and other stakeholders” to disregard them.

It noted that, “The deterioration of the Naira in 2016 led to the creation of different windows for various segments of the economy leading to foreign currencies being traded in these markets/windows at different rates and thus leading to a multiple exchange rate system in Nigeria.

“The existence of multiple FX markets with different exchange rates as well as the accessibility to such markets necessitates the review of the appropriate exchange rates that entities should use in accounting for and reporting its foreign currency transactions as well as foreign investments into Nigeria under International Financial Reporting Standards (IFRSs). IAS 21 ‘The effects of changes in foreign exchange rates’, requires that a foreign currency transaction should be recorded at initial recognition in the functional currency using the spot exchange rate at the date of transaction (IAS 21, paragraph 21). IAS 21 paragraph 8 defines the spot exchange rate as the exchange rate for immediate delivery. Where a country has multiple exchange rates, an official quoted rate should be used as the spot rate.

“Nigeria currently has multiple exchange rates and judgment is required to determine which exchange rate qualifies as a spot rate that can be used for translation under IAS 21. In determining whether a rate is a spot rate, an entity is required to consider whether the currency is available at an official quoted rate and whether the quoted rate is available for immediate delivery.

“The CBN official rate, Nigeria Inter-bank Foreign Exchange Fixing (NIFEX) rates and the Nigerian Autonomous Foreign Exchange Fixing (NAFEX) rates are all quoted and can be used to convert or translate foreign currency transactions. Thus, the CBN official, NIFEX or NAFEX rates all technically comply with the requirements of IAS 21.

“As a policy within Ecobank Group, we use the official rate in the respective jurisdictions in which we operate to translate the results and balances of our affiliates into the Group’s reporting currency, the US Dollar. As a result, and in exercising the judgment allowed for within IAS 21, the Group currently uses the CBN official rate which is one of the 3 quoted rates and the official exchange rate according to the CBN.

“The use of this rate complies with IAS 21 and has been publicly disclosed to the market in all our press releases along with the impact of using the other available rates.

“This is done so that users of our financial statements can easily quantify and adjust for the use of the other exchange rates if necessary. Most of our peers in Nigeria used the CBN rate in 2017, before switching to NIFEX towards the end of the year. In 2018, they have gradually settled at a blend of both NIFEX and NAFEX.

“The use of the CBN rate is in accordance with the group’s policy which is to apply the official rates. This policy and its application are compliant with IFRS and specifically IAS 21.

“To enable comparison and to ensure that the user of the group’s financial statements is not prejudiced in any way, we have adequately disclosed in our various press releases and investor presentations the fact that we have used the CBN official rate in addition to disclosing the expected impact on our results of using alternative available rates.

“At its November board meeting, the Board of ETI approved the adoption of the NAFEX rate as the rate to be used for the translation of our operations in Nigeria. The change has been necessitated and approved in response to developments in the industry especially with the ETI’s peers moving away from the use of the CBN official rate.

“Ecobank Group adopted IFRS 9 as issued by the IASB in July 2014 with a date of transition of 1 January 2018, which resulted in changes in accounting policies and adjustments to the amounts previously recognised in the financial statements.

“Similarly to our peers in Nigeria, as well as other African and global banks, and, as permitted by the transitional provisions of IFRS 9, the Group has elected not to restate comparative figures. Adjustments to the carrying amounts of financial assets and liabilities at the date of transition were recognised in the opening retained earnings and other reserves of the current period. Overall, the adoption of the standard resulted in the group recording higher impairment allowance than that recognised under IAS 39. This had a negative impact on the group equity by $299m.

“The main drivers for the significant increase in IFRS 9 impairment figures when compared to IAS 39 impairment figures are:

• Replacement of the emergency period under IAS 39 with 12 months ECL on all exposures under IFRS 9.

• IFRS 9 introduces the stage 2 bucket where higher impairment (Lifetime losses) is recognised for facilities with significant increase in credit risk. Under IAS 39, same assets were classified as performing with minimal impairment recognised.

• Off balance sheet exposure & undrawn balances: Under IAS 39, impairment was not required to be recognised on these items, however, IFRS 9 requires that impairment provision on these items is calculated.

• Other financial instruments: Historically very little or no impairment has been held on non-customer loans/ instruments such as placements with other banks, government treasury bills and bonds, corporate bonds, items in the course of clearing and other debtors. These are now clearly within the scope of IFRS 9 and impairment has been computed on these.

“IFRS 9 2014 does not require restatement of comparativeperiod financial statements except in limited circumstances related to hedgeaccounting (not applicable to Ecobank Group) or when an entity chooses torestate (the Group has not, nor have most of its peers).

“The standard requiresthat where comparative periods are not restated, the difference between theprevious carrying amounts and the new carrying amounts be recorded in openingretained earnings or other components of equity, as appropriate. This is theapproach that has been followed by the Group and as a result the transitionimpact of $299m has been recognised in equity.

“In conclusion, we can confirm to allstakeholders that there were no misstatements in our financial statements asalleged in our financial statement for the year ended 31 December 2017 or inour three quarterly reports released during the 2018 year.

“We also note thatthis unfounded allegation was made by a former employee of the Group who iscurrently in court claiming payment of 13 years’ salary for an alleged unlawfultermination of his employment contract.”

Banking

Seven Innovators Share N145m at 2024 Wema Bank Hackaholics

Published

28 minutes ago

29/11/2024

Modupe Gbadeyanka

By Modupe Gbadeyanka

About N145 million was won by seven innovators at the grand finale of the Hackaholics 5.0 organised by Wema Bank Plc in Lagos, with the overall winner of the contest, Feegor, going home with N50 million for its innovative B2B wholesale marketplace and SaaS platform.

Feegor empowers small businesses to discover, negotiate, and source goods from verified suppliers while accessing credit through a Buy Now Pay Later (BNPL) model.

The first runner-up, Empayment AI, got N35 million for its AI-powered invoice discounting platform, revolutionizing how businesses manage payments.

Bloom Beauty, the second runner-up, was awarded N20 million for its personalized, AI-curated solutions that are transforming the beauty industry.

In the women-led category, MyTherapist secured the position of first runner-up, earning N12 million. MyTherapist connects users with mental health professionals, providing accessible and affordable therapy solutions for emotional well-being.

Meanwhile, MyItura, an innovator delivering remote healthcare services, clinched the position of second runner-up in the women-led category, receiving N8 million.

Both Northino and University X earned honourable mentions at the grand finale, each receiving N10 million. Northino was recognized for bridging traditional knowledge and modern technology through digital skills training for African native speakers, while University X was impressed with its transparent, all-encompassing platform for tertiary education management.

“We are delighted to celebrate the brilliance of our youth through the Hackaholics initiative. At Wema Bank, we are more than a bank; we are enablers of dreams and drivers of transformation.

“When I stood here earlier, the total prize money was N75 million. But, inspired by the potential we saw, we decided to increase the total prize pool to N145 million.

“Wema Bank’s legacy of 79 years remains rooted in innovation, and with initiatives like Hackaholics, we continue to empower lives and shape the future,” the chief executive of the lender, Mr Moruf Oseni, stated.

Also, his counterpart at Feegor, Ugonna Ginigeme, said, “I feel very grateful to God, my team, and everyone who has been part of this journey. Winning among so many great startups and entrepreneurs is humbling.

“I sincerely thank the MD, Wema Bank, and its management for this incredible opportunity. These are still early days, but we are determined to keep working, building, and creating a positive impact for SMEs and the Nigerian economy while building an all-around successful company.”

Business Post gathered that this year’s Hackaholics stood out with a record-breaking 3,500 applications from across Nigeria. From this pool, 10 finalists showcased innovative solutions addressing real-world challenges, ranging from education accessibility to sustainable agriculture, healthcare, and more.

Banking

CBN, Fagbemi Express Fears Over Rising MDAs’ Judgement Debts

Published

1 hour ago

29/11/2024

Adedapo Adesanya

By Adedapo Adesanya

The Central Bank of Nigeria (CBN) has joined the Attorney General of the Federation (AGF) and Minister of Justice, Mr Lateef Fagbemi (SAN) to raise an alarm over increasing judgment debts against Ministries, Departments and Agencies (MDAs) of the federal government.

The parties expressed this concern while speaking in Abuja at the 2024 roundtable with legal advisers of MDAs.

The apex bank disclosed that in 2015, the number of cases stood at 441, adding that this has since increased exponentially in terms of volume to 1,629 and also in financial value since then.

Among major concerns was that the sporadic rise in judgment debts recovered through garnishee orders by the courts threatened the availability of funds for development in the country.

The Deputy Governor of the central bank for Corporate Services, Mr Bala Bello, traced the increase to the introduction of the Treasury Single Account (TSA) policy of the federal government in August 2015.

Mr Bala, who was represented by the Director for Legal Services at CBN, Mr Kofo Salam-Alada, said: “It is also pertinent to point out that prior to 2015 the number of cases stood at 441 and has since increased exponentially in terms of volume to 1629 and also in financial value, post-2015.

“Our inquisition on this development revealed that the upturn was a result of apathy by most MDAs towards adequately defending their cases in court, which in most cases will result in a judgement against the MDA”.

He stated that to address the issues, stakeholders must demonstrate a commitment towards the adoption of appropriate case management strategies and standardised practices across MDAs.

Mr Bala added that the purpose of the roundtable was to jointly come up with solutions to tackle the disturbing situation.

“We all know that our country Nigeria is faced with dwindling income and escalating expenditure. This also makes it imperative for us all to put on our thinking caps and participate actively in this session in order to safeguard the limited resources available to the country.

“The CBN remains committed to playing its role as banker and providing economic and financial advice to the federal government,” he added.

On his part, the AGF in his speech expressed happiness with the CBN, particularly the legal department of the bank for the initiative and collaborative efforts with the Federal Ministry of Justice to rescue government agencies from mountains of judgement debts.

“Let me reiterate that as legal advisors to the government, we play a pivotal role in shaping the legal landscape of our nation, safeguarding the state’s assets, avoidance of undue embarrassment to government, and ensuring the smooth functioning of public services.

“Our work touches every facet of public life, from reviewing and rendering appropriate and sound legal advice to defending the government’s interests in court. It is important to note that the quality of our work directly impacts the effectiveness and legitimacy of government actions.

Mr Fagbemi, who spoke through the Solicitor General of the Federation and Permanent Secretary, Federal Ministry of Justice, Mrs Beatrice Jedy-Agba, stressed the importance of providing exceptional legal services by approaching each case with diligence, professionalism, high ethics, integrity, and commitment to upholding public policy.

“Let me use this opportunity to state that the government will no longer condone instances of liability arising from compromises, lack of diligent prosecution/defence of cases, or sheer incompetence exhibited by attorneys acting on behalf of the government.

“While we will take measures to recognise and reward diligence, we will not hesitate to apply appropriate sanctions to officers who have failed to live up to the ethics of both the profession and the public service”, he added.

Banking

Zenith Bank Expands Global Footprint With New Branch in Paris

Published

6 hours ago

29/11/2024

Aduragbemi Omiyale

By Aduragbemi Omiyale

A new branch of Zenith Bank Plc has been opened in Paris, the capital of France, by the United Kingdom subsidiary of the Nigerian lender.

This followed the granting of the final approval by France’s banking regulator, the Autorité de Contrôle Prudentiel et de Résolution (ACPR), in September 2024, allowing the branch to commence operations.

Earlier in November 2023, Zenith Bank strengthened ties with France by signing a Memorandum of Understanding (MoU) with the French Government to establish a subsidiary in France.

The MoU was signed in Lagos by the Founder and Chairman of Zenith Bank Plc, Jim Ovia, CFR, and the French Minister for Trade, Attractiveness and French Nationals Abroad, Mr. Olivier Becht during the French envoy’s visit to Nigeria.

The chief executive of Zenith Bank, Ms Adaora Umeoji, described the opening of the branch as “part of the broad strategy of the bank to extend its footprints across the major global financial centres and our efforts at following our customers’ businesses.”

“[The] Paris branch opening underpins the need to serve our customers and bolster trade and finance relationships between our customers in France and other countries. Zenith Bank’s expansion into France is a very strategic move as Nigeria accounts for 20 per cent of France’s trade with Sub-saharan Africa according to the Franco-Nigeria Chamber of Commerce and Industry (FNCCI).

“Having successfully dominated large parts of Anglophone Africa, we will leverage Zenith Bank Paris operations to lead the Francophone market starting from the Ivory Coast and Cameroun where we will be establishing subsidiaries very soon.

“This will facilitate business and trade flows between the African region and France, which is a major business partner to several African countries,” she said.

Also speaking at the opening of the branch on Wednesday, November 27, 2024, at 21 Rue de la Paix, Paris, the Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, said, “I feel that one of the dividends of building trust for Nigerian institutions around the world is this event today, the opening of Zenith Bank in Paris.

“The presence of Zenith here can only help to engender trust of the French business community. They can learn about the opportunities in Africa, and of course, entry into Nigeria can be facilitated. We are happy and we are glad that we are all here to participate in this historic occasion.”