Banking
Ecobank Denies Manipulating Figures to Boost Financial Results
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.”
By Aduragbemi Omiyale
On Thursday, January 30, 2025, the board of directors of FBN Holdings Plc will gathered for a meeting, a statement signed by the company secretary, Mr Adewale Arogundade, has disclosed.
This is coming amid the boardroom crisis rocking the financial institution over the leadership of the board headed by popular businessman, Mr Femi Otedola.
Mr Otedela, who sold his stake in Forte Oil, now known as Ardova Plc (AP), a few years ago to invest in the power generating sub-sector through Geregu Power Plc, acquired some shares in FBN Holdings.
Soon after his acquisition was announced, a leadership tussle erupted between him and Mr Tunde Hassan-Odukale, extending to Mr Oba Otudeko.
Some days ago, some shareholders of the company called for the removal of Mr Otedola as chairman of FBN Holdings through an Extra-Ordinary General Meeting (EGM).
The leadership crisis triggered the firm to assure its customers that its operations will not be affected by happenings in the boardroom.
“This matter does not in any way impact the operations of the company, and all the businesses within the Group continue to provide uninterrupted services to its customers.
“We assure our valued customers, shareholders, investors, other stakeholders and the general public that we are taking all necessary steps to protect the interests of the company and its subsidiaries.
“The Group’s performance continues to improve, resulting in a higher market capitalisation even as we work towards surpassing the regulatory minimum capital well ahead of the deadline,” parts of the statement read.
As the company makes efforts to manage the situation, members of the board will meet by the end of this month to “consider its unaudited accounts for the year ending December 31, 2024, on Thursday, January 30, 2025.”
In the notice signed by Mr Arogundade, FBN Holdings said its closed period, which commenced on Wednesday, January 1, 2025, “will continue until 24 hours after the company’s unaudited accounts and 2024 audited financial statements are filed via the issuer’s portal of the Nigerian Exchange (NGX) Limited, in line with Rule 17.18(a) Closed Period Rules, Rulebook of the Exchange, 2015 (as amended).”
A closed period is a timeframe when those who have privileged information about the financial statements of a firm within the organisation are prohibited from trading securities of the company at the exchange.
This is put in place to prevent them from having an undue advantage over shareholders not having any business dealings with the organisation.
By Adedapo Adesanya
A Nigerian digital lending fintech, Allawee, has collaborated with Mastercard to launch a credit-building card designed to enhance financial access for federal civil servants and National Youth Service Corps (NYSC) members.
This product, facilitated by a secure Mastercard platform and issued in collaboration with Providus Bank, and Remita, provides instant access to credit and financial flexibility to over 720,000 federal civil servants and NYSC members all through the Allawee app.
Despite Nigeria’s significant economic potential, over 70 per cent of bank account holders lack access to credit, according to the National Bureau of Statistics (NBS).
The Allawee credit card promises to address this gap, offering a solution that caters to the unique financial needs of Nigerians.
Nigeria as a market is dominated by debit and prepaid cards, so this initiative aims to promote responsible credit usage, combines seamless digital onboarding, user-friendly features, and responsible credit management tools in one platform.
Launched in December 2024, the Allawee credit card supports the Nigerian government’s objective of increasing credit availability to 50 per cent of working Nigerians by 2030. The card offers a secure and seamless way to access credit while helping users build a credit profile, aligning with Mastercard’s mission to drive financial inclusion.
“We are thrilled to collaborate with Allawee on this innovative credit solution, which aligns perfectly with Mastercard’s commitment to bring one billion people into the digital economy by 2025.
“The Allawee credit card provides instant access to credit while also empowering civil servants and NYSC members in Nigerian to build their creditworthiness, further advancing financial inclusion across the country,” said Mrs Folasade Femi-Lawal, Country Manager and Area Business Head for West Africa at Mastercard.
Users can download the Allawee credit card, apply for a loan, receive approval, and start transacting immediately. Once approved, the credit is disbursed directly onto a co-branded card, giving users full control over their funds. The card allows for flexible usage across POS terminals, ATMs, and online transactions, enabling greater financial freedom.
“We launched this card to help Nigerians gain access to instant, affordable credit while building their credit history. Whether it’s handling daily purchases or taking care of life’s emergencies, our customers now have an easy way to cover expenses.
“With Mastercard, we are giving them the convenience to spend their credit at millions of retail locations in Nigeria and around the world, both online and in-store,” said Mr Ikenna Enenwali, CEO of Allawee.
The Allawee credit card offers instant credit access through a fast, secure, and fully digital application process, with wide acceptance at Mastercard online and physical retail locations globally. Customers benefit from flexible repayment options, choosing their credit limits (up to ₦1,000,000) and repaying in installments over four months.
By Adedapo Adesanya
The Nigerian Communications Commission (NCC) has authorised telecommunications companies to disconnect the Unstructured Supplementary Service Data (USSD) codes assigned to nine financial institutions over a N200 billion debt.
The directive signed by NCC’s Director of Public Affairs, Mr Reuben Muoka, on Tuesday and obtained by Channels Television, noted that the affected banks are to pay the outstanding debts by January 27, 2025, or risk losing access to their USSD codes.
According to the NCC public notice, nine out of 18 financial institutions had not complied with regulatory directives.
The affected financial institutions include Fidelity Bank Plc, First City Monument Bank, Jaiz Bank Plc, Polaris Bank Limited, Sterling Bank Limited, United Bank for Africa Plc, Unity Bank Plc, Wema Bank Plc, and Zenith Bank Plc.
It said while other banks have cleared their debts, the total amount initially owed by the financial institutions was reported to exceed N200 billion.
According to the NCC, some of the invoices have remained unpaid since 2020, and has been a source of tussle for years.
“By the information made available to the commission as at close of business on Tuesday, 14th January 2025, of a total of 18 financial institutions, the nine institutions listed below have failed to comply significantly with the directives in the Second Joint Circular of the Central Bank of Nigeria and the commission dated December 20, 2024, for the settlement of outstanding invoices due to MNOS, some since 2020,” a part of the notice read.
The affected USSD codes include *770#, *919#, and *822#, among others, could be reassigned to other applicants if the debts remain unresolved.
The regulator noted that banks’ failure to comply with the CBN-NCC joint circular also means that they are unable to meet the good standing requirements for the renewal of the USSD codes assigned to them by the commission.
It added, “In fulfilment of its consumer protection mandate, the commission wishes to inform consumers that they may be unable to access the USSD platform of the affected financial institutions from January 27, 2025.”
The NCC emphasised that the financial institutions had been duly notified of the need for immediate compliance and warned that consumers may face service disruptions if the issues remain unresolved.
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