Banking
Nigerian Banks’ Eurobonds to Ease FC Maturity Gaps—Fitch
By Dipo Olowookere
The issuance of Eurobonds by Nigerian banks has been described by Fitch Ratings as a step towards reducing maturity mismatches between foreign-currency (FC) assets and liabilities.
The global rating firm, in a statement on Tuesday said the return of Nigerian banks to the international bond markets lessens FC liquidity risk, but the impact will be modest as the new bond issuances are small relative to total term FC lending.
Renewed interest from international investors seeking yield has enabled several banks to issue Eurobonds since late 2016, for the first time since 2014, albeit at higher yields following rating downgrades in the intervening period. In most cases, the issuance will boost FC funding rather than simply refinance maturing FC debt.
Nigerian banks have traditionally operated with significant maturity gaps, funding longer-term loans with short-term customer deposits, as is the case in many emerging markets. For FC liquidity, there are no prudential limits in place, Fitch noted.
The Central Bank of Nigeria’s regulatory liquidity ratio (requiring banks to hold liquid assets equivalent to 30 percent of total deposits) is focused exclusively on Naira liquidity.
According to Fitch, there are regulatory limits to control open FC positions in banking and trading books, but these target the management of market risk and its potential impact on banks’ capital rather than liquidity risk.
The term of bank lending has gradually lengthened since 2012 when Nigeria opened up opportunities for investment in the oil sector. We estimate that about half of all bank loans are medium-term with maturities of three to four years. These are largely in FC.
This is a high share for a low-rated market where banks have limited access to longer-term FC funding.
FC term loans underwent considerable restructuring last year and this year, particularly among oil-related borrowers facing cash flow constraints given weak oil prices and disruptions in production.
The rating firm observed that the devaluation of the Naira in mid-2016 also caused debt servicing problems as borrowers reliant on naira revenue streams struggled to find additional funds to repay rising FC obligations. Loan restructuring typically involves a two- to three-year maturity extension, pushing out final maturities to 2019 and beyond.
Sources of longer-term FC funding are limited for Nigerian banks and we estimate that FC funding equates to less than half of FC sector loans.
Nigerian banks are infrequent issuers on the international capital markets, but three leading banks with deposit market shares near or above 10 percent have issued medium-term Eurobonds since Q4’ 16 (Zenith Bank: $500 million; United Bank For Africa: $500 million; Access Bank: $300 million).
This week, Fidelity Bank, a smaller bank with a 5 percent deposit share, issued $400 million.
“We think more banks may follow. Outstanding FC bonds issued by banks totalled USD4 billion at end-June 2017, the bulk of which is in Eurobonds,” Fitch said in the statement.
Banking
Banks, Fintech Firms Should Not Operate as Rivals—Ajalie
By Modupe Gbadeyanka
The chief executive of TeamApt Limited, Mr Dennis Ajalie, has called for a robust collaboration in the digital payments ecosystem, saying banks and fintech companies should not see themselves as rivals.
Mr Ajalie said the industry’s regulator, the Central Bank of Nigeria (CBN), has delineated what each entity should do and how they should function in creating a successful payment ecosystem that protects consumers and enables businesses, which he admitted to be complementary and not competitive.
Touching on the imperative of borderless transactions and the solutions for implementation concerning the framework, he said, “Borderless transactions have to happen because we’re becoming more interconnected by the day and by the minute.”
“We still have a lot of siloed implementations among key stakeholders and unless we recalibrate our systems, borderless remains beyond our reach and a mirage,” Mr Ajalie stated at the Committee of e-Business Industry Heads (CeBIH) conference in Lagos themed Payment System Vision 2030: Navigating Contemporary Issues in Driving Future Growth.
“There’s the fierce urgency of now that demands that we find solid ways to interconnect, and once we’re able to interconnect within ourselves, reconcile properly, especially on the local front, then we can present a single, unified front that will enable us to push transactions and receive transactions from outside.
“We cannot go forward without fixing these internal challenges,” he added at the event, where he was one of the panellists.
TeamApt, a subsidiary of Moniepoint Incorporated, facilitates payment processing across many industries while enabling reliable payments for banks and their customers while reducing operating costs.
Wrapping up his thoughts, the TeamApt boss reiterated the need for industry-wide collaborations in fighting the menace of fraud.
“If we are able to all share information and collaborate seamlessly, we’ll find out that it becomes disinteresting for these bad faith individuals to use the collective technology commonwealth that we have all built to commit nefarious activities.
“So, it goes back to collaboration among fintechs, the banks, NFIU, infrastructure providers, the telcos, and switches. We’ve all got to come together to say, enough is enough and that this present situation threatens all of us rather than just one of us,” he added.
Banking
Bankit MFB Introduces Web Banking Platform for Convenience, Security
By Modupe Gbadeyanka
An innovative web banking platform to provide customers with an additional digital channel to manage and carry out uninterrupted daily transactions on their phones, laptops and other devices has been introduced by Bankit Microfinance Bank (MFB).
The emerging small financial institution said it came up with this platform to break barriers and empower individuals and businesses to manage their finances with confidence.
With this, Bankit MFB is redefining convenience and security in banking, ensuring uninterrupted access to financial services, time-saving functionalities, efficiency, real-time account updates, 24/7 availability, and faster transactions.
“In today’s fast-paced digital age, connectivity is everything in banking, and for us, it’s all about improving customer experience with simple banking options and empowering our teeming customers to live their best lives.
“We are revolutionizing the Fintech landscape in Nigeria, and we have developed this solution to empower our customers to bank securely, anytime, anywhere, conveniently.
“We are committed to leveraging technology to enhance the banking experience for all our customers,” the chief executive of Bankit Africa, Mr Yen Choi, stated.
“Bankit’s web banking platform reaffirms one of the bank’s core values – Innovation and sets a new standard for accessibility and security in the banking industry.
“As part of our ongoing commitment to excellence, Bankit Africa will continue to evolve its offerings to meet and exceed the needs of its rising customer base.
“Some key features of this web banking platform include: a simple way to send money, buy airtime, and pay bills with no extra fees or hidden charges,” he added.
Bankit MFB is a licensed financial institution dedicated to providing innovative, customer-centric financial solutions to individuals, businesses, and communities in Nigeria, with a focus on simplicity, convenience, and security.
Banking
GTBank, UBA, Others Announce Early Closure of Branches as 2024 Ends
By Dipo Olowookere
Banking operations at the branches of most financial institutions in Nigeria will end earlier than expected today, Tuesday, December 31, 2024.
The majority of them have sent messages to their customers to inform them of this development.
Business Post sighted some of these notices sent by the banks to their customers via electronic mails (e-mails).
One of them from Guaranty Trust Bank (GTBank) Limited said transactions at its Lagos branches will close for the day and year by 3 pm while in other branches at 2 pm, encouraging customers to use its digital channels for their financial transactions.
“We would like to inform you that all our branches nationwide will close to customers early on Tuesday, December 31, 2024.
“During this period, we encourage you to take advantage of our digital channels for banking needs,” the notice read in parts.
On its part, United Bank for Africa (UBA) Plc said its branches would close for the day at 2 pm across the nation.
“As we prepare for the New Year celebration, our branches will close by 2 pm on Tuesday, December 31, 2024.
“While our branches take a break, our digital channels, the UBA Mobile Banking, Leo, *919# or internet banking are available 24/7 for all your banking needs.
“Your security is our priority. We will never ask for your BVN, card number, PIN or personal details. Suspect anything fraudulent? Call our Fraud Help Desk,” the message from the lender read.
As for Fidelity Bank Plc, it plans to stop banking services at its branches nationwide today by 2 pm to resume on Thursday, January 2, 2025.
“Please be informed that our branches will close at 2 pm on Tuesday, December 31, 2024, ahead of the New Year holiday.
“As always, our digital channels; Mobile Banking, USSD Bank (*770#), PoS, ATMs, Cards, and Ivy Chat, will be available 24/7 for all banking transactions.
“Please note that normal operations will resume at 8 am on Thursday, January 2, 2025,” the bank said in its message to customers.
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