Banking
CBN Limits Dividend Payment by Banks
By Modupe Gbadeyanka
Rules regarding the payment of dividend to shareholders by banks and discount houses in the country have been tightened by the Central Bank of Nigeria (CBN).
The apex bank, in a circular titled ‘BSD/DIR/GEN/LAB/11/002’ and dated January 31, 2018, explained that the move was to ensure that the lenders use retained earnings as an important source of growing their capital.
The circular, signed by the CBN Director in charge of Banking Supervision Department, Mr Ahmad Abdullahi, expressed worry that some institutions pay out a greater proportion of their profits, irrespective of their risk profile and the need to build resilience through adequate capital buffers.
”In view of the dynamism, rapid changes and emerging risks on the horizon, there is a need to proactively address these risks,” Mr Abdullahi said.
Rolling out its new rules on dividend payment by banks, the CBN said henceforth, “Any Deposit Money Bank (DMB) or Discount House (DH) that does not meet the minimum capital adequacy ratio shall not be allowed to pay dividend.
“DMBs and DHs that have a Composite Risk Rating (CRR) of “High” or a Non-Performing Loan (NPL) ratio of above 10% shall not be allowed to pay dividend.
“DMBs and DHs that meet the minimum capital adequacy ratio but have a CRR of ‘Above Average’ or an NPL ratio of more than 5% but less than 10% shall have dividend payout ratio of not more than 30%.
“DMBs and DHs that have capital adequacy ratios of at least 3% above the minimum requirement, CRR of “Low” and NPL ratio of more than 5% but less than 10%, shall have dividend pay-out ratio of not more than 75% of profit after tax.
“There shall be no regulatory restriction on dividend pay-out for DMBs and DHs that meet the minimum capital adequacy ratio, have a CRR of ‘low’ or ‘moderate’ and an NPL ratio of not more than 5%. However, it is expected that the Board of such institutions will recommend payouts based on effective risk assessment and economic realities.
“No DMB or DH shall be allowed to pay dividend out of reserves.
“Banks shall submit their Board approved dividend payout policy to the CBN before the payment of dividend shall be permitted.”
The central bank, which said the rules take immediate effect, emphasised further that, “All ratios shall be based on financial year averages.”
By Aduragbemi Omiyale
The management of Polaris Bank Limited has urged its customers and members of the public not to panic over reports that the financial institution has been sold to a new investor, Mr Auwal Gombe, in the sum of N40 billion.
It was recently reported that efforts are being made to hand over the lender to the businessman, who is said to be an ally of former military president, Mr Ibrahim Babangida, after the Central Bank of Nigeria (CBN) nationalised the defunct Skye Bank Plc into Polaris Bank in 2018.
In a statement issued on Friday in Lagos, the bank described the report of the purported sale as not only “speculative” but done to deliberately “create panic” among its customers and the banking community.
The company said the CBN established it and injected funds for its operations, it has bounced back to profitability, with a solid balance sheet, saying there is no cause for alarm as the bank was in safe hands.
“Stakeholders may recall the regulatory intervention in the erstwhile Skye Bank by the CBN and the subsequent injection of capital via the Asset Management Corporation of Nigeria (AMCON) through a bridge bank process, which birthed Polaris Bank in 2018.
“The bank has since stabilised its operations following the intervention; improving its balance sheet, customer base and profitability,” a part of the notice today said.
Continuing, Polaris Bank noted that, “Whilst the intention has always been to return the bank to private ownership, such a sale would occur following regulatory approvals with formal notification to all relevant stakeholders,” expressing its commitment to “ensuring timely communication to the public in such an event.”
“The board and management hereby reassure its customers, staff and the general public that Polaris Bank remains a stable, strong and credible financial institution, positioned to deliver sustainable value to all its stakeholders,” the statement concluded.
By Aduragbemi Omiyale
The management of Wema Bank Plc has rubbished an allegation that it issued a dud cheque in connection with a garnishee proceeding for the payment of a judgement debt on behalf of the Bayelsa State Government.
A legal practitioner, Mr George Haliday, had accused the financial institution of issuing dud cheques but in a statement issued on Wednesday, the lender explained that the cheques have only not been cleared for payment because of the subsisting appeal at the Court of Appeal sitting in Abuja on the garnishee proceeding which has now been decided in its favour.
According to the statement, the lawyer only ran to the Magistrate Court in Abuja to lodge a complaint about the issuance of dud cheques after he lost his case at the appellate court.
“It is very worthy of note that the judgement debt against Bayelsa State Government, which Barrister George Haliday attempted to enforce by a garnishee proceeding, thereby leading to the issuance of the cheques in question had been settled by Bayelsa State Government via a Terms of Settlement between Barrister George Haliday and the Bayelsa State Government at the Supreme Court,” a part of the statement.
Recently, there were reports that the Managing Director/CEO of Wema Bank, Mr Ademola Adebise, was issued an arrest warrant, but the bank dismissed this, saying its leader was not given a fair hearing in the matter.
“Wema Bank wishes to state that the warrant for the arrest of Mr Ademola Adebise is in violation of his fundamental rights to fair hearing as he was never personally served with any process to appear before the magistrate court nor was he represented in court.
“We are a law-abiding corporate citizen; if there was any court summons properly served on the Managing Director for his appearance in court, he would have done so without fail.
“But in this case, there was no such service extended to him or any court processes personally served on him to appear in court until a warrant of arrest was issued in absentia. We view the arrest warrant as being an infringement on his fundamental rights,” the statement said.
Concluding, the lender emphatically refuted and dismissed “in their entirety, the allegations of dud cheque and forgery levelled against our bank and the Managing Director. We also dismiss the inappropriate issuance of a bench warrant on our Managing Director.
“We are already engaging in legitimate actions to seek redress and bring all the perpetrators of these unprofessional conducts and heinous criminal acts against our Managing Director and the bank to book.”
By Aduragbemi Omiyale
More big feathers have been added to the colourful cap of Advans La Fayette Microfinance Bank, cementing its leadership position in the small lending business in Nigeria.
Recently, in recognition of its customer-centric credentials and innovation in product development, service delivery and brand management, the financial institution was named the Best Microfinance Bank in Nigeria at the Financial Derivatives Awards 2022.
Also, the company emerged as the Most Innovative Microfinance Bank in Nigeria in the Global Brands Magazine and World Economic Magazine Awards 2022.
The Managing Director/CEO of Advans La Fayette Microfinance Bank, Mr Gaetan Debuchy, while reacting to the accolades bestowed on the firm, dedicated the awards to the working management and staff of the bank, promising that the bank would continue to break boundaries.
“We are excited to win these awards. It further validates our innovative approach to providing customer-centric, affordable and transparent financial services,” Mr Debuchy said.
Also, the Head of Marketing and Communication at Advans La Fayette Microfinance Bank, Mr Kayode Abraham, stated that, “Over the years, we have centred our business on customer needs and feedback, which has helped us develop financial solutions from scratch to completion. We are pleased to be recognised as the most innovative and best microfinance bank in Nigeria.”
Earlier in the year, Advans Nigeria upgraded its mobile banking app ‘Adspire’ to include users’ ability to request bank statements and control their daily transaction limit. Through the app, clients can receive notifications and share by referring their friends and loved ones.
The bank recently introduced a micro-health insurance product and an education loan to facilitate financial inclusion.
The health insurance product was designed to ensure existing and prospective clients have access to high-quality and affordable health care services, while the education loan was designed to provide working and investment capital for school owners and to assist parents in paying their children’s school fees with ease.
