Banking
NDIC Writes CBN to Stop Bank Directors Accessing Loans
By Modupe Gbadeyanka
A proposal to prevent directors of banks operating in Nigeria to have access to loans from lenders they are directly linked with has been forwarded to the Central Bank of Nigeria (CBN) by the Nigeria Deposit Insurance Corporation (NDIC).
Business Day reports that this recommendation has been largely welcomed by stakeholders in the financial sector in the country.
According to the NDIC, such directors should not sit on the boards of any financial institution if their loans become classified as non-performing.
An Associate Professor and Head of Banking and Finance department at the Nasarawa State University, told Business Day in an emailed response that, “It is indeed a welcome development. A lot of studies on bank failures have shown that loans to bank Directors played a significant role.
“So, the measure will not only check insider related dealings (including sharp forex practices by Bank Directors), it will also go a long way in reducing the high prevalence of non-performing loans (well above the regulatory threshold of 5 percent) in the banking industry.”
Managing Director of Afrinvest Securities Limited, Mr Ayodeji Ebo, also in an emailed response, noted that bank directors should not be totally barred from taking loans from their banks but a review of the credit policy on related party loans.
He said the CBN needs to come up with more stringent rules around the maximum loan limit directors can access, maximum tenor as well as minimum interest rate allowable.
The amount of loan should be capped as a proportion of their remuneration. The policy should also include related companies of the directors.
Also, loan documentation should be more stringent (like higher coverage ratio) to reduce the delinquency level.
“This will reduce loan losses, hence bolster the bottom lines of the banks”, Mr Ebo noted.
This infraction by bank directors has resulted in rising Non-Performing Loans (NPL) put at a record high of N1.85 trillion, about 10 percent above 5 percent industry regulatory threshold.
Managing Director/CEO of NDIC, Mr Umaru Ibrahim, had expressed displeasure over the rising trend in the level of banks’ non-performing loans (NPLs) in these financial institutions.
According to the agency, the 25 Deposit Money Banks (DMBs) had total loans portfolio of N18.53 trillion as at December 2016.
In microfinance banks, (MFBs), insiders/ directors consumed N68.25 billion or 35 percent loans while NPL remained as high as N87.75 billion or 45 percent. The NPLs indicated a classic case of over-lending, accumulated interests charges and poor corporate governance.
Similarly, the existing 42 primary mortgage banks (PMBs) had total deposits liabilities of N69 billion but with total loans portfolio of N94 billion, which indicated another case of over-lending, accumulated interests, poor corporate governance and high ratio of NPLs which stood at N51.7 billion or 55 percent out of which N42.3 billion or 45 percent were Insider related/Directors loans.
The resultant effects of these negative trends would be poor earnings and erosion of shareholders fund, Ibrahim, had said in his 2017 budget defence before House Committee on Insurance and Actuarial Matters.
By Aduragbemi Omiyale
The Central Bank of Nigeria (CBN) has reaffirmed that the old and new Naira notes will continue to be used for financial transactions in the country beyond December 31, 2024.
There had been rumours that the old and redesigned N200, N500, and N1,000 banknotes would no longer be legal tender from Wednesday, January 1, 2025, because the central bank would phase out the notes in compliance with a Supreme Court judgement of November 29, 2023.
But the apex bank, in a statement signed by its acting Director of Corporate Communications, Mrs Hakama Ali, on Friday, clarified that the apex court’s judgement being cited did not authorise the bank to phase out the banknotes by the end of this year.
According to her, the court allowed the CBN to leave the old and new notes to be used concurrently until it decides to gradually phase out the former.
The central bank’s spokesperson urged members of the public to disregard claims suggesting the old series of these denominations would cease to be valid at the end of this year.
She urged them to continue to accept all Naira notes for daily transactions, encouraging banks to also adopt alternative payment methods such as electronic channels to reduce the pressure on physical cash usage.
“The Central Bank of Nigeria (CBN) has observed the misinformation regarding the validity of the old N1000, N500, and N200 banknotes currently in circulation.
“In line with the bank’s previous clarifications and to offer further assurance, the CBN wishes to reiterate that the subsisting Supreme Court ruling granted on November 29, 2023, permits the concurrent circulation of all versions of the N1000, N500, and N200 denominations of the Naira indefinitely.
“For the avoidance of doubt, all versions of the naira, including the old and new designs of N1000, N500, and N200 denominations, as well as the commemorative and previous designs of the N100 denomination, remain valid and continue to be legal tender without any deadlines,” the statement noted.
By Adedapo Adesanya
Access Bank Plc, the banking subsidiary of Access Holdings Plc, has entered into a binding agreement with South African-based Bidvest Group Limited for the acquisition of 100 per cent equity stake in Bidvest Bank Limited.
The deal for the 24-year-old South African lender is due to be completed in the second half of 2025, upon regulatory approval.
This shows Access Bank’s further expansion plans in line with goals set by its late founder, Mr Herbert Wigwe.
The agreement to acquire 100 percent stake in Bidvest Bank reflects Access Bank’s commitment to strengthening its footprint in South Africa and consolidating on its position as the continent’s gateway to global markets as it seeks to optimise the benefits of recent acquisitions and accelerate its transition towards a greater focus on efficiencies.
Bidvest Bank, founded in 2000 is a niche and profitable South African financial institution providing a diverse range of services, including corporate and business banking solutions and diverse retail banking products.
As of its year ended June 2024, Bidvest Bank reported total assets equivalent of $665million and audited profit before tax of $20million.
Upon conclusion of this acquisition, Bidvest Bank will be merged with the bank’s existing South African subsidiary to create an enlarged platform to anchor the regional growth strategy for the SADC region.
This is coming just as the bank opened a new branch in Malta as part of efforts to focus on international trade finance after obtaining a banking licence from the European Central Bank (ECB) and the Malta Financial Services Authority (MFSA).
Access Bank said the licence marks a transformative milestone in bolstering Europe-Africa trade flows.
The Maltese branch was established by Access Bank UK Limited, the subsidiary of Access Bank Plc, which is also the subsidiary of Access Holdings Plc, which is listed on the Nigerian Exchange (NGX) Limited.
By Modupe Gbadeyanka
To strengthen Europe-Africa trade ties, Access Bank has opened a new branch in Malta. It will focus on international trade finance, employing approximately 30 people in its initial phase, with plans for controlled expansion over time.
It was learned that this Maltese branch was established by Access Bank UK Limited, the subsidiary of Access Bank Plc, which is also the subsidiary of Access Holdings Plc, which is listed on the Nigerian Exchange (NGX) Limited.
Access Bank Malta Limited commenced operations after obtaining a banking licence from the European Central Bank (ECB) and the Malta Financial Services Authority (MFSA).
Access Bank said the licence marks a transformative milestone in bolstering Europe-Africa trade flows.
Malta, a renowned international financial centre, and a gateway between the two continents, is strategically positioned to play a pivotal role in advancing commerce and fostering economic partnerships.
This strategic expansion into Malta enables The Access Bank UK Limited to leverage growing trade opportunities between Europe and Africa.
It underscores the organisation’s commitment to driving global trade, financial integration, and supporting businesses across these regions.
“By establishing operations in Malta, we will gain a foothold in a market that bridges European and North African economies, moving us one step closer to our goal of becoming Africa’s Gateway to the World.
“It further enhances our bank’s capacity to support clients with innovative solutions tailored to cross-border trade and investment opportunities,” the chief executive of Access Bank, Mr Roosevelt Ogbonna, stated.
“Europe has emerged as Africa’s leading trading partner, driven by initiatives such as the Economic Partnership Agreements between the EU and African regions and the African Continental Free Trade Area (AfCFTA).
“With Europe-Africa economic relations entering a new phase, The Access Bank Malta Limited is ideally positioned to deepen trade and meet the financing and banking needs of our clients in these expanding markets,” the chief executive of Access Bank UK, Mr Jamie Simmonds, commented.
Also speaking, the chief executive of Access Bank Malta, Renald Theuma, said, “Malta is uniquely positioned as a bridge between Europe and Africa, making it an ideal location for our subsidiary. This move allows The Access Bank Malta Limited to engage more closely with customers in Europe and deliver tailored financial solutions that drive growth and connectivity across both continents.”
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