Banking
Nigerian Banks May Struggle to Meet Foreign Currency Obligations—Moody’s
By Aduragbemi Omiyale
A global rating company, Moody’s Investors Service, has expressed doubts over the ability of Nigerian banks to meet their foreign currency obligations due to the foreign exchange (FX) crisis in the country.
As a result, the agency has placed on review for the downgrade of the long-term deposit ratings, long-term issuer, and senior unsecured debt ratings, where applicable, of nine lenders in Nigeria.
These banks are Access Bank, FCMB, Fidelity Bank, First Bank, GTBank, Sterling Bank, UBA, Union Bank, and Zenith Bank.
In a report, Moody’s said it was concerned about the rationing of forex in Nigeria, which could affect the operations of the commercial banks as they could struggle to honour FX transactions.
Nigeria, one of the producers of crude oil in the world, has not been able to earn more from the sale of the commodity, where it gets most of its forex earnings.
This has put the Naira under pressure in the currency market despite the Central Bank of Nigeria (CBN) rushing to the nation’s external reserves to supply FX to traders to defend the local currency.
“We understand that the central bank, which is the main provider of foreign exchange in the country, has consequently scaled down and become increasingly selective with its foreign currency allocations,” the agency said, noting that this has depleted Nigeria’s foreign exchange reserves to $38 billion as of September 2022 from $40 billion as of January 2022 despite higher oil prices.
It said if actions are not taken to straighten things, especially with the material discrepancies between official and parallel market exchange rates, the country will battle with the availability of foreign currency liquidity.
Moody’s further said this and constraints on domestic oil production, capital outflows, and the increased cost of the country’s imported refined petroleum products, coupled with the Dollar strengthening, could weaken the asset quality and capitalisation of the banks.
The firm noted that it would evaluate the resilience of the banks’ balance sheets to a potential material depreciation in the country’s foreign exchange rate.
In addition, it would assess the extent to which the banks’ capitalisation buffers and foreign currency positions mitigate the risk of a potential material weakening in the local currency.
It would also focus on assessing the banks’ operational ability to meet their foreign currency obligations and consider the expected evolution in foreign exchange reserves, as well as the various tools at the banks’ disposal to conduct foreign currency payments amid the shortage of Dollars.
“Moody’s rating review will also assess the resilience of the banks’ foreign currency liquidity positions and risk management frameworks amid ongoing foreign currency rationing in Nigeria and tightening funding conditions globally,” it stated.
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.”
By Adedapo Adesanya
The International Finance Corporation (IFC) and Goldman Sachs have announced a new partnership with African banks, including Nigeria’s Zenith Bank and Stanbic IBTC Nigeria to support the Goldman Sachs 10,000 Women initiative, a joint programme launched in 2008 to provide access to capital and training for women entrepreneurs globally.
The two Nigerian banks are part of nine financial institutions from across Africa which have agreed to join the 10,000 Women initiative committing to leverage the business education and skills tools the programme provides to create more opportunities for women entrepreneurs across the continent by providing access to business education.
Others banks include Stanbic Bank Kenya, Ecobank Kenya, Ecobank Cote d’Ivoire, Equity Bank Group, Banco Millenium Atlantico – Angola, Baobab Group, and Orange Bank.
Speaking on this, Ms Charlotte Keenan, Managing Director at Goldman Sachs said – “10,000 Women has had a powerful impact to date, but we know that there are more women to reach and more potential to be realized.
“We are delighted to partner with IFC to supercharge the growth of women-owned businesses across Africa, and mainstream lending to female business leaders. We remain committed to supporting entrepreneurs with the access to education and capital that they need to scale.”
Since 2008, the 10,000 Women initiative has provided access to capital and business training to more than 200,000 women in 150 countries.
“This expanded initiative marks a significant step forward in creating equitable economic opportunities for women in Africa, enabling them to build stronger, more resilient businesses and to realize their entrepreneurial goals,” said Ms Nathalie Kouassi Akon, IFC’s Global Director for Gender and Economic Inclusion.
Goldman Sachs’ 10,000 Women initiative complements the Women Entrepreneurs Opportunity Facility (WEOF), launched in 2014 by Goldman Sachs and IFC as the first-of-its-kind global facility dedicated to expanding access to capital for women entrepreneurs in emerging markets.
By Aduragbemi Omiyale
In recognition of its unwavering commitment to fostering access to financing for Nigerian micro, small and medium enterprises (MSMEs), Development Bank of Nigeria Plc has been rewarded with the Financial Inclusion Leadership Award at the Champions of Inclusion Nigeria Financial Inclusion Awards.
This was at the 2024 International Financial Inclusion Conference (IFIC) organised by the Central Bank of Nigeria (CBN) in collaboration with the World Bank and other stakeholders.
The chief executive of the lender, Mr Tony Okpanachi, said the recognition affirms the company’s efforts in expanding access to financial services for MSMEs in Nigeria.
“We are honoured to receive the Financial Inclusion Leadership Award, which is a testament to our bank’s commitment to expanding access to financial services for all Nigerians. This award recognises our efforts to bridge the financial inclusion gap, particularly for a priority sector like the MSMEs.
“Additionally, this award is a validation of our strategic focus on driving financial inclusion for small businesses, and we are proud to be at the forefront of this initiative that drives that. We will continue to innovate and expand our financial inclusion programmes, ensuring that more Nigerian small and startup businesses have access to services,” he stated.
On his part, the Chief Operating Officer of DBN, Mr Bonaventure Okhaimo, said the accolade demonstrates the firm’s dedication to driving financial inclusion and economic growth in Nigeria.
“This award acknowledges our Bank’s innovative approach to widening opportunities for MSMEs in Nigeria to grow and scale their businesses,” he said.
“This award will motivate us to continue pushing the boundaries of financial inclusion, exploring more innovative solutions and partnerships to expand our reach and impact.
“We are committed to ensuring that more small businesses and startup enterprises in Nigeria have access to financial services, this award will further inspire us to accelerate our efforts in this regard,” he stated.
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