Internal auditors vital to banks’ growth – Coronation MD

Image result for Internal auditors vital to banks’ growth – Coronation MDInternal auditors of banks are critical stakeholders to realising sets goals and achieving sustainable growth, the Managing Director/Chief Executive Officer, Coronation Merchant Bank Limited, Abubakar Jimoh, has said.

He said companies with a focus on excellence always ensured that the internal audit department maintained global standards in process and resource considerations.

Jimoh, who spoke on the theme, ‘Internal audit: Defence, advisory and consulting’, made this known at the 37th Quarterly Meeting of the Association of Chief Audit Executives of Banks in Nigeria, held in Lagos.

Quoting the Institute of Internal Auditors, the CEO said internal auditing as an independent, objective assurance and consulting activity, was meant to add value and improve an organisation’s operations.

According to him, internal auditing brings systematic, disciplined approach to evaluation and improvement in the effectiveness of risk management, control, and governance processes.

Jimoh, who was represented by the bank’s  Executive Director, Enterprise, Mrs. Onome Komolafe, said, “This definition of internal audit provides comprehensive guidelines for the framework of internal audit and should be a critical reference point in formulating the complete internal audit approach.

“The internal audit activity must be free from interference by any influence that hinders the progress of work, including matters of audit selection, scope, procedures, frequency, timing, or report content to permit maintenance of a necessary independent and objective mental attitude.”

Jimoh said internal auditors must exhibit the highest level of professional objectivity in gathering, evaluating, and communicating information about the activity or process being examined.

Internal auditors, according to him, must make a balanced assessment of all the relevant circumstances and not be unduly influenced by their own interests or by others in forming judgments

Also speaking, ACAEBIN Chairman, Abiodun Aderoju, praised Coronation Merchant Bank, which hosted the event for a job well done.

According to him, the ACAEBIN formerly known as Committee of Chief Inspectors of Banks and Discount Houses in Nigeria, has been in existence for over 20 years and has been promoting interaction among practitioners.

“It also seeks to promote competence, ethical standard and professional behavior amongst member organisations, while also building a common front in the fight against fraud in the industry,” he said.

Internal auditors, Jimoh added, should have no direct operational responsibility or authority over any of the activities audited.

Accordingly, they are not to implement internal controls, develop procedures, install systems, prepare records, or engage in any other activity that may impair their judgment.

He explained that the first line of defense in the governance of risk framework was the front-line employees who must understand their roles and responsibilities with regard to processing transactions.

These employees, he added, must follow a systematic risk process and apply internal controls and other risk responses to treat the risks associated with those transactions.

“The second line of defense is the enterprise’s Compliance and Risk functions that provide independent oversight of the risk management activities of the first line of defense. This line of defense monitors and facilitates the implementation of effective risk management practices by operational management and assists the risk owners in reporting adequate risk related information up and down the organisation,” he stated.

N30tn probe: Indicted banks, firms return N140bn

Image result for N30tn probe: Indicted banks, firms return N140bnThe Senate Joint Committee on Customs, Excise and Tariffs; and Marine Transport on Wednesday claimed that it had recovered over N140bn from banks and companies following its probe into the alleged loss of N30tn in Nigeria’s import and export value chain.

It said the recovered funds had been deposited with the Central Bank of Nigeria.

This was contained in an interim report by the panel, which the Senate considered and adopted at its plenary on Wednesday.

The probe followed the adoption of a motion titled, ‘Urgent Need to Examine the Operations of the Nigeria Customs Service Revenue Drive’ on November 15, 2016.

The Senate had specifically mandated the committee to carry out a holistic investigation into the activities of the service “with a view to identify the leakages and irregularities as well as the causes of the declining revenue profile of the service and come up with recommendations that will reinvigorate the revenue of the Nigeria Customs Service.”

In the report presented by its Chairman, Senator Samuel Anyanwu, the panel said some banks had remitted N128bn to the CBN, while some of the 60 companies investigated made voluntary payments of N12bn into Federal Government’s coffers.

The panel said, “As a result of this exercise, some collection banks have made additional remittances to the Central Bank of Nigeria to the tune of N128bn and evidence of payment and receipt has been received by the committee.

“From the selected 60 companies, over N12bn payments have been made to the government voluntarily by the companies based on their internal self-audit after receiving documented evidence of their culpability from our committee.

“It is instructive to note that despite all the payments so far made, none of the approved collection banks or the selected companies has fully cleared the established liabilities against them.”

The committee however asked for additional eight weeks to carry out its investigations, saying the banks and companies currently under investigation represented less than one per cent of the entire import and export value chain.

The panel listed 32 “leakage channels” it identified as the “major sources of revenue losses” in the import and export business.

It said, “These infractions within the system disproportionately distort the economic profile of the country and place extensive pressure on the nation’s scarce foreign exchange.

“It also negates all Central Bank of Nigeria initiated foreign exchange management plans. This is because a distorted forex requirement does not essentially reflect the actual forex needs of individuals and businesses in the country.

“This situation benefits only the purveyors of capital flight from the country and adds absolutely no value to the nation.”

The Majority Leader, Senator Godswill Akpabio, urged the lawmakers to give the committee more time to carry out the probe, considering the amount of money it claimed to have recovered.

Unity Bank supports breast cancer campaign

Image result for Unity Bank nigeriaThe Managing Director/Chief Executive Officer, Unity Bank Plc, Mrs. Tomi Somefun, has commended the Breast Cancer Association of Nigeria for sensitising the public and increasing momentum on the multi-sector approach targeted at curbing the spread of breast cancer in the country.

Somefun, who led this year’s edition of BRECAN’s Jog for Life charity walk in Lagos, said the association had expanded the reach of the breast cancer campaign to many states of the federation and far-flung communities, according to a statement.

She said, “The collaborative platform is a potent vehicle to reach out to significant number of people with critical information that will accelerate both separate and concerted individual, corporate and governmental action needed to focus attention and increase intervention to curb the spread of breast cancer in our society.”

Eurobond: Fidelity Bank records largest new issue, liability offering

Image result for fidelity bankFidelity Bank Plc, on October 11, 2017, priced a successful $400m five-year Eurobond with a 10.50 per cent coupon in what is the largest combined new issue and liability management offering ever by a Nigerian issuer.

Citigroup Incorporated, Renaissance Capital and Standard Bank Group Limited managed the deal, which included an any-and-all cash tender offer for the early redemption of its $300m 6.875 per cent notes due May 9, 2018.

The bank, in a statement on Monday, said the tender offer was very successful with the repurchase of $256m of its $300m existing United States dollar notes due in May 2018. This represented a tender hit ratio of 85 per cent, one of the best results recently achieved by peers.

Proceeds from the new $400m issue due 2022 was used to finance the tender offer of $256m and the balance (net issuance cost) will be used to support the trade finance business of the bank, according to the statement.

The company was said to have conducted a focused marketing campaign on the back of the strong tender offer and new issue investor feedback. The strong demand for the new issue and the transaction structure favouring existing holders during the new issue allocation, was said to have led to a high conversion ratio with over 60 per cent of the holders of the old notes subscribing for the new notes.

The landmark Eurobond issue was twice oversubscribed (Order Book of $630m), with the final coupon ultimately set at 10.50 per cent. The transaction achieved a wide market distribution with over 100 investors from the United Kingdom, United States, Continental Europe, Asia and Africa subscribing to the new issue.

The Managing Director, Fidelity Bank, Mr. Nnamdi Okonkwo, was quoted in the statement to have said, “We are delighted to have successfully completed the offering, and believe the transaction has a big positive signaling effect.

“It paves the way for other banking institutions, especially the tier-two banks in Nigeria to explore the Eurobond source of funding in the international arena and talk to the global emerging markets investor community as Nigerian market rebounds and we see bigger demand for strong local stories.”

Fidelity Bank’s $400m issue demonstrated strong trading upon entering the market post-pricing, cementing the Eurobond’s robust position, the bank said.

Fidelity is a full-fledged commercial bank operating in Nigeria with over 3.8 million customers who are serviced across its 240 offices and various digital banking channels. The bank is focused on select niche corporate banking sectors, Small and Medium Enterprises and is rapidly implementing a digital-based retail banking strategy.

Over the last 3.5 years, the strategy, it explained had resulted in: a 93 per cent growth in savings deposits; 50 per cent customer enrollment on debit cards and 30 per cent of its customers now using its flagship mobile/internet banking products.

Fidelity Bank recently released its Audited H1 2017 results which showed a major improvement on all indices with gross earnings increasing by 22 per cent to N86bn, expenses declining by two per cent to N31bn and profit before tax increasing by 67 per cent to N10bn.

Sterling Bank celebrates employees

Image result for sterling bankSterling Bank Plc has joined other corporate bodies around the world to celebrate its employees as part of activities to mark the 2017 Customer Service Week.

The Executive Director, Operations and Services, Sterling Bank Plc, Mr. Yemi Odubiyi, said the bank decided to honour its employers in recognition of their significant contributions to the growth and development of the bank over the years.

He attributed the success of the bank to its employees and praised them for rendering vital services to customers, on behalf of the bank.

According to him, such services are business loans, mortgage, cash management, merchant services and other customer service functions.

He disclosed that senior management members of staff of the bank visited branches in Lagos to carry out operational activities during the week, adding that some workers dealing directly with customers were nominated and given badges of honour and appreciation cards, in appreciation of excellent service delivery rendered during the week.

Odubiyi said a drama, showcasing the difference between good and bad services, was broadcast during the weekly knowledge sharing session, adding that it was done to strengthen the bank’s culture of excellent service.

The statement said he also spent an hour making outbound and third-party confirmation calls to customers at the contact centre, as part of activities marking the event.

Fidelity Bank sells $400m bonds with 10.75% yield

Image result for Fidelity Bank sells $400m bonds with 10.75% yieldFidelity Bank Plc sold the highest-yielding Eurobond from emerging markets this year, joining a rush for issuance before higher United States interest rates push up borrowing costs.

The lender issued $400m of five-year securities with a 10.75 per cent yield on Wednesday, Bloomberg quoted a person familiar with the matter who asked not to be identified. The deal initially had guidance of about 11 per cent, the newswire gathered.

Fidelity is the third Nigerian bank to sell Eurobonds this year after bigger rivals Zenith Bank Plc and United Bank Plc, while also following the lead of the country’s government, which plans to more than double its outstanding dollar debt to $9bn. Investors have piled into emerging markets to hunt for higher rates, as those in developed nations linger near all-time lows.

The Eurobond is the first from Fidelity, which is rated B- by S&P Global Ratings and Fitch Ratings, or six steps into junk territory, since 2013. The yield fell to 10.27 per cent by 11:08am in Lagos on Thursday.

The yield on UBA’s $500m five-year notes fell 13 basis points to seven per cent on Wednesday, extending their drop since they were issued in June at 7.88 per cent. Zenith’s notes, also due in 2022, traded at 6.06 per cent.

Small and mid-sized banks in Nigeria have struggled to raise capital as the economy recovers slowly from its worst slump in around 30 years, triggered by the 2014 collapse in crude prices. Most of the dollar bonds issued this year with higher yields than those of Fidelity, which has $4.2bn of assets, came from the North American corporate market, according to data compiled by Bloomberg.

Citigroup Inc., Renaissance Capital and Standard Bank Group Limited managed Fidelity’s deal, which included the repurchase of $256m of its $300m of existing dollar notes due in May next year.

“If you account for the stage Fidelity is at in its evolution, the macroeconomic situation and the current apathy toward the Tier 2 banking space among investors, the pricing appears reasonable,” the head of RenCap’s Nigerian unit, Temitope Popoola, said by phone from Lagos Thursday.

“The other point is that we will likely see some tightening in the US over the next few months and this should very likely lead to more expensive access to funding,” Popoola said, adding that, “Time will tell but this rate may be considered generous over time.”

Exotix Capital, in a note to clients, assigned a buy recommendation because of the new debt’s high spread over other Nigerian bank bonds.

Stop surcharge on mutilated, dirty notes, Reps tell CBN

Image result for Naira, file photoThe House of Representatives has directed the Central Bank of Nigeria to stop imposing charges on commercial banks before receiving mutilated and dirty notes from them.

The House noted in Abuja on Thursday that the surcharge was one of the major reasons why the banks were reluctant to withdraw such notes from circulation or accept them from customers.

The resolution followed a motion moved by a member from Edo State, Mr. Sergious Ose-Ogun.

Members observed that when mutilated notes remained in circulation, they contribute to inflation, describing as strange the growing trend by commercial banks to reject torn naira notes.

Ose-Ogun’s motion read in part, “The House notes that Section 20 of the CBN Act of 2007 provides that the currency notes and coins issued by the CBN shall be the approved medium of exchange, and as a result, should be accepted for all transactions in Nigeria.

“The House also notes the widespread circulation of dirty, mutilated and worn out notes contrary to the requirement that they be replaced by commercial banks when they are worn out or defaced as long as the central bank and treasury’s serial numbers can still be seen on the notes.

“Aware that in the past, such notes were replaced by commercial banks, but now, the banks routinely reject torn, defaced and mutilated notes, which customers bring for deposits.

“Also aware that despite the regulatory position of the CBN, it is apparently encouraging the outrageous and appalling practice of the commercial banks in rejecting the notes.”

It added, “Concerned that the continued circulation of worn out, dirty and mutilated notes calls for concern and also raises the need for close investigation and constant monitoring of the process of destruction of the notes, as continued printing of new currency notes without destroying mutilated notes contributes to the inflationary trend in the economy.

“The House observes that the practice of rejecting mutilated notes by banks is as a result of the refusal of the CBN to recycle the old and defaced notes, and it even imposes ludicrous charges on commercial banks, which serve as central collection points for the CBN to effectively carry out its functions under Section 18 (d) of the CBN Act.”

The House, which was presided over by the Speaker, Mr. Yakubu Dogara, also asked its Committee on Banking and Currency to “liaise with the CBN to harness the modalities for handling, returning and destroying damaged and mutilated notes, and report back within eight weeks for further legislative action.”

The resolution was passes in a unanimous voice vote.

CBN recovers N50bn excess charges from banks

Image result for emefiele picsThe Central Bank of Nigeria has recovered over N50bn excess charges imposed by banks on their customers.

The Acting Director, Corporate Communications, CBN, Mr. Isaac Okorafor, disclosed this at the ongoing Abuja International Trade Fair on Wednesday.

Okorafor said that the CBN was committed to ensuring that banks customers were not subjected to excess charges and urged them to visit the apex bank’s website to get acquainted with the approved charges.

The Consumer Protection Department of the CBN, he stated, had in the last three years helped customers who complained to recover more than N50bn in excess charges imposed by banks.

He urged other customers who had issues with charges being collected by banks to complain to the appropriate quarters so that their issues could be resolved.

Okorafor also stated that the bank had so far disbursed a total of N43.92bn to farmers through its Anchor Borrowers’ Programme.

According to him, the agricultural intervention programme of the bank, being executed in association with 13 banks, has benefited 200,000 smallholder farmers from 29 states of the federation.

The CBN spokesperson also said that through the intervention programme, 233,000 hectares of farmland were currently being cultivated with eight commodities, including rice, wheat, maize, cotton, soya beans, cassava and groundnut.

He said, “At harvest, the smallholder farmers supply their produce to the agro-processor, who pays the cash equivalent to the farmer’s account.

“We cannot let our farmers go hungry while we enrich farmers from other countries. This is why we said for some certain items, which are 41 in number, if you want to import any of them, go and look for your own foreign exchange.

“As a complementary measure, we put in place the Anchor Borrowers’ Programme for agriculture to make farmers rise up and fill the space and gap created by the non-importation of those items.”

Also speaking at the event, the 2nd Deputy President, Abuja Chamber of Commerce and Industry, Alhaji Al-Mujtaba Abubakar, urged the apex bank to reconsider some of its policy stands that were negatively impacting on small businesses.

“While we commend the CBN for its roles in getting our economy out of recession, we want to emphasise that the subsisting high lending rate is stifling production and productivity of the real sector,” he stated.

Banks cut lending, opt for investment in securities

Image result for Banks cut lending, opt for investment in securitiesThe loan books of Deposit Money Banks are shrinking by the day as lenders step up investments in securities and money market assets at the expense of lending.

Investigation by our correspondent revealed that the DMBs in the country, which before now were recording double-digit growth in their loan books year-on-year, were barely managing to hit nine per cent, with most banks recording around five per cent growth.

Top sources said the 18-month recession and weak growth recently witnessed by the country had affected the banking sector adversely, pointing out that most banks with high non-performing loans had reduced lending significantly.

They said unless the economic recovery became strong enough, banks might not be bullish in their lending activities in the coming months.

Economic and financial experts said with the recent exit of the country from recession, the DMBs were supposed to start growing their loan books.

They, however, expressed concern that most banks might not do so because the high yield currently on securities and money market instruments would discourage them from it.

“Banks are not willing to lend for now. They prefer to invest in Treasury bills, bonds and other securities and instruments, because their yields are high now. Imagine the 18 per cent on TBs! This is why most banks now prefer to buy TBs instead of lending,” the Managing Director, Cowry Assets Management Limited, Mr. Johnson Chuwku, said.

An analyst at Ecobank Nigeria, Mr. Kunle Ezun, said there was a need for the Central Bank of Nigeria to make conscious efforts to reduce the yields on TBs and other instruments in order to incentivise banks to lend to the real sector.

This, he said, would help to grow the economy because lending to the real sector was crucial to economic growth.

The post-recession recovery of commercial banks in the country is said to be in doubt because a number of economic issues are expected to impact on their performance in coming months.

The banking industry’s non-performing loan level had hit 15.07 per cent in June, far above the five per cent limit directed by the Central Bank of Nigeria.

In its latest report titled, ‘Nigerian banks: Survival of the fittest’, Renaissance Capital, an investment bank said, “We believe that the focus for the banks that have struggled in this environment is to clean up their loan books and strengthen their capital positions.

“In our view, the biggest risk to both the NPL clean-up process and capital is the currency, as most of the banks continue to use the official rate (N305/$) to market their foreign currency exposures.”

It added, “We acknowledge that current market valuations remain depressed for the tier-2 banks, although the year-to-date share price increase and the improved macro outlook should make these banks more willing to engage in discussions around a capital raise. This, in our view, will drag out the prospect of a RoE recovery.

“For the entire banking sector, we believe that there is a risk to NIMs in FY 18 given the scope for monetary policy easing. We expect that general business activity will also start to slow down in the 2H 18 ahead of the 2019 general elections. All of these factors could contribute to a delayed recovery for some of the banks.”

First Bank increases stake in FBNBank DRC

First Bank of Nigeria Limited has announced the acquisition of the remaining shares in FBNBank DRC Limited, making it a First Bank’s wholly-owned subsidiary.

First Bank said this followed its initial investment in FBNBank DRC (formerly Banque Internationale de Credit) in 2011, when it acquired a 75 per cent stake in FBNBank DRC.

The lender said that following the acquisition, FBNBank DRC had continued to expand its product offerings, deepen its customer base and is currently ranked amongst the top five banks serving the Democratic Republic of Congo, a country with a population of more than 82 million.

The Chief Executive Officer, First Bank, Dr. Adesola Adeduntan, was quoted to have said, “This transaction underscores our belief in sub-Saharan Africa’s growth and our focus on providing a differentiated banking experience throughout Africa.

“This acquisition further consolidates our already robust African footprint and positions First Bank to take advantage of emerging opportunities in DRC and the sub-region. This increased investment by First Bank in FBNBank DRC – the 3rd largest banking entity in the group, will surely accrete value for shareholders.”

The CEO, FBNBank DRC, Mr. Akeem Oladele, said, “With 100 per cent holding by First Bank, FBNBank DRC now has much greater flexibility to deliver differentiated propositions by fully tapping into the resources and innovative capabilities of First Bank in eight countries, on three continents.v