Buhari Exempts Financial Services Operators from Lockdown

1
Muhammadu Buhari

•CBN suspends clearing of cheques
•Nigerian banks’ foreign subsidiaries post strong earnings

Obinna Chima in Lagos and James Emejo in Abuja

The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, and the Governor of Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, yesterday said they had obtained exemptions from President Muhammadu Buhari to allow very skeletal operations in the financial system and money markets in order to keep the system in light operations during the period of restriction in Lagos, Ogun, and Abuja.

The president had in a broadcast on Sunday locked down the two states and the federal capital, beginning from last night in order to curb the escalation of COVID-19 in the country.

The exemption comes as the boost in lending and other business activities have propelled higher earnings for the foreign subsidiaries of four of Nigeria’s tier 1 banks, the full year audited results of the financial institutions have shown.

In a joint statement, the minister and the CBN governor explained that the move was to ease the pains of Nigerians following the 14-day lockdown and ensure that they can still perform online transactions and use ATMs whilst observing the recent restrictions of movement.
The statement said:” We are mindful of the difficulties these restrictions would bring on ordinary Nigerians and are grateful to the president for approving these exemptions, which should help ease some of these burdens.

“We urge all Nigerians to be patient, cooperative and united as all hands are on deck to defeat this virus.”
It further directed all relevant staff of affected outfits and agencies to “look out for further instructions from their immediate bosses”.

Ahmed and Emefiele particularly applauded and appreciated “the appropriate and proactive restrictions in personal and vehicular movement directed by President Muhammadu Buhari in his speech of Sunday 29 March 2020,” adding that “these restrictions are critical to significantly reduce the transmission rate of the disease and make it much easier for health professionals to trace, test and isolate patients.”

CBN Suspends Clearing of Cheques

In a related development, the CBN said in view of the 14-day lockdown in Lagos, Abuja, and Ogun, it had in the interim, suspended until further notice, the clearing of cheques instruments in the Nigerian Clearing System, effective yesterday.

The CBN stated this in a circular that was signed by its Director, Banking Services Department, Mr. Sam Okejere, that was addressed to all banks and the Nigeria Interbank Settlement System, a copy of which was posted on its website.

“For the avoidance of doubt, no fresh cheque instrument will be allowed to pass through the clearing system on March 31, 2020. Only returned cheque would be treated to the said date. However, settlement activities for electronic instruments will continue to hold during this period of suspension. Please be guided accordingly.”

Limit Usage of Cash, CBN Tells Bank Customers

The CBN, in a separate statement yesterday by the Director, Corporate Communications, Mr. Isaac Okorafor, also called on customers of deposit money banks to limit their use of cash and avail themselves of the use of alternative payment channels such as mobile banking, internet banking, mobile money, point of sale and USSD.

“The public is therefore assured that financial institutions will remain operational during this period and therefore should guard against panic withdrawals from their banks,” the CBN spokesman added.

He said security agencies had been requested to grant passage to the critical staff of institutions to enable essential and strategic financial transactions to go undisrupted during the lockdown. He listed the institutions to include: the CBN; banks, the Nigeria Interbank Settlement System (NIBSS) Plc; switching companies; mobile money operators and payment solution service providers.

“We also urge all Nigerians to adhere strictly to the movement restrictions and follow stipulated guidelines by the Federal Ministry of Health, Nigeria Centre for Disease Control (NCDC) and other relevant health agencies of government to curb possible spread of the virus in Nigeria,” CBN added.

Nigerian Banks’ Foreign Subsidiaries Post Strong Earnings

Meanwhile, a boost in lending and other business activities have propelled higher earnings for the foreign subsidiaries of four of Nigeria’s tier 1 banks, the full year audited results of the financial institutions have shown.

The banks are Guaranty Trust Bank Plc (GTBank), United Bank for Africa Plc (UBA), Zenith Bank Plc and Access Bank.

For Access Bank which has subsidiaries in nine countries, their contribution to the group’s performance stood at 32 per cent year-on-year, recording a total subsidiaries’ profit before tax of N37.4 billion. This represented an increase by 34 per cent year-on-year, compared with the N27.9 billion recorded as of December 2018. The bank’s United Kingdom and Ghana subsidiaries accounted for 94 per cent of the total full year 2019 subsidiaries’ profit before tax, up from the 88 per cent they recorded in 2018. In addition, total loans recorded by Access Bank’s subsidiaries stood at N666.9 billion, which represented 22 per cent of the total loans disbursed by the group in 2019.

Similarly, total deposits from Access Bank’s subsidiaries amounted to N1.1 trillion, contributing 20 per cent of total group’s deposits, just as total assets from the subsidiaries stood at N1.4 trillion in the year under review.

Also, Zenith Bank in a recent presentation to investors showed that its subsidiaries’ contribution to the group’s revenue increased from 13.8 per cent the previous year, to 14 per cent in 2019, while profit before tax contribution from the foreign subsidiaries grew by 12.9 per cent, to 14 per cent year-on-year. A breakdown of this showed that whereas the rest of Africa contributed 10.2 per cent to the bank’s revenue, its operation in Europe contributed 3.8 per cent.

On its part, the United Bank for Africa Plc (UBA) revealed growth in the contribution of its 19 African subsidiaries to the group’s net earnings and total assets. According to the pan-African bank, its entire subsidiaries contributed 46 per cent to the group’s profit before tax in 2019.

A breakdown of the contribution showed that its Anglophone West Africa – Ghana, Liberia, S/Leone contributed 18 per cent; the CEMAC region which include Cote D’Ivoire, Senegal, Mali, Burkina Faso, Benin, Guinea – 17 per cent; UEMOA region made up of Cameroon, Gabon, Chad, Congo Brazzaville, Congo DRC – nine per; and East and Southern Africa, made up of Tanzania, Kenya, Zambia, Uganda , Mozambique – two per cent.

For GTBank, its eight foreign subsidiaries contributed a total of 14.9 per cent to its profit before tax in 2019, up from 12.1 per cent contribution in 2018. While the contribution of the subsidiaries to the group in terms of loans was 13.5 per cent in 2019, contribution in terms of deposit was 22 per cent.

Commenting on the contribution of his bank’s subsidiaries, the Group Managing Director/CEO, UBA, Kennedy Uzoka, recently said, “Our businesses are gaining commendable share in their markets across regions in Africa, as we deepen the scale and scope of our operations.”

“I am indeed excited about the synergy we have built within the UBA Group and the significant progress we have made in our transformation drive. We have positioned the bank as a truly pan-African banking franchise, leveraging our operations in France, the UK and the USA, to deepen intra-African trade, and facilitate capital flows between Africa and the rest of the world.

“In 2020, we will pursue the aggressive deepening of market share in all our subsidiaries, leveraging technology, rich human resources and our customer-first strategy to win in all the markets we operate, notwithstanding the challenges of our operating environment.”

In a similar vein, the Group Managing Director of Access Bank, Herbert Wigwe, recently said the bank plans to be Africa’s gateway to the world and expand into 22 countries over the next five years.

Wigwe said Access Bank aims to expand into Africa as a diversified retail bank.

“We want to have subsidiaries across 22 countries over the next five years, with strategic plans to be present in the major trade corridors in the African continent. Building on our successful expansion into Kenya, we will also be making entries into Angola and Mozambique.”

“At the moment, Access Bank does not have a presence in the Francophone region of Africa, and we will be working to see that this is changed in the coming years. By 2023, Access Bank will have consolidated its position as Africa’s gateway to the world with about 100 million customers in Nigeria and an additional 20 million customers across our African subsidiaries,” Wigwe said.