CBN Penalises 11 Banks Over Non-compliance
Eleven banks were last year sanctioned by the Central Bank of Nigeria (CBN) for breaking the rules, according to a report released on Tuesday in Abuja.The report, compiled by the CBN, also disclosed that 48,894 borrowers owed banks N1.553 trillion by December 31, 2006.
Nigeria International Bank (NIB) had five infractions, the highest number, followed by Fidelity Bank, Afribank, and Access Bank, which committed four each.Equitorial Trust was penalised for three contraventions. Sterling Bank, Union Bank and Guaranty Trust were culpable for three, while IBTC Chartered, Ecobank, and Oceanic were sanctioned for one each.Seven banks were free of contravention in 2006: United Bank for Africa, Zenith, First Bank, Bank PHB, Diamond, First City Monument, and Stanbic.
The report says "Contraventions for which the offending banks were penalised were as follows: non-implementation of recommendations in the previous examination; failure to adhere to CBN circular reference BSD/FE/48/Vol.6/304 dated March 29, 1990, in respect of the minimum information to be contained in a credit file; and failure to obtain the prescribed documentation for some letters of credit and invisible trade transactions.
Other infractions include: non-adherence to foreign exchange regulation, such as failure to report to the CBN, customers who defaulted in the submission of shipping documents 90 days after negotiation; and failure to adhere to CBN Circular reference SD/DO/CIR/VOL.1/2001/22 of November 29, 2001, by using unconfirmed letters of credit to import finished goods, among others.
Appropriate penalties/sanctions on banks that contravened regulations were imposed on the affected banks, in line with the provisions of the Banks and Other Financial Institutions Act."
Some 54 banks were penalised in 2004 for 212 contraventions. More than 50 banks were sanctioned in 2005 for over 160 offences.
On the Credit Risk Management System (CRMS), the report said the system web-enabled CRMS database had a balance of N1.553 trillion, involving 48,894 borrowers in 2006, against N1.388 trillion and 34,366 borrowers in 2005.
As at December 31, 2006, in absolute terms, both the Naira value and the number of borrowers grew, reflecting the growing confidence of the public in the banking system.It stated that 1,193 cases of fraud and forgery, involving over N4.6 billion and various other sums of foreign currencies, were reported by banks last year, out of which 612 cases - amounting to over N2.6 billion - were reported to have been lost to perpetrators of the crime.
The report also said that liquidation dividends of private sector depositors of the banks that failed the capitalisation requirement will be paid to the CBN paid by the Nigeria Deposit Insurance Corporation (NDIC).And, on another flank, it disclosed that 14 Nigerian banks are partnering foreign ones to manage the country's external reserves.
So far, the CBN has allotted between $325 million and $1 billion to the 14 partnerships, depending on the class of their mandate. Foreign bank custodians/asset managers that show interest in developing local capacity and partnering with Nigerian banks would be allotted more funds to manage."
Nigeria International Bank (NIB) had five infractions, the highest number, followed by Fidelity Bank, Afribank, and Access Bank, which committed four each.Equitorial Trust was penalised for three contraventions. Sterling Bank, Union Bank and Guaranty Trust were culpable for three, while IBTC Chartered, Ecobank, and Oceanic were sanctioned for one each.Seven banks were free of contravention in 2006: United Bank for Africa, Zenith, First Bank, Bank PHB, Diamond, First City Monument, and Stanbic.
The report says "Contraventions for which the offending banks were penalised were as follows: non-implementation of recommendations in the previous examination; failure to adhere to CBN circular reference BSD/FE/48/Vol.6/304 dated March 29, 1990, in respect of the minimum information to be contained in a credit file; and failure to obtain the prescribed documentation for some letters of credit and invisible trade transactions.
Other infractions include: non-adherence to foreign exchange regulation, such as failure to report to the CBN, customers who defaulted in the submission of shipping documents 90 days after negotiation; and failure to adhere to CBN Circular reference SD/DO/CIR/VOL.1/2001/22 of November 29, 2001, by using unconfirmed letters of credit to import finished goods, among others.
Appropriate penalties/sanctions on banks that contravened regulations were imposed on the affected banks, in line with the provisions of the Banks and Other Financial Institutions Act."
Some 54 banks were penalised in 2004 for 212 contraventions. More than 50 banks were sanctioned in 2005 for over 160 offences.
On the Credit Risk Management System (CRMS), the report said the system web-enabled CRMS database had a balance of N1.553 trillion, involving 48,894 borrowers in 2006, against N1.388 trillion and 34,366 borrowers in 2005.
As at December 31, 2006, in absolute terms, both the Naira value and the number of borrowers grew, reflecting the growing confidence of the public in the banking system.It stated that 1,193 cases of fraud and forgery, involving over N4.6 billion and various other sums of foreign currencies, were reported by banks last year, out of which 612 cases - amounting to over N2.6 billion - were reported to have been lost to perpetrators of the crime.
The report also said that liquidation dividends of private sector depositors of the banks that failed the capitalisation requirement will be paid to the CBN paid by the Nigeria Deposit Insurance Corporation (NDIC).And, on another flank, it disclosed that 14 Nigerian banks are partnering foreign ones to manage the country's external reserves.
So far, the CBN has allotted between $325 million and $1 billion to the 14 partnerships, depending on the class of their mandate. Foreign bank custodians/asset managers that show interest in developing local capacity and partnering with Nigerian banks would be allotted more funds to manage."
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