Alleged forex infractions: experts want indicted banks to finish punishment

By Chinyere Joel-Nwokeoma – Some financial experts on Thursday urged the Central Bank of Nigeria (CBN) to ensure the 14 banks banned to see through their punishment.

The experts, who spoke in Lagos, said that the ban would curb banks’ excesses, round-tripping, inflation and the continuous depreciation of the nation’s currency.

Prof. Sheriffadeen Tella, Prof. of Economics, Olabisi Onabanjo University, Ago-Iwoye, in Ogun said the ban would check activities of banks if the CBN could ensure they go through the punishment.

Tella said most of the banks had been involved in round-tripping because they get forex from CBN and resell same to the black market.

He said that the action was responsible for the rapid depreciation of the Naira, capital flight and inflation.

“If some banks are banned and seen to have been properly punished, others will be careful,” Tella said.

Dr Uche Uwaleke, the Head of Banking and Finance Department, Nasarawa State University, Keffi, described the ban as a welcome development.

Uwaleke noted that the apex bank should continue to apply the big stick on erring banks to instill sanity in the sector.

“It is unfortunate that a bank will access forex at a special rate meant for SMEs and divert such to other purposes.

“It is hoped that this action of the CBN will go a long way in minimising complaints by the SMEs and improve their access to forex for importation of the much needed raw materials,” he stated.

Uwaleke added that the CBN should​ give a pat on the back to the eight banks that disbursed forex to SMEs in line with the CBN guidelines.

He said that improved access to forex by the SMEs would increase their productivity level, as well as lead to lower inflation thereby hastening the process of economic recovery.

Mr Sewa Wusu, Head Research, SCM Capital Ltd., Lagos said that the banks should be severely dealt with to act as deterrent to others.

“I think they took the action to prevent any form of instability or distortions to supply in order to ensure the smooth running of various interventions in the markets.

“It is a signal that the CBN is sending that it would not tolerate any impediments to cause another round of abrasion in the market, particularly as we have begin to see some level of rate convergence and by extension stability in the market,’’ Wusu added.

He said that the SMEs play critical roles in the economy, in terms of job creation, among others.

According to Wusu, special window has been created for SMEs to ensure access to foreign exchange for their businesses.

He said that any form of distortion to that flow would likely downplay the objective of the foreign exchange windows.

Mr Ambrose Omordion, the Chief Operating Officer, InvestData Ltd. , Lagos said that the suspension was a good measure to awakne the banks to do the right thing.

Omordion said that all hands must be on deck in revamping the economy from the current recession.

He stated that CBN needed to be tough with the sanctions to discourage banks from committing further infractions.

CBN had on May 2, barred 14 banks from dealing in the SMEs wholesale forex window.

The affected banks are; First Bank, FCMB, Keystone Bank, Mainstreet Bank, Stanbic IBTC, Citi Bank, Enterprise Bank and Wema Bank.

The rest are; Guaranty Trust Bank, First City Monument bank, Union Bank, SunTrust Bank, Standard Chartered Bank and United Bank for Africa.

Mr Isaac Okoroafor, the CBN Spokesman said they were barred, following persistent complaints that some Deposit Money Banks (DMBs) were deliberately frustrating efforts by many SMEs to access forex.

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