Investors dump shares of Nigerian banks after foreign exchange trade suspension
The central bank suspended FCMB, First Bank, United Bank for Africa (UBA), Heritage Bank, Keystone Bank, Skye Bank, Diamond Bank, Sterling Bank, and Fidelity Bank on Tuesday for withholding government dollars from the national treasury, banking sources said.
Shares in Diamond Bank fell the most, shedding 7.32 percent in early trade, followed by Sterling bank which was down 3.88 percent. FCMB fell 2.5 percent, FBN Holdings shed 1.5 percent, while Skye Bank was down 1.54 percent.
According to the central bank, the banks had failed to remit $2.1 billion, which was the government’s share of dividends from the state-owned gas company NLNG. The banks were supposed to pay the money into the government’s account at the central bank.
Last year, President Muhammadu Buhari ordered government payments to be made into one single central bank account as part of his pledge to fight graft.
UBA denied late on Tuesday that it had withheld any government funds. “We wish to state very categorically that UBA has completely remitted all NNPC/NLNG dollar deposits,” Charles Aigbe, the bank’s spokesman said in an email.
FCMB has said it was working with the central bank to solve the issue, while the other banks either had no immediate comment or were not reachable for comment.
The suspensions came after the central bank tightened restrictions on the flow of dollars to domestic lenders in March. That has forced banks to delay hard-currency loans andtrade repayments and increased their risk of default.
Nigeria, Africa’s largest economy, is suffering its worst financial crisis in decades as a slump in oil revenues hammerspublic finances and the naira. The central bank governor has said a recession is likely.
The bank floated the currency in June to attract investment, allowing the naira to fall by 40 percent against the dollar. But foreign investors have remained on the sidelines, making thecentral bank the main supplier of dollars.