Forex: Suspended Banks Meet CBN To seek truce

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Nine banks banned this week from foreign exchange trading for failing to remit some oil money into a government account are holding talks with the Central Bank to seek a truce, operators said Thursday.

The Central Bank of Nigeria (CBN) on Tuesday suspended nine banks for withholding 2.12 billion dollars belonging to the Nigerian National Petroleum Corporation (NNPC) and the Nigeria Liquified Natural Gas (NLNG) contrary to a government regulation.

“We have been meeting with CBN officials to find a way out of the impasse because, if the crisis persists, it may have very dire consequences on the financial system,” a top executive at one of the affected banks said.

He said the ban might trigger “a run on the banks” as concerned customers withdraw their deposits.

“Customers may think the suspension is a signal of distress and may rush to take out their money,” he said.

Nigeria’s oil-dependent economy is in recession because of low oil prices and resulting foreign currency shortages, hammering government revenue and pushing inflation to an 11-year-high of 16.5 percent in June.

The administration of President Mohammadu Buhari, who took office in May last year, ordered all government revenues to be paid into Treasury Single Account (TSA) in the CBN to prevent fraud, and in his fight against corruption.

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The United Bank for Africa (UBA), one of the suspended banks, said its ban had been lifted after it remitted $530 million.

“We are pleased to inform our valued customers, stakeholders and business partners as well as the general public that the CBN has re-admitted us into the Foreign Exchange Market following our remittance of all NNPC/NLNG dollar deposits,” spokesman Charles Aigbe said in a statement.

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