A Federal High Court sitting in Lagos, Southwest Nigeria has adjourned for further hearing of the N6,441,369,617.73 suit instituted against Zenith Bank Plc, by a Lagos businessman, Olusola Adejugbe and his company Tonique Oil Services limited over alleged excess and illegal charges.
By a further amended statement of claim accompanied by written statement on Oath sworn to by Adejugbe and filed before the court by Lanre Ogunlesi SAN, the businessman averred that in the course of his business engagements, his company Tonique Oil Services Limited obtained several credit facilities from Zenith Bank PLC while he pledged three of his properties as securities for the loan facilities.
The plaintiffs averred that three different transactions leading to this litigation occurred in the company’s current account whereby excess interest and charges were discovered. The company demanded for a reversal but the bank refused.
A forensic accounting firm was commissioned to scrutinize and analyse the Company’s account. It was then discovered that between August 2006 and December 2013, excess interest and charges on the Company’s account by Zenith Bank Plc amounted to N1,842,471,801.99.
By a letter dated 19th February 2008, the bank granted Tonique Oil Services Company commercial paper facility of N2,568,644,276.09 to finance the purchase of 30,000MT of Petroleum products, but N2,501,270,000 was credited into the account of the company.
However, it was alleged further that instead of Zenith Bank financing the purchase of 30,000 metric tons of Petroleum products for the company as per letter of offer, the entire sum of N2,501,270,000 was diverted by the bank for the purchase of its own shares during the bank’s initial public offer, a conduct that is unethical, unprofessional and reprehensive.
In addition, out of the sum of N104,363,212.03 assessed as dividends payable on the bank’s shares only N42,173,498.43 was credited into the company’s account leaving outstanding balance of N62,169,713.60.
The bank’s shares purportedly bought by the Tonique Oil Company with the facilities granted by Zenith bank were managed by the bank so much that the bank eventually liquidated the shares after the value has nose-dived and depreciated.
Another activity on the Tonique Oil Company current account with the bank was the sale and purchase of a property in Port Harcourt that belonged to one of the shareholders /customers of the bank who needed to clean up some of his obligations to the bank. It was the bank who introduce Tonique Oil company to the shareholders 50,000 square meters of land out of which the company bought 20,000 square metres for the purpose of expanding its business earnings.
To facilitate the purchase of the land, the bank offered the company a term loan of N500,000 and it was part of understanding of the company and the bank that after the purchase of the land, the bank will finance the company’s Tank forms to be built thereon.
After the purchase of the land, the bank took possession of the title documents of the land as collateral but reneged on the promise and understanding to finance the Company’s tank farm on the land and since 2008 the land had been under the management of the bank and the same had been lying fallow.
In this circumstance, the plaintiffs contended that Tonique Oil Company was not indebted to the bank and any alleged indebtedness could only have been arisen as a result of the unconscionable and illegal acts of the bank’s officials in debiting the company’s account with astronomical spurious interest charged, consequently the plaintiffs also contended that such interest charges are illegal in that they contravene the Central Bank of Nigeria Monetary Credit and Foreign Exchange/Trade guidelines.
The plaintiffs financial consultant computed other charges that were passed into the account of the company, base on relevant policy circulars, guide to bank charges of Central bank of Nigeria and discovered that the bank excessively overcharged the company on interest on overdraft, COT, and VAT on COT, Management Fees, upcountry transfer fees, interest on commercial paper, foreign exchange purchases and letter of credits.
Consequently, the plaintiffs are contending that they are not indebted to the bank rather the bank has overcharged the plaintiffs to several billions of Naira.
The plaintiffs are urging the court to declare that Zenith Bank being a bank within the supervisions and control of CBN cannot charge interest on any facilities granted to them beyond the official approved policy rate of the Central bank of Nigeria.
The plaintiffs are also urging the court not only to restrain the bank from selling their property pledged as securities for the loan but to also compel Zenith Bank to pay Tonique Oil services company the sum of ₦6,441,369,617.73 being the total excess charges debited into the company’s account by the bank and interest on the same amount at the rate of 21% per annum from the date of judgement of the court until final liquidation.
However, by its further statement of defence accompanied with statement on oath sworn to by Senior Assistant Manager, Internal Control and Audit Department of Zenith bank, Vincent Ohanugo and filed before the court, the bank denied almost all the company’s claim and stated that the company was granted the following loans: ₦2.5 billion regular commercial paper , $36 million united state Dollars import finance facility, $6,648,000 commercial paper /usance facility $9 million Dollars import finance facility via usance facility $11 million Dollars short term import facility of ₦500 million.
The Central Bank of Nigeria, CBN, has said that the Federal Government recorded fiscal deficit of N910.41 billion in the fourth quarter of 2018.
The CBN stated this in its latest economic report.
It said: “Federally-collected revenue, at N2.41tn, in the fourth quarter of 2018, was 27.4 per cent and 4.8 per cent lower than the estimate and the receipts in the preceding quarter, respectively.
“The development relative to budget estimate was due to the shortfall in receipts from both oil and non-oil revenue in the reviewed quarter. Federal Government estimated retained revenue and total expenditures were N916.44bn and N1.826tn, respectively, resulting in an estimated deficit of N910.41bn in the fourth quarter of 2018.”
According to the report, the cessation of rainfall in the period led to widespread dryness across the country.
The report also said that agricultural activities in the fourth quarter were dominated by harvesting of tubers, grains and vegetables.
“In the livestock sub-sector, farmers continued with the breeding of poultry birds and fattening of cattle in anticipation of the end of year sales,” the CBN said.
It said the end-period headline inflation on year-on-year and 12-month moving average bases for the review period were 11.44 per cent and 12.10 per cent, respectively.
The apex bank maintained a non-expansionary monetary policy stance in the fourth quarter of 2018, aimed at further curbing inflationary pressure.
Broad money supply (M3), on a quarter-on-quarter basis, grew by 8.3 per cent to N33.42tn at end-December 2018, compared with the growth of 5.1 per cent at end-September 2018.
The development, the report said reflected, wholly, the 4.5 per cent increase in domestic credit (net) of the banking system, adding that broad money supply grew by 16.6 per cent, compared with the 7.6 per cent and 0.6 per cent growth recorded at the end of the preceding quarter of 2018 and the corresponding quarter of 2017, respectively.
The report also indicated that growth in M3 was due to the 6.4 per cent and 18.5 per cent increase in domestic credit (net) and foreign assets (net) of the banking system, respectively.
On a quarter-on-quarter basis, narrow money supply (M1), rose by 9.2 per cent, compared with 0.5 per cent and 11.0 per cent at the end of the preceding quarter, due largely to the 19.4 per cent and 7.5 increase in its currency outside banks and demand deposit components, respectively.
Developments in banks’ deposit rates were mixed, while lending rates trended downwards in the review quarter.
With the exception of the one-month and three-month deposit rates which fell by 0.26 and 0.04 percentage point to 8.79 per cent and 9.43 per cent, respectively, all other deposit rates of various maturities rose from a range of 3.68 – 10.10 per cent to 3.86 – 10.52 per cent at end-December 2018.
The CBN report further stated that average savings rate remained unchanged at 4.07 per cent, same as at the end of the third quarter of 2018, while the average term deposit rate rose by 0.12 percentage points to 8.63 per cent at end of the review quarter.
The Central Bank of Nigeria, CBN, on Monday said there is no truth in a report alleging that faceless agents, backed by regulators, were exploiting the nation’s multiple exchange rates.
According to the report, the activities of the faceless agents which have devastating effects on the forex market, gives the agents about N32 billion annually.
The CBN, in a statement on Monday, said: “The forex rates across various markets governed and regulated by the CBN, have been converging, leaving no room for arbitrage opportunities in Nigeria’s forex market.
“For avoidance of doubt, the CBN will continue to act in the best interest of Nigeria and shall ensure it remains focused on its core mandate of sustaining the stability in the forex market.”
The Central Bank of Nigeria (CBN) on Monday denied involvement in foreign exchange manipulation as alleged in one of the national dailies.
The bank’s Director, Corporate Communications of the CBN, Mr Issac Okorafor made the denial on its Website.
The regulator noted that the story by BusinessDay Newspaper titled, “Exposed The Sleazy Face of N306/$1, inside Nigeria’s racket where faceless agents pocket over N32bn annually” was unfounded and untrue.
It therefore, challenged the BusinessDay Newspaper to provide the names of agents involved, and also verifiable evidence of collusion.
The CBN said: “The management of the CBN wishes to react to the report wherein BusinessDay Newspaper alleges that faceless agents in Nigeria are exploiting the country’s multiple exchange rates to devastating effects and allegedly with the backing of regulators.
“The CBN wishes to state unequivocally that this report is unfounded and untrue and challenges BusinessDay to provide the names and also verifiable evidence of collusion between these faceless agents and officials of the CBN, who are working to perpetuate these so called Forex (Fx) racket schemes.
“We would also urge the management of BusinessDay to contact the CBN prior to making such spurious allegations, as we were denied the benefit of responding to this article.
“The CBN wishes to remind BusinessDay, as most financial observers have noted, that the Fx rates across various markets governed and regulated by the CBN have been converging, leaving no room for arbitrage opportunities in Nigeria’s Fx market.
“For avoidance of doubt, the CBN will continue to act in the best interest of Nigeria and shall ensure it remains focused on its core mandate of sustaining the stability in the Fx market.”
African leading commercial bank, Absa (Amalgamated Bank of South Africa) has ruled out the acquisition of a Nigerian bank in the pursuit of its aggressive growth strategy.
Absa’s Chief Executive Officer, Maria Ramos, disclosed this to News men on the sidelines of the World Economic Forum in Davos yesterday. Ramos said while Nigeria is a big and exciting banking market, Absa would build its presence in the country slowly and organically and did not plan to become a top lender. She stated: “For us to be in the top three or four would mean us going out and acquiring a Nigerian business.
The Nigerian banks are big and expensive and we wouldn’t be looking to do that.” South Africa’s third biggest lender had not previously been so explicit on its intentions in Nigeria, which is set to become a lively battleground in the fight for Africa’s banking market. It has highlighted the country as key to its plan to double its share of banking revenues on the continent to 12 percent – one of a series of ambitious targets Absa has set as it tries to carve out a name for itself after separating from Britain’s Barclays in 2017.
Ramos was however cautious on the potential in Nigeria, described by McKinsey last year as a “sleeping giant” where banking penetration is far lower than expected relative to income levels. She maintained that the market was “big and exciting” and remains important, but noted that Absa was concentrating on the “huge amount of opportunity” in its other markets outside South Africa.
The Central Bank of Nigeria (CBN) has injected $289.76million into the retail secondary market intervention sales and CNY38.70million into the spot and short- tenored forwards segment of the inter-bank foreign market.
The Director, Corporate Communications Department, CBN, Isaac Okorafor, who disclosed this in a statement, noted that the dollar-denominated interventions were for transactions in the agricultural and raw materials sectors.
He also added that on-the-spot and short- tenored sales in Chinese Yuan were similarly for the payment of Renminbi-denominated Letters of Credit for agriculture and raw materials based on bids the apex bank received from authorised dealers.
Okorafor also reaffirmed CBN’s support to the inter-bank foreign exchange market, saying: “The management of the CBN is pleased with the level of stability at both the Bureau de Change and the investors’ and exporters’ window of the foreign exchange market.
“The bank is also satisfied with the current implementation of the bilateral currency swap agreement with the Peoples Bank of China, coupled with a recent inflow of about $2.8bn Eurobond.”
Okorafor also expressed confidence that the foreign exchange market in Nigeria would remain stable in the coming months and beyond, with the marginal increase in the country’s external reserves.
It would be recalled that the CBN had earlier injected $210 million into the wholesale, small and medium enterprises and invisibles windows of the inter-bank foreign exchange market on January 17.
Each branch of Deposit Money Banks (DMBs) in the country that pays out counterfeit or mutilated banknotes will be fined N1 million, the Central Bank of Nigeria (CBN) has said.
According to the CBN, such goes contrary to its ‘Banknote fitness guidelines and clean note policy documents for the industry.’
The apex bank disclosed this in a circular to all DMBs on ‘Penalty for payment of counterfeit monies from ATMs, Teller Points’ on Wednesday.
It said: “The management of the CBN has observed with concern the incidences of counterfeits paid through some DMBs’ ATMs/Teller points. This situation has continued unabated despite moral suasion to the affected DMBs.
“To address this, among others, the CBN in collaboration with key currency management stakeholders developed ‘Banknote fitness guidelines and clean note policy documents for the industry.”
“In order to sustain public confidence in the national currency and ensure compliance with the provisions of the policy documents, the CBN said it approved the, “Spot checks on DMBs’ ATMs and Teller points to ensure compliance; and imposition of penal fee of N1m per branch of DMBs for non-compliance.”
The CBN also said that the enforcement of the sanction would take effect after the launch of the two policy documents at a date which would be communicated to all stakeholders.
The apex bank, which claimed that it has the statutory obligation to provide adequate supply of clean banknotes to facilitate seamless payment and settlement of transactions by the public, government and banks, said it observed that the growth in economic activities and the upsurge in population had necessitated the rise in the volume of banknotes in circulation.
It also noted that in view of technological advances, the CBN, like other central banks, introduced various forms of electronic payment systems for an effective and efficient settlement of transactions and to reduce the volume of cash usage with its attendant cost implications.
The CBN however noted that demand for cash continued to grow despite technological advances.
“The volume of currency in circulation as at the end of 2012 rose significantly by 10.34 per cent to N7.91tn pieces, as at half year of 2018,” it stated.
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has raised the alarm that Nigeria may return to the pre-2005 Paris Club debt level, if the Federal Government fails to come up with immediate measures to address the rising debt profile.
The MPC stated this on Tuesday in Abuja after its first meeting of the year.
It would be recalled that in October 2005, Nigeria and the Paris Club announced a final agreement for debt relief worth $18bn and an overall reduction of Nigeria’s debt stock by $30bn.
The deal was completed on April 21, 2006, when Nigeria made its final payment and its books were cleared of any Paris Club debt.
Statistics from the debt management office showed that Nigeria’s debt profile as at June 2018 stood at $22.08 billion.
However, key officials of the President Muhammadu Buhari’s administration have consistently dismissed fears raised by Nigerians over the rising debt profile.
Prominent among these Buhari administration officials are the Vice President, Yemi Osinbajo and the Minister of Power, Works and Housing, Babatunde Raji Fashola.
Speaking on behalf of the MPC on Tuesday, CBN Governor, Mr Godwin Emefiele, said that the committee noted the rising debt profile and called for caution.
He said: “On external borrowing, the committee noted the increase in debt level advising for caution, noting that it could fast be approaching the pre-2005 Paris Club level.”
According to Emefiele, the committee noted that while the real Gross Domestic Product grew by 1.81 per cent during the third quarter of 2018, the persistence of herdsmen attacks on farmers, cattle rustling and flooding in parts of the country affected agricultural and livestock output.
He said in view of this, the output for growth remained fragile as the late implementation of the 2018 budget and the residual impact of flooding and security challenges constituted headwinds to growth.
The MPC called for the effective implementation of the 2018 capital budget and the Economic Recovery and Growth Plan in other to stimulate economic activities.
It also hammered on the need for improvements in the security situation in the country as well as continued stability in the foreign exchange market to enhance aggregate demand and growth.
“The committee observed that the near term risk to inflation remain the impact of flooding on agricultural output, insecurity on food producing belts in the country, exchange rate pass through to inflation due to the weakening of oil price and campaign-related spending towards the 2019 general elections.
“Accordingly, the Monetary Policy Committee called on the Federal Government to sustain its efforts towards improving security to ease supply chain bottlenecks.
“The committee recommended that the Federal Government should focus investment on infrastructure and urge the Federal Government to sustain the pace towards addressing infrastructure deficit in Nigeria.
“It noted that the immediate impact of this on the GDP will be slow in coming but it will expand the economy, reduce unemployment and increase aggregate demand in a more sustainable manner”, Emefiele said.
The MPC also backed the plan by the Federal Government to raise more revenue through Value Added Tax, saying the move would help to reduce pressure on government expenditure.
“The committee also noted the attempts by the government to broaden the base of the Value Added Tax and urge the authorities to expedite action in that effect, arguing that increased tax collection will reduce pressure on government expenditure and create fiscal buffers to improve macroeconomic management,” he added.
On the recent increase in foreign capital inflow into the country despite the political risks, Emefiele said this was based on the confidence of the international community in the country’s macroeconomic management.
He said: “The observed and recent high foreign capital inflow into the Nigerian economy despite the perception of political risks is based on the confidence of the international community in the country’s macroeconomic management and provides a compelling reason for the committee to await clarity on the macroeconomic performance after the general elections in February and March.”
The Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC) has granted approvals in principle for the merger of Access and Diamond banks.
This was disclosed by the Executive Director, Personal Banking at Access Bank, Mr Victor Etuokwu in Lagos.
According to Etuokwu, the banks were awaiting the final approval which would be granted after convening shareholders meeting.
“So far, we have gotten approvals up to approval in principle. There are three approvals that we need for this process.
“The first one is the pre-order approval which is like the first approval, the next approval is the approval in principle.
“The final approval comes after approval in principle and it will come after you have convened your shareholders meetings,’’ Etuokwu said.
Etuokwu further disclosed that the banks would convene shareholders meetings in February, adding that the approval would be taken to court once approved by the shareholders.
Explaining that all the processes, including final approval would be completed in the next 60 days, Etuikwu said the new bank would remain committed to retail and corporate banking to drive financial inclusion for desired growth and development.
“We need to invest in retail market to drive economic growth, this is what the new bank will do, a strong corporate and a strong retail bank,’’ he said.
Speaking on the likelihood of staff retrenchment, Etuokwu said that members of staff would be retrained for different roles in case of overlapping.
“Staff will be retrained for new roles where there are overlaps, one of the branches can be converted to an e-branch or Automated Teller Machine (ATM) gallery,’’ he added.