Nine Banks May Meet CBN Criteria For Primary Market Dealers | Independent Newspapers Limited
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Nine Banks May Meet CBN Criteria For Primary Market Dealers

Posted: Jun 17, 2016 at 4:32 am   /   by   /   comments (1)

Bamidele Ogunwusi

Lagos – As Nigerians await the commencement and implementation of the Central Bank of Nigeria’s (CBN) guidelines on forex primary dealers there are indications that just nine deposit money banks (DMBs) may likely qualify for the interbank/autonomous market which opens on Monday, June 20.

While unveiling the broad forex market framework, Godwin Emefiele, governor, Central Bank of Nigeria (CBN), said between eight and ten banks will be appointed with the requirement that they are able to deal in minimum sizes of $10 million for spot transactions and at least $5 million for forwards, forex swaps and futures.

The CBN said banks that can provide two-way quotes in the necessary size, have the right infrastructure in place, are sufficiently capitalised (Tier 1 equity of at least N200 billion or a minimum of N400 billion in total foreign currency assets), are sufficiently liquid, and have a history of compliance with CBN regulations will be eligible as primary FX dealers.

The CBN is expected under the arrangement to deal mainly with these primary dealers, although other licensed forex dealers will operate in the new system as there will be no pre-determined spreads on CBN transactions.

The central bank released guidelines for its new flexible exchange rate policy on Wednesday following the press conference by the CBN governor, Godwin Emefiele.

One of the key details of the policy was the introduction of FX Primary Market Dealers (FXPDs) that shall be registered authorised dealers designated to deal with the CBN on large trade sizes on a two-way quote basis, amongst others.

Commercial banks who may likely meet the requirements are FBN Holdings, Zenith Bank, United Bank for Africa, Guaranty Trust Bank, Access Bank, Diamond Bank, First City Monument Bank, Fidelity Bank and Sterling Bank.

FBN Holdings leads the pack with N1.549 trillion foreign assets, N575 billion shareholders’ funds and a liquidity ratio of 55.80 percent, followed by Zenith Bank which has $1.324 billion in foreign assets, N621 billion shareholders’ fund and 47.70 percent liquidity ratio, while United Bank for Africa has N1.160 trillion in foreign assets, N347 billion shareholders’ fund and 50 percent liquidity ratio.

Guaranty Trust Bank’s liquidity ratio of 36.10 percent, N434 billion shareholders’ fund and N972 billion in foreign assets also qualified it for a place in the primary dealers’ club just as Access Bank also got a spot with  N794 billion in foreign assets, N382 billion in shareholders’ fund and a liquidity ratio of 37.60 percent.

Diamond Bank has N575 billion in its foreign assets, N199 billion in shareholders’ fund and 52.40 liquidity ratio, First City Monument Bank’s foreign assets stood at N346 billion, N164 billion in shareholders’ fund and 38.20 percent liquidity ratio, Fidelity has N329 billion foreign assets, N184 billion shareholders’ fund and 37.50 percent, while Sterling Bank has N224 billion in foreign assets, N94 billion shareholders’ fund and 46 percent liquidity ratio.

Comments (1)

  • Jun 17, 2016 at 10:54 am Osaze Igho

    This is to a large extent expected in a game of size and not name.

Comments are closed.