TSA: CBN Fines FirstBank, UBA N4.82bn for Concealing NNPC Funds

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In line with its threat to sanction commercial banks that failed to comply with the federal government’s directive on the remittance of government revenue to the treasury single account (TSA), the Central Bank of Nigeria (CBN) last Friday fined First Bank of Nigeria Limited (First Bank) and United Bank for Africa (UBA) Plc the sum of N4.819 billion.

According to a circular obtained from banking industry sources, while the CBN imposed a penalty of N1,877,409,905.12 on First Bank, UBA was fined N2,942,189,651.45 for its failure to comply with the federal government’s policy.

An industry source explained that First Bank concealed N37,548,198,102.41 belonging to the Nigerian National Petroleum Corporation’s (NNPC) instead of remitting it to the TSA as directed.
On the other hand, UBA concealed N58,843,793,029.05 of NNPC funds, which attracted the penalty.

The source explained that the penalty was the equivalent of five per cent of the funds they failed to remit respectively.
“The accounts of both banks with the CBN have been debited for the unremitted amounts and the penalties,” she added.

Providing further insight, the source said at the last Bankers’ Committee held in Lagos early this month, the central bank officials had impressed on the banks the need to comply with the directive, saying that it had it on good authority that some banks were colluding with some ministries, departments and agencies (MDAs) to conceal their funds.

In response, the bank chief executives said that they had a directive from the Accountant-General of the Federation to a Director in the CBN exempting some MDAs from transferring their funds to the TSA.

The chief executives of both banks were said to have been present at the meeting held at the central bank’s Lagos office on October 2.
“But the CBN rejected the claim, informing them that the letter was written to a Director with the CBN and not the governor of the CBN and that the governor had not received a counter-directive from the presidency on the transfers. After the clarification, they all promised to remit any outstanding amounts with them.

“However, a week after the meeting, CBN discovered that some banks had still not complied and proceeded to call all tier 1 banks reminding them that they must do so, otherwise they would be sanctioned.

“They responded again stating that the Office of the Accountant General had again sent them a schedule asking them to disclose how much of the funds belonging to MDAs had been transferred and how much was still with the banks,” she explained.

Thereafter, the source said the CBN Director, Banking Supervision, Mrs. Tokunbo Martins, then wrote to the banks asking that they furnish it with information on any unremitted funds, after which it was established that FirstBank and UBA had failed to remit N58.8 billion and N37.5 billion respectively, leading to the imposition of the penalty of N4.819 billion on both banks.

The source explained that FirstBank and UBA were being recalcitrant by refusing to comply with the directive despite repeated efforts by the CBN to get them to transfer the concealed funds.

She however clarified that the concealment was not a reflection on their liquidity, as both banks are very liquid.
“The system is awash with liquidity and this has been reflected in the NIBOR and deposit rates which have crashed. FirstBank and UBA as Tier 1 banks are both very liquid, so their decision to conceal the funds had more to do with their collusion with the chief executives of the MDAs than any confusing directive from the Accountant General,” she explained.

However, an executive of First Bank informed THISDAY last week that there must have been some kind of “miscommunication” that led to the non-transfer of the NNPC funds.

He explained that when the confusion arose from the circular from the Accountant-General, CBN had itself directed that NNPC’s funds should be retained with the banks for 18 days, pending the resolution of the matter.


“The 18 days only expired last week, so we do not see how we failed to comply with the directive or attempted to conceal the funds. This is most unfortunate and occurred due to miscommunication from the Accountant-General and the regulator,” he said.
The FirstBank executive further assured THISDAY that his bank does not have a liquidity crisis, adding that FirstBank has a liquidity ratio of 50 per cent, 20 per cent above the CBN threshold of 30 per cent for commercial banks in the country.

“Trust me, we are very liquid. We have a liquidity ratio of 50 per cent, which is 20 per cent above the rate permitted by the CBN for banks.
“We have even informed our depositors that we are crashing deposit rates to between 3 and 4 per cent because we have excess liquidity, so we do not have a liquidity crisis in any shape or form,” he stated.

THISDAY had exclusively reported penultimate Sunday that the presidency and the central bank were considering penalising two prominent banks for failure to comply with the directive on the transfer of funds to the TSA.
The penalties that were considered included the suspension of the chief executives of the banks and its board of directors and/or imposition of penalties.

THISDAY also gathered that some banks were hiding under the authorisation letter from the Accountant-General of the Federation, Alhaji Ahmed Idris, who tried to exempt certain agencies, and was using that as a basis not to comply with the TSA.
But the CBN, in line with its September 9 circular, restated its resolve to punish any commercial bank that failed to comply with the policy on the TSA.

Meanwhile, the CBN has reiterated its resolve not to further devalue the naira.
Speaking in an interview with journalists on the sidelines of his investiture as a fellow of the Chartered Institute of Bankers of Nigeria in Lagos at the weekend, the Deputy Governor (Corporate Services), CBN, Mr. Adebayo Adelabu, said the official position of the central bank on naira devaluation had been made public.

“We all are aware of the official position of the central bank about this, that there would not be devaluation for now,” Adelabu said.
When asked if the central bank would consider the advice by the Emir of Kano and a former CBN Governor, Muhammad Sanusi II, calling on the central bank to devalue the nation’s currency, Adelabu said: “Like I mentioned earlier, we have made our official position known about naira devaluation to the public, there could be comments from different people, but we have stated our official position on that.”
Speaking earlier, the deputy CBN governor said the nation was feeling the effect of the slump in crude oil price, adding that Nigeria’s policy makers failed to diversify the economy during the time of oil price boom.

This, he said was responsible for the pains being felt in the country.
“We all know what is happening globally, and because we don’t operate in an island, what is happening in the global economy is affecting our economy, our communities and even the families.

“The dwindling price of oil and the reduction in oil production are all affecting us and have led to a drop in the country’s revenue.
“Because we rely so much on oil as the primary revenue earner for the country, we have seen where we have found ourselves. Failure to plan, they say is planning to fail. We lost the opportunity to diversify when oil price was high.

“It is periods of boom that we were supposed to have diversified our economy, instead we did not. We thought it was going to remain unchanged forever. Now that we are learning the hard way, I believe we don’t need any teacher to teach us,” he added.
Adelabu also stressed the need for growth of the agriculture sector and for Nigerians to start patronising local products so as to stimulate economic growth.

The Emir of Kano last week advised the CBN and the presidency to reconsider their stance against naira devaluation, saying the country could not continue to live “in denial.” He also called for a complete removal of the subsidy on fuel.