|
Getting your Trinity Audio player ready...
|
Following the introduction of FX primary dealers and non-FX primary dealers yesterday by the Central Bank of Nigeria (CBN), analysts are pointing to eight systemically important banks (SIB) to become the major players market.
The CBN yesterday introduced FX Primary Dealers (FXPDs) to be registered authorised dealers designated to deal with the CBN on large trade sizes on a two-way quote basis. The FXPDs shall operate with other authorised dealers (non-FXPDs) in the Inter-bank market.
The central bank said eight to 10 primary dealers would supply the interbank market with dollars, handling minimum volumes of $10 million.
The primary dealers will be allowed to sell back 70 percent of any dollars bought from the central bank on the day of purchase. Sales must be backed by a specific customer order to avoid currency speculation, the central bank said.
Their choice of the eight systemic important banks are based on their Size – represented by total assets; Interconnectedness – represented by net interbank placements; Substitutability – represented by total credits and total deposits; and complexity – represented by total number of branches and foreign subsidiaries.
The Systemically Important Banks accounts for N18.15 trillion or 68.9 percent banking sector total asset of N26.4 trillion at the end of December 2015, according to the CBN.
The eight systemically important banks include Access Bank Plc, Skye Bank Plc, United Bank for Africa Plc, First Bank of Nigeria Limited, Zenith Bank Plc, Guaranty Trust Bank Plc, Ecobank Nigeria and Diamond Bank Plc.
Similarly, the SIBs accounted for 71.3 per cent (N11.9trillion) of total industry deposit of N16.73 trillion. The D-SIBs also accounted for a significant portion of the loans and advances to the economy as at December 2015 with N9.54 trillion (71.45%) of the total N13.35trillion from the industry.
Market sources also pointed to Citibank and Standard Chartered Bank as potential FX primary dealers.
Godwin Emefiele, governor of CBN said yesterday that the players have to play with highest level of professionalism. “We expect players to be people who can deliver on their words”, he said while addressing journalists during the press conference in Abuja.
Razia Khan, managing director, chief Economist, Africa, Global Research, Standard Chartered Bank, London said the new forex products introduced by the CBN is broadly positive.
An analyst at UBA who spoke with BusinessDay yesterday said the trade and investment ministry should complement the forex policy by promoting export.
