- It mustn’t affect our ROI, shareholders warn
Citing the need to strengthen corporate governance and ensure transparency among financial institutions in the country, the Central Bank of Nigeria has penalised five banks. It fined them a total sum of N341 million, as atonement for contravening various regulations in the banking sector.
The banks – Diamond bank Plc, GTBank Plc, Union Bank Plc, First City Monument Bank Plc, and Stanbic IBTC Bank Plc – suffered the levies in the financial year ended 2017, The Point’s investigation has revealed.
Analysis of the banks’ financial statements for the year ended December 2017 revealed that the penalties were paid for various offences, ranging from unutilised foreign exchange from the CBN, to late rendition of returns, and then, violations of guides on bank charges, among others.
A breakdown of the banks’ financials showed that while Diamond Bank paid N28m, GTBank paid N65m, Stanbic IBTC, N228m; Union Bank, N12million; and FCMB, N8m, as fines to regulatory agencies.
All details of the payments for the infractions are contained in the banks’ financial returns submitted to the Nigerian Stock Exchange for the period under review.
Various regulatory bodies in the banking sector routinely impose sanctions as a means of strengthening corporate governance in the financial institutions and ensuring transparency, it was gathered.
In the case of Diamond Bank, findings revealed that it was fined N14m for contraventions noted during the foreign exchange supervisory examination – N6m for risk-based supervision report; N4m for monthly report on transactions of politically exposed persons; N2million for non-compliance with the know-your-customer regulation; N2million for litigation case/failure to promptly respond to regulatory directives, among others.
GTBank, on its part, was fined N50m as penalty for late rendition of returns – N6 million as penalty on infractions on Guide to Bank Charges, and a separate N2 million penalty on closure of an e-branch without CBN approval.
In respect of Limit Above Gross Aggregate Net Open Position, it paid a separate N2 million; for under-repatriation of export proceeds by two customers of the bank, it paid another N2 million; and as penalty for delay in rendition of returns, it paid N25, 000, among others.
Stanbic IBTC was penalised to the tune of N200m by the CBN, Securities Exchange Commission and the Nigerian Stock Exchange, respectively, for late rendition of its daily FinA returns for February, July and September 2017, among others.
The CBN imposed a penalty of N10m on the bank for the deployment of an offsite ATM without the apex bank’s approval; it was also surcharged because returns for ATM cards to CBN on FinA were different from the returns provided for examiners’ review at the E-business, thus, not fully complying with Section 3 (8) of prudential guidelines, among others.
Other infractions listed against Stanbic IBTC are: N4million for consummating a transaction of N16.35m without obtaining CBN approval, and for also contravening a CBN circular. The apex bank also imposed a penalty of N14m on it for failing to notify the former within 30 days of re-deployment of some staff members.
It sounds ironic that while government is making efforts to ensure that more companies access the capital market, its agencies, saddled with regulating activities in the financial sector, are playing discouraging roles
IT MUST NOT AFFECT OUR ROI -INVESTORS
Meanwhile, some shareholders of the banks, who spoke with The Point in separate interviews, have warned the respective managements of their banks and regulators, that such sanctions must not affect their Returns On Investment.
They expressed concerns on why authorities in banks often violate the rules and regulations for banking operations, thus leading to payment of sanctions from money that ought to accrue to shareholders as dividend.
Some analysts are, however, of the opinion that banking operations are huge and complex, making it almost difficult to record a hitch-free operation throughout the financial year. Others argue that the regulatory bodies should come up with tighter sanctions, to control infractions and make the management of banks comply with the rules.
The National Coordinator, Pragmatic Shareholders Association, Mrs. Bisi Bakare, explained that the incessant penalties on banks were not only affecting returns on investments, but were also discouraging companies from listing their shares on the NSE.
She, however, appealed to the regulatory bodies to come up with a strategy to control the infractions and make the management of banks comply with the rules.
National Chairman, Progressive Shareholders Association of Nigeria, Mr. Boniface Okezie, on his part, said the fines were becoming counter-productive, making some companies to consider delisting as an option.
He said, “In fact, the way regulators are charging fees and imposing fines on companies is becoming a big risk to our investments in the market. Many companies are delisting because of this situation.”
A top bank executive officer who wouldn’t want to be named, because of the sensitivity of his position, said instead of creating an enabling environment for more companies to thrive and list on the NSE, government agencies were stunting the growth of companies, especially banks, through their various fines and charges.
He said, “It sounds ironic that while government is making efforts to ensure that more companies access the capital market, its agencies, saddled with regulating activities in the financial sector, are playing discouraging roles.”
He said instead of using moral persuasion in dealing with violation of the rules, the regulators preferred punitive measures and various fines, “which is very unfortunate.”
“This is not only eating into our investments but it is also making some companies to have a second thought as to whether to remain listed or go private,” he lamented.
