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 (FirstBank) 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 FirstBank, UBA was fined N2,942,189,651.45 for its failure to comply with the federal government’s policy.


An industry source explained that FirstBank 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 FirstBank 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.

Firefire:
Criminal banks.
5% fine is even too small.