Bank directors support CBN selling excess currency

Bisola David
Bisola David
CBN stops foreign oil corporations from sending all fx proceeds abroad

The Bank Directors Association of Nigeria has said it supports the move of the Central Bank of Nigeria requesting commercial banks to cease “hoarding” foreign money.

According to the PUNCH, the growing foreign exchange risk that banks are taking on through their Net Open Positions was a source of concern for the CBN last week.

As a result, a circular was issued telling lenders to sell any surplus dollar stocks to their clients under the heading, “Harmonisation of Reporting Requirements on Foreign Currency Exposures of Banks.”

The CBN stated in the circular that the net present value limit for all foreign currency assets and liabilities should not be greater than 20% short or 0% long of shareholders’ funds.

In response, BDAN stated on Monday that it was fully aware of the CBN circulars and that they were intended to strengthen the country’s financial system.

The association, through its Chairman of the Board of Directors, Mustafa Chike-Obi, said in a statement on Monday that it “wholly supports these comprehensive measures which underscore the commitment of the CBN to ensuring the stability and resilience of the banking sector.”

Dollar supply increased by 180% to $440 million in the official foreign exchange market after the CBN directive.

The Association stated that “this directive plays a critical role in ensuring the effective management of foreign currency exposures, along with other prudential requirements outlined in the circular.”

The central bank circular states that the CBN seeks to limit possible damages that could pose significant systemic challenges.

It was stated that these regulatory actions “underscore a strategic initiative aimed at bolstering risk management, accountability, and transparency within the financial industry.”

The Central Bank of Nigeria has been commended by the Bank Directors Association of Nigeria for its proactive approach in protecting the interests of investors, depositors, and the country’s general economic well-being.

In order to build a robust financial environment and avoid negative consequences on the banking industry, BDAN said that it saw the measures as a step in the right direction.

The group commends the CBN’s dedication to proactive regulation and continues to support programmes that advance the stability and prosperity of the Nigerian economy, according to a portion of the statement.

Therefore, the association exhorts all banks to adhere to the new guidelines in full and take part in implementation

“In addition, the association recognises the careful effort by the Central Bank of Nigeria in conferring with experts and stakeholders to guarantee a well-rounded and efficient regulatory strategy.

“BDAN believes that these guidelines will significantly contribute to the long-term sustainability, growth, as well as the overall efficiency, transparency, and stability of the banking sector, ultimately contributing to the nation’s economic development,” the organisation states. “We are advocates for responsible banking and ethical conduct.”

While endorsing the apex bank, BDAN stated that the actions being implemented were constructive.

“BDAN commits to working in tandem with the Nigerian Central Bank and other key players to maintain a robust and dynamic financial system that advances the welfare of all Nigerians.

“We fully support these steps and think they are a good way to improve the effectiveness of the banking system,” they stated.

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