The Central Bank of Nigeria recently held a retail Dutch Auction in which six major banks were excluded, including United Bank for Africa, Wema Bank, and Stanbic IBTC.
The CBN conducted the auction, in which it sold $876.26 million to 26 eligible banks. This was a component of the central bank’s continuous endeavors to mitigate demand pressure in the foreign exchange (FX) market, according to Nairametrics.
This auction represents one of the CBN’s most important FX interventions under the direction of Governor Yemi Cardoso, who has been actively trying to stabilize the naira and address the continued volatility in the FX market.
According to the CBN, a total of $1.18 billion was submitted in bids by 32 banks. However, bids amounting to $279.04 million from six banks were disqualified for various reasons.
One of the leading financial institutions in Nigeria, United Bank for Africa, had its $13.21 million proposal rejected for being submitted too late.
First City Monument Bank (FCMB), which made the highest bid out of all the banks that were eliminated, also suffered from a late submission. After the bank’s $178.65 million proposal was ruled illegal, its hopes of obtaining a share of the CBN’s allotted foreign exchange were severely setback.
Stanbic IBTC, another prominent bank in the Nigerian financial landscape, submitted a bid of $57.86 million. However, like UBA and FCBM, Stanbic IBTC’s bid was disqualified due to late submission. The disqualification of such a sizable bid from a major player in the industry further reflects the rigorous compliance standards enforced by the CBN
Wema Bank was also disqualified, despite its growth and innovative trajectory, especially with its ALAT digital banking platform. The bank’s $21.94 million bid was deemed void since it was submitted too late.
SunTrust Bank, submitted a bid of $7.38 million. However, in contrast to the other banks that were eliminated, SunTrust’s proposal was deemed ineligible due to an omitted bid rate rather than a delayed submission.
Finally, Rand Bank was eliminated for not making a proposal. Consequently, the bank was not linked to any sum in this auction.
The CBN held a retail Dutch auction on August 6, 2024, with the goal of distributing FX to end users, including those with trade-backed demands as part of its plan to stabilize the naira.
The successful bids were settled on August 8, 2024, as part of the T+2 settlement process.
