Coronation MB, JP Morgan, Barclay and two others ranked amongst World’s Best Investment Banks

Global Finance magazine has named its 20th annual World’s Best Investment Banks in an exclusive survey to be published in the April 2019 issue. Winning organizations will be honoured at an awards ceremony on the morning of October 19, 2019 at the National Press Club in Washington, DC during the IMF/World Bank Annual Meetings. 

J.P. Morgan was honored as the Best Investment Bank in the world for 2019 while Coronation Merchant Bank was recognized as the Best Investment Bank in Nigeria along with Barclays, VTB Capital and DBS Bank as the Best Investments Banks in Western Europe, Central & East Europe and Asia – Pacific regions respectively. 

Investment banking plays a key role in moving the global economy forward. Our awards highlight the investment banks that stand out in delivering quality insight and innovative deals that meet their clients rapidly changing needs,” said Joseph D. Giarraputo, publisher and editorial director of Global Finance. 

Commenting on the award, Abu Jimoh, Group Managing Director/CEO of Coronation MB said, “We are delighted to be recognized as the Best Investment Bank in Nigeria. Our successes and achievements over the years is a reflection of the hard work and commitment of our staff, management and Board in ensuring we maintain our core values of integrity, innovation and excellence in service delivery”. He further stated that, “This award affirms that we are on course to achieving our long-term goal of becoming Africa’s premier investment bank”. 

Coronation Merchant Bank is a Nigeria based financial institution, founded in 2015 and offering a range of services to individual and institutional clients, including trade finance, treasury, investment banking and brokerage products. Coronation Merchant Bank is part of the Coronation group of companies, one of Africa’ leading investment management groups offering asset management, merchant banking, risk transfer and digital distribution capabilities. 

The Bank's achievements over the years has led to numerous accolades in recognition of excellent service delivery, provision of tailor made solutions and good corporate governance. In 2018, Coronation MB received several national and international awards for product and service innovation and sound corporate governance practices, such as: Best Investment Bank in Nigeria by World Finance, Fastest Growing Investment Bank by Global Banking & Finance Review, Best Investment Bank by Global Business Outlook, Best Investment Bank and Best Fund Managers by International Finance Magazine and Best Investment Bank in Nigeria by BusinessDay.  

2019 General Election Postponement: Economic Implications

Following the postponement of the 2019 General Elections on Saturday, 16th February 2019, Business Insider, Sub-Saharan Africa looks at four economic implications of the postponement on the nation, the individual and the economy.

1. Increased economic uncertainty
The postponement of the elections will further keep investors away from the Nigerian market as fear and uncertainty about the country's economic and political direction linger. This will also discourage investment and bring adverse effect to the nation’s stock market.

2. Overbearing costs
Individual spending has increased in the last two days. Many have gone to filling stations and supermarkets to stock up for the election weekend, while some have travelled out of their places of residence to their constituencies where they are registered to vote.

Journalists, international correspondents, and election observers have spent thousands of dollars travelling to and around Nigeria to cover the elections and observe polling activities.

For instance, a return flight for a UK journalist to cover Nigeria election will cost them about N400,00 (more than £800) while hotel accommodation for up to a week in a Lagos hotel could cost up to N35,000 (£75) per night. Add to that an average per diem of $500 for 3-4 days and you will get a sense of just how much could have been expended on covering the elections originally scheduled for February 16.

Every Saturday, hundreds, maybe thousands, of people get married across the country. Those who might have scheduled their weddings for the week after the elections will now have to reschedule them, bearing unforeseen costs that might greatly affect their finances in the process.

3. Companies’ strategies at risk
Some companies have tied their spending and 2019 strategies around the Saturday, February 16 and March 2, 2019, initial election dates, spending millions of Naira. Adjusting to the new dates will not only affect company finances, but it will have some effects on employee morale going into the new week, further harming the companies’ productivity levels.

Last week, Nigeria fully recovered from its worst economic recession as the GDP growth recorded a remarkable 1.93% in 2018, thanks to the activities and spending of private organisations. It will be important to note how these activities will be impacted in the coming weeks.

4. Waste of national resources
INEC’s budget for the election year is roughly 189 billion Naira. It is safe to say that a large chunk of that budget that has already been expended on logistics in preparation for elections on February 16 has gone to waste, never to be recouped.

INEC will also need to make adjustments to already incurred costs, almost doubling costs.

NSE All-Share Index Rises 0.12% as Market Rebounds

After one day of negative performance the stock market rebounded yesterday as the Nigerian Stock Exchange (NSE) All-Share Index (ASI) gained 0.12 per cent to close at 32,453.69 compared with a decline of 15 per cent. Market capitalisation added N14.0 billion to close at N12.1 trillion.

The market had on Wednesday depreciated due to profit taking after days of rally that led to a gain of about 6.7 per cent since the beginning of February.

However, the market rebounded yesterday as 22 stocks appreciated. Associated Bus Company Plc and Livestock Feeds Plc with 10 per cent apiece. Unity Bank Plc trailed with 9.6 per cent, just as Unilever Nigeria Plc. Wema Bank Plc went up by 6.7 per cent, while PZ Cussons Nigeria Plc chalked up 5.4 per cent.

PZ Cussons has been attracting more demand following restatement of its commitment to remain in the country. Contrary to speculations, the company said it had no plan to leave Nigeria, stressing that the country still remained a market of interest for it. Chief Executive Officer of PZ Cussons , Mr. Christos Giannopoulos, said the company would be celebrating 120 years of PZ Cussons making life better and adding value to Nigerians.

“In our 120 years of doing business in Nigeria, we have faced different conditions and come out stronger at the end. We confirm to our consumers, customers, employees, business partners and stakeholders that Nigeria still remains a market of interest for us and have made no plans to leave Nigeria . Our factories in Ikorodu, Aba and all our distribution centres around the country are operational and will continue to be,” he said.

Conversely, Union Bank of Nigeria Plc led the price losers with 8.3 per cent, trailed by Oando Plc with 5.1 per cent. Dangote Flour Mills Plc shed 4.5 per cent and Union Diagnostic went down by 3.2 per cent among others.

In all, investors traded 422.7 million shares worth N3.7 billion, which is lower than the previous day’s performance. The most active stocks by volume were Diamond Bank (97.6 million shares), Transcorp (41.1 million shares) and Zenith Bank (40.3 million shares) while Zenith Bank (N997.1 million), GTBank (N992.6 million) and Access Bank (N263.7 million) led in terms of value.

In terms of sectoral performance, three out of five sectors tracked advanced. The NSE Insurance Index led with 1.2 per cent. It was followed by the NSE Industrial Index and NSE Consumer Goods Index with 0.7 per cent and 0.3 per cent in that order.

On the contrarily, the NSE Oil & Gas Index and NSE Banking Index shed 0.8 per cent and 0.5 per cent in that order.

Former Ecobank manager remanded over alleged N411million fraud.

A Federal High Court in Ikoyi, Lagos, yesterday remanded Ifeanyi Chukwu Azike, a former manager of Ecobank Nigeria, over allegations of defrauding the bank’s customers of N411million. 

Azike, who was handed over to the police by the investigative unit of the bank was arraigned before Justice Ayotunde Faji by the Special Fraud Unit (SFU) of the Nigeria Police Force on a three-count charge bordering on obtaining money under false pretenses, false representation and fraud. The defendant, however, pleaded not guilty to the charge upon his arraignment.

Following his plea of not guilty, police prosecutor, ASP Daniel Apochi urged the court to remand him in prison pending trial. Consequently, Justice Faji ordered that the defendant be remanded in prison till March 8, when his bail application would be heard.

In a charge marked, FHC/L/56c/2019, the police alleged that between 2016 and 2017, Azike fraudulently obtained N150 million from a customer of Ecobank Nigeria under false pretence of buying him Federal Government Treasury Bill in his bank.

Azike was also alleged to have forged the bank customer’s signature, picture and letter of Instruction which he used in opening another parallel account as Ikenna Okafor Kelvin. The police also alleged that the bank manager without the consent of the bank fraudulently converted the sum of N411 million belonging to the bank to his personal use. The offences were said to be contrary to Sections 1 (1) (a), 15(1)(2) and 15(2) of the Advance Fee Fraud and Other Fraud related Offence Act No. 14 of 2006, and punishable under Section 1 (3) of the same Act.

WorldRemit introduces ‘low-cost online money transfers’ from South Africa to Nigeria.

WorldRemit, a digital money transfer service, has introduced “low-cost online money transfers” from South Africa to Nigeria.

In a statement on Tuesday, the company said Nigerians living in South Africa can now send money to all major Nigerian banks with a few taps directly from their phones, using the WorldRemit app or website.

“The new digital service will reduce the cost of sending money across borders. The prohibitive charges that individuals and businesses pay to transfer money within Africa are recognised as a major obstacle to the growing regional integration promoted by the continent-wide free-trade agreement signed in March 2018,” the statement read.

“According to the World Bank, South Africa is the most expensive G20 country to send money from. The average cost of sending $200 from South Africa to Nigeria is nearly 16% – more than double the global average.

“WorldRemit is now one of the only digital money transfer services sending money from South Africa. By opening up this service, WorldRemit will introduce some of the cheapest fees available on the market to send money to Nigeria – often under half of the average cost.”

Nigeria and South Africa are the continent’s two largest economies which are home to 20% of Africa’s population.

Both nations contribute $700 billion to the continent’s gross domestic product (GDP) which represents one-third of the total GDP of $2.1 trillion.

CBN sets new rules for banks planning to establish banking relationship with foreign lenders

NEW rules have been set by the Central Bank of Nigeria (CBN) for banks planning to establish correspondent banking relationship with foreign lenders.

The apex bank, in the Anti-Money Laundering/ Combating the Financing of Terrorism (AML/CFT) Policy and Procedure Manual released yesterday insisted that it will guard against establishing correspondent banking relationships with high risk foreign banks such as shell banks, with correspondent banks that have historically allowed their institutions to be used for Money Laundering / Financing Terrorism (ML/FT).

The regulator said that all banking products that are used to convert cash to a monetary instrument and electronic products that permit rapid value movement such as electronic transfers, forex transactions followed by payment into an account in another jurisdiction can be abused by criminals.

The CBN said: “For trade transactions, Export Letters of Credit have been ranked as high risk because of the possibility of presentation of false shipping documents when no goods are actually shipped.

“Another factor in this ranking is the possibility of over-inflated invoicing for low value or worthless merchandise. All other trade products have been risk ranked either medium or low risk.”

The regulator said that transactions conducted through correspondent banking relationships shall be managed in accordance with a risk-based approach, and Know Your Correspondent (KYC) procedures shall be established to ascertain whether or not the correspondent bank or the counter party is itself regulated for money laundering prevention.

Also, where regulated, the correspondent shall verify the identity of its customers in accordance with Financial Action Task Force (FATF) standards, and where this is not the case, additional due diligence shall be required to ascertain and assess the correspondent’s internal policy on money laundering and KYC procedures.

The CBN said that care should be taken when doing business with third parties located in geographic locations with a history of supporting terrorism, bases for drug production/distribution, suffering from civil unrest/war.

“These include jurisdictions that have been identified as high risk countries by standard setting institutions such as FATF; countries on designated sanction lists such as the United Nations Consolidated list and US Office of Foreign Asset Control (OFAC) List,” the bank said.

The CBN said it shall accept customers after due verification of customers’ identities, address and/ or place of business, after ascertaining their source of income/funds and after considering the level of risks they pose to the bank, based on the kind of business under consideration (such as bureau de change operators).

The apex bank said care will be taken to apply appropriate level of due diligence, depending on customers’ risk profiles adding that no accounts shall be opened for anonymous of fictitious customers.

“The CBN should not enter into a relationship with a prospective customer until the person/entity has been duly identified and verified. The customer acceptance process also includes ensuring that the prospective customer is not on the ‘watch-list’ which includes names of sanctioned persons as well as known fraudsters.”

Central bank lists measures for anti-money laundering, combating financing of terrorism

The Central Bank of Nigeria (CBN) has warned employees of financial institutions to avoid establishing relationships with individuals or entities who may pose undue reputational risks to their organisations.

The regulator also warned staffers to protect banks’ integrity and fair dealing by ensuring that customers and transactions which financial institutions engage in are legitimate.

These are some of the minimum operating standards for employees of financial institutions which the apex bank released on Friday, urging stakeholders to comply with the AML/CFT laws and regulations to ensure that banks’ products and services are not used for the purpose of Money Laundering, Terrorism Financing or other crimes.

The 37-page manual which deals among others, conduct of financial services, dealings with third party beneficiaries and employee conduct in discharge of their duties, is intended to achieve the objectives of its Anti-Money Laundering, Combating the Financing of Terrorism.

The release of the document is coming simultaneously with allegations by Economic and Financial Crimes Commission (EFCC) of illicit financial flows involving ten undisclosed commercial banks.

Acting Chairman of EFCC, Ibrahim Magu, made the allegation on Friday during a round table meeting with managing directors of financial institutions in Nigeria.

The EFFC boss said: “It is worrisome to note that in 2018, statistics available to the EFCC shows that out of about 28 commercial banks in Nigeria, 10 banks evacuated out of Nigeria through Travelex Nigeria Limited the sums of GBP- 50,832,560; USD-8,057,756; EURO-39,986,560 and RAND-7,500,000.

“The reasons for these evacuations are still sketchy. We must note that the impact of illicit financial flows from the country undermine the stability and integrity of the financial institutions,” said Magu.

Magu who spoke on “Roles and Obligations of Managing Directors of Banks in Nigeria in Curbing Vote Buying During an Election, Illicit Financial Flows and Other Related Matters in Nigeria” accused banks of aiding customers to receive foreign financial inflows to their accounts in neighbouring countries like Ghana, Republic of Niger and other West African countries where they have branches.

In its new manual, the CBN set out measures, policies and procedures financial institutions must adopt in the anti-money laundering and combating of the financing of terrorism initiative, urging financial system operators to promote sound financial system and ensure that employees conduct business in accordance with applicable Anti-Money Laundering (AML) laws and regulations.

The manual which aims to establish procedures and minimum standards to protect the CBN from being used as a channel to launder money, finance terrorism and other forms of financial crimes, advised Banks to supports their staff to achieve the highest standards of compliance and integrity.

“Employees shall fully understand and be guided by these standards in the conduct of business and dealings with stakeholders. Protecting the good name and the reputation of the Bank shall be a primary consideration in all actions taken by employees,” CBN stated.

GTBank Reaffirms Commitment to Digital Banking

The Group Chief Executive Officer of the Guaranty Trust Bank GTBank) Plc, Mr. Segun Agbaje has said the bank is committed to building a strong robust banking platform to drive financial services and accommodate the effects of disruptive technology in Nigeria. Agbaje said this at the 2019 edition of the Social Media Week in Lagos recently.
Speaking at the event with a theme: “Building the Bank of the Future”, Agbaje said that digital technology through the fourth industrial revolution has disrupted different economic sectors ranging from retail trade to healthcare.
He said that the economic outlook for Nigeria in the area of banking still leaves room for improvement as not all citizens are financially included. He therefore, called for a level playing ground between banks and telecommunication companies for more Nigerians to enjoy financial services.
According to him, “People need banking and not banks and financial institutions that operate in the traditional mode, current paradigms will not last for too long. That is why we are building single trusted integrated platform in the financial services industry in Nigeria.”
He said: “I am always very optimistic about Nigeria. I am not one of those who are worried about elections. The outlook for the Nigerian banking industry is always going to be up, until we reach a mature stage. We are only banking 33/34 million people in a country that has about 190 million people. It is by no means mature. So there is still a lot of upside. This was why GTBank evolved a leading innovation and disruption platform in the financial services market space through products like the USSD (737), Quick Credit for customers, GTWorld, GTMobile and a few others.
On the recent decision of the Central Bank of Nigeria to create “Payment Service Banks” Agbaje called for a level playing field for different operators from the telcos.
“We welcome competition. The only thing we ask is that, there be a level playing ground between the banks and the telcos.”
The chief executive also gave further explanation on the recently launched “Habari App” which provides unique services to customers, from their play experience, to messaging, e-commerce and payments. “Habari App provides a platform and infrastructure for them to reach out to multiple customers at the same time.

GTBank’s CEO reaffirmed the commitment of the bank to increase coverage of communities while servicing 15 million existing customers.

10 Banks Facilitate N139trn Investment on FMDQ OTC Securities Exchange

10 Banks Facilitate N139trn Investment on FMDQ OTC Securities Exchange


Stanbic IBTC Bank Plc, Access Bank Plc, Ecobank Nigeria Limited led the top 10 banks that facilitated N139.13 trillion investment in fixed securities and currency on the FMDQ OTC Securities Exchange in 2018.
The 10 banks accounted for 76.1 per cent of the N182.856 trillion total transactions in the market in 2018, according data obtained by THISDAY.
However, Stanbic IBTC Bank Limited, Access Bank Plc and United Bank for Africa Plc ranked first, second and third respectively. The three banks were responsible for N81.13 trillion trading, which is about 58.31 per cent of the total market turnover for the year.
Standard Chartered Bank Nigeria Limited occupied the fourth position, while Ecobank Nigeria Limited occupied the fifth position. Other banks among the 10 are: First Bank of Nigeria Limited, Citibank Nigeria Limited, Guaranty Trust Bank Plc, Coronation Merchant Bank Limited and Zenith Bank Plc.
An analysis of the FMDQ OTC Securities Exchange turnover in 2018 showed that treasury bills accounted for the highest, recording N72.123 trillion transactions. It was followed by foreign exchange (forex), which recorded N43.975 trillion transactions, while repurchase agreements/buy-back recorded N30.179 trillion. Forex derivatives accounted for N23.748 trillion, just as FGN Bonds recorded N11.8 trillion among others.
A total of 46 securities were registered and quoted on the exchange in 2018. The securities comprise 13 bonds and 33 commercial papers (CPs). Since it commenced operations about five years ago, the FMDQ OTC has helped to deepen the financial markets general and debt capital markets in particular.
Following its long-time agenda to foster market integration, improve network effects and promote liquidity in the Nigerian financial markets, FMDQ last launch of its Dealing Member Specialists (DMS) Market, which went live on December 19. According to the exchange, that unprecedented market development initiative came on the back of the fragmentation identified in the fixed income market and will provide seamless integration of the fixed income inter-bank market -FMDQ Dealing Member Banks DMBs and the securities dealers, who are Members of the newly-created membership category.
The DMS category is a subset of the FMDQ Dealing Member category, which also warehouses the DMBs and is made up of securities dealers, including investment banking firms, securities trading/stockbroking firms and OTC fixed income dealers licenced to make market in all fixed income products admitted for trading on the FMDQ platform.
FMDQ said in the last three years, it has worked with the Securities and Exchange Commission (SEC) and market participants to create the DMS market, and this new market affords both the SEC- registered Nigerian
Stock Exchange (NSE) as well as FMDQ dealers the opportunity to trade together in a liquid fixed income market operated by banks, who are the foundation members of FMDQ.
The participation of DMSs in the Nigerian fixed income market will not only enhance liquidity, but also serve as an efficient channel for FMDQ to integrate retail participants into the Nigerian fixed income market. Furthermore, in a first-time move, the banks have committed to support the DMS market with trading liquidity by accepting to provide two-way quotes to the DMSs, whereas FMDQ Clear Limited, will act as the clearing house for the market and Stanbic IBTC Bank Plc as the settlement bank,” it said.
The FMDQ OTC Securities Exchange was license by SECS in 2013 as an over-the-counter (OTC) securities exchange and self-regulatory organisation to run the fixed income trading platform.

47 million bank accounts go dormant

47 million bank accounts go dormant


Economic hardship, BVN, others take blame Banks strategise against worsening situation

MORE Nigerians have abandoned their bank accounts majorly due to economic hardship caused by sluggish economic growth, rising job losses and reduction in purchasing power occasioned by double digit inflation. Statistics from the Nigeria Interbank Settlement System, NIBSS, showed that Nigerians abandoned 10 million bank accounts in 2018. NIBSS is owned by all Nigerian banks and the Central Bank of Nigeria, CBN.

According to the company, the number of bank accounts abandoned by bank customers and hence categorised as ‘inactive bank accounts’ rose by 28 percent to 46.7 million in 2018 from 36.7 million in 2017. Depositor-initiated transaction According to the CBN 2015 guidelines on dormant accounts, “An account shall become inactive if there has been no customer or depositor-initiated transaction for a period of six months after the last customer or depositor initiated transaction.” This implies that in just one year, ten million bank accounts recorded zero transactions. Financial Vanguard analysis also showed a steady growth in the number of inactive bank accounts between 2014 and 2018. According to NIBSS, inactive bank accounts grew faster than active bank accounts in the past five years, 2014 to 2018. During this period, inactive bank accounts grew by 73 percent while active bank accounts grew by 35 percent.  While inactive bank accounts increased  by 19.61 million to 46.7 million in 2018 from 27.09 million in 2014, active bank accounts rose by 24.75 million to 71.2 million in 2018 from 46.45 million in 2014. Financial Vanguard investigations and the comments from both bankers and bank customers, indicate that factors responsible for the steady and huge growth in the number of inactive bank accounts are many and varied.

These include ownership of multiple bank accounts by some bank customers, breakdown in bank-customer relationship, Biometric Verification Number (BVN) issues, incomplete account opening documentation and Know Your Customer, KYC, challenges as well as increased efforts against money laundering and other financial frauds by banks and the regulatory authorities.
However, most of the bankers and individuals who spoke to Financial Vanguard, cited economic difficulties and business failures as well as rising job losses as the major causes. Okechukwu Uzor, a teacher, does not see the need to continue to operate his bank account. “I have an account with a zero balance which I have abandoned. If I have the money I will credit the account. The money is not enough to feed talk-less of saving it in the bank”, he told Financial Vanguard. 
Economic downturn “The factors mainly responsible for the rise in inactive bank accounts are economic downturn/business failures and inactivity on salary accounts due to loss of job,” said FirstBank in response to Financial Vanguard enquiries. Last year, the National Bureau of Statistics reported that the number of unemployed Nigerians rose by 3.3 million to 20.3 million in the third quarter of 2018 (Q3’18) compared to third quarter of 2017 (Q3’17). This, according to Uju Ogubunka, President of Bank Customers Association of Nigeria (BCAN) will definitely lead to inactivity in bank accounts. “The current situation where people are being laid off is responsible.
 If your job stops and you have been depending on your salary; now if your salary is not coming in, whatever you get, you just use it to oil your daily need. That can warrant inactivity in account,” he told Financial Vanguard. This is aptly illustrated by the story of Makinde Wakil, Managing Director B2SM Management Services Limited, who had to abandon his corporate bank account due to economic downturn. He said: “I have a personal account and I also had a corporate account between 2010 and 2015. If I print my bank statement you will see inflow and outflow of funds and the e-payment transactions because we dealt with multinational companies at that time and their payments didn’t come within the country, they paid from their head office abroad. “We worked round the clock when there was business. We paid salaries; we also had other subsidiary companies under us.

The business was at its peak by that time but thereafter from mid-2015 there was no business activity happening in the company. “As a result of that, what do we have to do? When you are in business everything goes well but when you are not, what do you do. So my corporate account has been dormant from that time till date.” In addition to bank customers who abandoned their accounts due to job losses, is a growing number of Nigerians leaving the country for greener pastures abroad, and in the process abandon their bank accounts. Speaking on condition of anonymity, a staff of Ecobank, said: “A lot of people are leaving the country and abandoning their accounts. So it is leading to an increase in inactive accounts that banks have. Those are the people that can actually have bank accounts.

 You know people that are able to leave are people that earn fairly well and they can have a bank account. Once they leave they don’t access those accounts anymore.” An example is Mr. and Mrs. Oloruntoba who have stopped operating their bank accounts since they migrated to the United States early 2018 with their two year old daughter.

The fraud factor the case of Mrs. Sarah Adewale, who sells clothes and fashion accessories is, however, different. She abandoned her bank account not because of job loss or economic hardship, but due to fraud. Narrating her experience to Financial Vanguard, she said: “One of the factors responsible for increase in inactive accounts is fraud. People are abandoning their bank accounts after being defrauded. Like me, I fell into the hands of fraudsters or armed robbers called ‘one-chance’ who used a Point of Sale (PoS) machine to transfer my money in my bank account to their accounts. And since then I abandoned the account because I don’t have any reason to go to the bank again. I don’t want to encounter such and since then the bank has been calling me but I don’t have their time.”

According to a branch manager with UBA, many Nigerians in Diaspora have abandoned their bank accounts due to fear of fraudsters. “We discovered that a lot of customers living abroad refused to enrol for the Biometric Verification Number (BVN) because they don’t want anybody to use their account to commit fraud. They will tell you I will come and do it when I return to the country. So the account becomes inactive.”

The BVN effect The BVN according to bankers is another reason why some customers have abandoned their accounts. “A lot of the inactive bank accounts have BVN issues,” a top official of NIBSS confirmed to Financial Vanguard on condition of anonymity. Confirming this in response to Financial Vanguard enquiries, GTBank said: “There is a close tie between number of accounts that are inactive and number of accounts that do not have BVN. In addition, inaccurate information supplied by customers leads to data matching issues during BVN enrolment”. A branch manager in one of the tier-1 banks, however, said the reason some bank accounts have not been linked to BVN is because they were primarily opened and used for fraudulent activities. “The customers abandoned the accounts because they don’t want the activities in those accounts traced to them”, she said. Banks fight back Financial Vanguard investigations, however, discovered that most banks are not comfortable with customers abandoning their bank accounts and hence are making efforts to reduce the number of inactive bank accounts in their books. “It is part of our performance indices”, a branch manager in a Tier-1 bank told Financial Vanguard. “In my bank, we don’t use the six months criteria of the CBN. Rather we use three months. Once the customer does not operate the account for three months, it is classified inactive, and we begin to take measures to encourage the customer to operate the account. 
We are also given quarterly target or threshold for inactive bank accounts,” she said. To check incidence of inactive bank accounts, 

FirstBank said it has created a team to follow up on inactive account holders. This is in addition to digitisation of account opening process and creation of convenience for on-site BVN enrolment. Other measures introduced by the bank include: automation of access to loan facilities like salary overdraft, personal loan against salary; and creation of account opening processes at agent locations to help in reducing the incidence of inactive accounts as such agents are closer to customers. On its part, GTBank said it actively engages inactive customers through incentivized campaigns to encourage them reactivate their accounts. “Furthermore, the bank has also commenced expanding its agent banking network so that customers in remote areas can bank without the inhibition of proximity to our regular branches,” the bank told Financial Vanguard.  

CBN reacts The CBN, however, described the rise in inactive bank accounts as a normal feature of the banking industry with profit potentials for banks. Responding to Financial Vanguard enquiries, Director Corporate Communications, CBN, Mr. Isaac Okoroafor, said: “Incidence of abandoned accounts has always been a feature of the Nigerian banking industry for many reasons. “A common reason is the cumbersome procedure of complete closure of an account. Many people in a hurry will withdraw to the last kobo possible and move on, abandoning the account for good. “There’s is also death and the absence or knowledge of a bona fide heir to the estate or poor documentation for inheritance. “In most cases, abandoned accounts carry relatively low balances compared to active ones signifying lack of interest to pursue them.

The banks, however, welcome such developments because the funds represent no-cost flow and eventual profits. FG freezes bank accounts of suspects on ‘looters list’ “The above are normal trends in the banking system.  However, if the is a recent upsurge in the statistics then fear of law enforcement against money laundering cannot be ruled out especially if the sums in the accounts are heavy.” BCAN President, Oju Ogubunka however insisted that the authorities should be worried and take measures to tackle the trend. He said: “The industry should be worried about it. If the accounts are active, that helps monetary policy performance, because velocity of money and other factors will come into play. If people are not using their bank accounts and they are now dealing on cash and carry  basis, that is lost   in the economy arrangement in terms of capturing  it in the system”. 


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