Banking & Finance Regulatory Update – April 2024

INTRODUCTION

This is an update on the circulars and regulations released by the Central Bank of Nigeria (the “CBN”) in April 2024. We have also provided a report of the market and case law updates that are relevant to the financial services sector that occurred during the month of April 2024.

SYNOPSIS

CBN REGULATORY UPDATES

CBN PROHIBITS THE USE OF FOREIGN CURRENCY-DENOMINATED COLLATERAL FOR NAIRA LOANS

The CBN on 08 April 2024 through a letter addressed to all banks has prohibited the practice of securing naira loans with foreign currency denominated collateral, except in permitted exceptions.

CBN REDUCES THE LOAN-TO-DEPOSIT RATIO OF DEPOSIT MONEY BANKS

The CBN on 17 April 2024 via a letter addressed to all banks announced the reduction of the statutory loan-to-deposit ratio (LDR) by 15 percentage points from 65% to 50%.

MARKET UPDATES

CBN OFFERS SALE OF FX TO BDCs TO MEET RETAIL MARKET DEMAND FOR ELIGIBLE INVISIBLE TRANSACTIONS

The CBN on 08 April 2024 and 22 April 2024 announced the sale of $10,000 to Bureau de Change Operators (BDCs) at the rate of N1101/$1 and N1021/$1 respectively, instructing them to sell to eligible end users at a spread of not more than 1.5% above the purchase price.

CBN GOVERNOR DELIVERS PRESS BRIEFING AT THE IMF/WORLD BANK SPRING MEETINGS 2024

The CBN Governor on 20 April 2024 at the spring meetings of the International Monetary Fund (IMF) and the World Bank engaged with international policy counterparts and stakeholders from around the world and shared among other things, the CBN’s commitment to doubling remittance flows through formal channels into Nigeria via collaboration with International Money Transfer Operators (IMTOs) and the setting up of a collaborative task force.

CBN CONDUCTS SUCCESSFUL APRIL AUCTION OF NATIONAL TREASURY BILLS, INCREASES ALLOCATION TO ADDRESS OVERSUBSCRIPTION

Based on media reports, the CBN on 24 April 2024 conducted a successful auction of national treasury bills, raising NGN362.45 billion across various maturity dates and recording an oversubscription of 254.23%.

FMDQ GROUP APPOINTS CBN DEPUTY GOVERNOR MUHAMMAD ABDULLAHI AS BOARD CHAIRMAN

The FMDQ Group PLC has announced the appointment of Mr. Muhammad Sani Abdullahi as the Group Chairman of the Board effective Friday, 26 April 2024. Mr. Muhammad Sani Abdullahi currently serves as the Deputy Governor of the Economic Policy Directorate at the CBN.

CBN DIRECTS KUDA BANK, MONIEPOINT, OPAY, PAMLPAY TO STOP ONBOARDING NEW CUSTOMERS

Based on media reports, the CBN has directed Kuda Bank, Moniepoint, OPay and Palmpay to pause/cease account opening for new customers following a directive from the CBN on 26 April 2024. The directive stems as a result of concerns surrounding unauthorised foreign exchange transactions conducted by the customers of these financial institutions.

EFCC SECURES FEDERAL HIGH COURT ORDER TO FREEZE 1,146 BANK ACCOUNTS

Based on media reports, the Federal High Court sitting in Abuja granted an order dated 24 April 2024 freezing up to 1,146 bank accounts owned by individuals and corporate entities under investigation by the Economic and Financial Crimes Commission (EFCC) for offences involving unauthorised foreign exchange transactions, money laundering, and terrorism financing. The interim order was made following an ex-parte application by the EFCC and will be in force for a period of ninety (90) days.

NGX UPDATES

NGX ANNOUNCES SIGNIFICANT INVESTMENT IN ETHIOPIAN SECURITIES EXCHANGE

The Nigerian Exchange Group Plc (NGX) announced its investment in the Ethiopian Securities Exchange (ESX), joining other institutional investors like FSD Africa and Trade and Development Bank Group.

SEC UPDATE

APPOINTMENT OF NEW BOARD MEMBERS TO SEC

The President, Bola Ahmed Tinubu approved the reconstitution of the Board of the Securities and Exchange Commission (SEC) and the appointment of Emomotimi Agama as the new Director-General of SEC.

SEC TO ISSUE GUIDELINES TO FACILITATE CAPITAL RAISING

The Securities and Exchange Commission is partnering with the Central Bank of Nigeria and other relevant agencies to facilitate an efficient capital-raising process in the recapitalization exercise.

CASE LAW UPDATE

FIRST BANK OF NIGERIA v. YUNUSA GARBA ALIYU CA/J/199/2022.

This is a Court of Appeal decision involving a claim of fraud and negligence in relation to unauthorised electronic transfers from a customer’s account. The bank succeeded on appeal as the customer failed to plead cogent and credible evidence to establish elements of fraud and negligence against the bank. The customer was also unable to prove that he did not share his Automated Teller Machine (ATM) PIN with a third party that carried out the transactions on his account.

FIDELITY BANK PLC V PETER (2024) LPELR-6155 (CA)

This is a Court of Appeal decision involving the appellant and two other persons in respect of banking transactions the respondent directly had with the second defendant in the action (Mr. Inyang Emmah), who was the branch manager of the appellant. The respondent had complained that she made fixed deposits of some money with the appellant, which the appellant later refused to pay her. The appellant maintained at the trial that the bank was not officially involved in the transaction with the respondent and that the respondent dealt with Mr. Inyang Emmah in his private capacity and as such, the appellant was not liable for the claims of the respondent.

LEGISLATIVE UPDATE

FEDERAL GOVERNMENT ENACTS CYBERCRIMES PROHIBITION, PREVENTION, ETC) (AMENDMENT) ACT, 2024

The Cybercrimes (Prohibition, Prevention, etc) (Amendment) Act, 2024 (the ‘Amendment Act’) was recently passed by the President on 28 February 2024. The Amendment Act, which is an improvement to the Cybercrimes (Prohibition, Prevention, etc) Act 2015 (the ‘Principal Act’) now includes consequential words that were inadvertently omitted in the Principal Act.