… As CBN Withdraws Class A Bureau De Change Licences
At the National Assembly, the Senate has confirmed the appointment of the Board of the Asset Management Corporation of Nigeria (AMCON) just as the Central Bank of Nigeria withdraws Class A Bureau De Change Licenses.
The Chairman, Senate Committee on Banking, Insurance and Other Finance Institutions, Senator Nkechi Nwaogu, presenting the report of the screening exercise at the plenary said that the 10 nominees presented for confirmation for appointment to the Board of the AMCON were duly screened and found suitable for the job and therefore, urged the Senate to approve the Committee’s recommendations. The Senate thereafter, unanimously confirmed all nominees.
Those whose appointment were confirmed by the Senate include the Chairman designate, Mr. Aliyu Kola Belgore OFR, the Managing Director, Mr. Mustafa Chike Obi, Mr. Hewett Adegboyega Benson, Executive Director, Mr. Abbas Muhammed Jega, Executive Director, Dosunmu Mofoluke Benedicta, Executive Director and Ms. Eniye Ambakaderemur, Non Executive Director. Other institutional representation on the Board include, the Permanent Secretary, Federal Ministry of Finance, (Mr. Danladi Kifasi), the Deputy Governor, Financial System Stability, Central Bank of Nigeria, (Dr. Kingsley Chiedu Moghalu), the Director General, Security and Exchange Commission, (Ms Aruma Oteh) and the Managing Director, Nigerian Deposit Insurance Corporation, (Alhaji Umar Ibrahim).
It will be recalled that President Goodluck Jonathan had earlier forwarded the list of the 10 (ten) nominees to the Senate for confirmation following their recommendation by the Federal Ministry of Finance and the Central Bank of Nigeria.
With this development, the AMCON Board is expected to commence operations immediately.
The AMCON is the principal vehicle for the resolution of the asset quality problems that confronted the banking system in the last 2 years and it provides an alternative to the liquidation of distressed banks. In addition to purchasing non-performing loans (NPLs) from the banks, AMCON is a vehicle for recapitalising the affected banks.
While awaiting the approval of the bill setting up AMCON and the membership of its Board, the management of the rescued banks, their boards, shareholders and financial advisors had been working assiduously towards the recapitalization of the banks. The approval of the AMCON Board by the Senate and the commencement of its operations signal the final stages of the recapitalisation of the rescued banks and the resolution of their problems.
Meanwhile the Central Bank of Nigeria has decided to withdraw the licences of all existing Class ‘A’ Bureau De Change BDCs with effect from November 8, 2010. The withdrawal is part of measures to stem the gross abuses of the enhanced Class ‘A’ BDC in line with the CBN’s avowed commitment to eradicate money laundering.
The Class ‘A’ BDCs, whose licences have been so withdrawn are, however, free to apply for Class ‘B’ licence with the attendant privileges by fulfilling the stipulated licensing requirements. The CBN shall also, within 30 days, refund all mandatory caution deposits lodged with the Bank.
It will be recalled that the CBN had on February 26, 2009 restructured BDCs into categories A and B in order to further liberalise the foreign exchange market and enhance its allocative efficiency. The main objective was to facilitate end-user access to foreign exchange supply from official sources in order to boost economic growth by promoting productive efficiency of small and medium scale enterprises.
The latest appraisal of the policy initiative, however, revealed gross abuses of the enhanced official funding of the Class A category of the BDCs and the negation of the expected benefits to the economy. Available information also revealed that the target end-users have been sidelined while large transactions that should have been channelled through the banking system have been carried out through Class ‘A’ BDCs. The Bank has also been inundated with complaints from foreign countries that some Nigerian travellers indulge in cross-border transportation of large sums of foreign currency in cash. Indeed, returns from the Nigerian Customs Services on foreign currency declaration by travellers show that large amounts, up to US $3million cash have been taken out of the country by individuals in single trips. These are worrisome developments that negate the expected benefits from further liberalisation of the foreign exchange market.
The CBN shall continue to monitor the operations of the BDCs with a view to fine-tuning the operational guidelines for enhanced efficiency.