CBN Plans Tough Sanctions for Banks

The Governor of the Central Bank of Nigeria, Olayemi Cardoso, has vowed to pursue an aggressive regulatory environment to reduce infractions in the country’s banking system.

He said this on Tuesday in Abuja at the Monetary Policy Committee meeting of the apex bank, the first since he assumed office in September 2023.

He also said that an in-depth investigation was underway to determine the necessary actions against banks involved in infractions, stressing that the bank was in the process of formulating “stringent regulations” to cleanse and purify the country’s foreign exchange market.

The governor, responding to questions on steps taken to promote trading on the foreign exchange market, also revealed that its foreign reserves increased to $34bn as of February 20, up by $2bn from the $32.23bn recorded at the end of January.

The naira has depreciated to an all-time low since the new administration floated the currency and unified the exchange rate windows.

The Nigerian currency weakened from over N700/$1 in May 2023 to over N1,500/$1 on Tuesday.

However, Cardoso said that the apex bank was moving to a “very aggressive regulatory environment”, adding that the CBN would do all within its powers to curb arbitrage aided by banks and BDCs.

According to Cardoso, the apex bank would continue to make the market more liquid and to ensure that those who are genuine and want to abide by the rules and regulations that have been set by the central bank will be free to do so, adding that those who do not should be ready to face the consequences.

Cardoso revealed that the apex bank had paid another $400m out of $2.2bn of valid FX backlog to those who were genuinely identified.

According to the CBN governor, the bank will work to restore the confidence of the public and remains committed to its FX backlog to businesses being owed.

The CBN had a $7bn FX backlog when Cardoso assumed office as the apex bank governor on September 15, 2023.

However, the CBN governor said in an interview that the legitimate FX obligation of the bank stood at over $4bn and the bank had cleared around $2.3bn with about $2.2bn remaining.

Also, the Governor said that around $2.4bn of FX claims were not valid after the bank instituted a forensic audit of the claims.

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