Bank in difficulty CEOs as Tinubu’s investigator looks into the N1.27 trillion CBN stimulus monies

According to revelations by Punch, the Chief Executive Officers and senior management personnel of banks may also be questioned as part of the ongoing inquiry into the operations of the Central Bank of Nigeria.

It was discovered that several bank CEOs would be summoned in an effort to identify any irregularities in the way deposit money institutions were managing intervention monies.

This newspaper had previously stated that the Central Bank of Nigeria would be asked to retract its recently published audited annual financial reports.

This followed the discovery of anomalies and abnormalities in the financial statements by a committee looking into the apex bank.

The letter, dated July 28, 2023, stated that the administration was continuing the fight against corruption by appointing you as a Special Investigator to look into the CBN and Related Entities in accordance with the fundamental goals outlined in Section 15(5) of the Federal Republic of Nigeria 1999 (as amended). You must report right away to my office for this appointment, which will have immediate effect.

“The full terms of your engagement as Special Investigator shall be communicated to you in due course but require that you take immediate action to ensure the strengthening and probity of key GBEs, further stop leaks in the CBN and related GBEs, and provide a thorough report on public wealth currently held by corrupt individuals and establishments (whether private or public).

To complete this project, you must conduct an investigation of the CBN and associated entities employing a team that is appropriately qualified, experienced, and capable, as well as collaborate with pertinent security and anti-corruption agencies. A weekly update on the status of the project is what I can anticipate.

A copy of the President’s order suspending Godwin Emefiele as CBN Governor on June 9, 2023, was also annexed.

According to information obtained by this publication, the CBN Special Investigator is conducting the probe alongside a group of accountants, auditors, and forensic accountants.

George Akume, the Secretary to the Government of the Federation, recently stated that the Federal Government would soon release the audit results of the CBN investigation.

According to the SGF, if the CBN investigation report is made public, it would show how bad leadership contributed to the nation’s current situation.

He claims that the study will help Nigerians understand what actually went wrong and how the nation ended itself in its current predicament.

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As the investigations into the unpaid intervention funds progress, several top bank executives will be invited, according to a high official who spoke to this publication under the condition of anonymity.

This newspaper’s research revealed that five banks’ accounts hold N1.27 trillion in intervention monies.

Based on a review of Access Bank, Fidelity Bank, Guarantee Trust Bank, United Bank for Africa, and Zenith Bank’s half-year financial results.

The CBN’s Accelerated Agriculture Development Scheme, Anchor Borrowers’ Programme, Commercial Agriculture Credit Scheme, Healthcare Sector Intervention Facility, and Paddy Aggregation Scheme are among the lending facilities covered by the intervention funds that are made available through regional banks.

The Micro, Small, and Medium Enterprises Development Fund, the Real Sector Support Facility, the 100 for 100 Policy on Production and Productivity, the Export Facilitation Initiative, and the Creative Industry Financing Initiative are also included.

According to data from The PUNCH, Access Bank has intervention money worth at least N530.07 billion.

Included in this were approximately N3.56 billion from the Commercial Agriculture Credit Scheme, N1.57 billion to support the rapid rollout of agent networks throughout Nigeria and the growth of a shared Agent Network, N58.84 billion from the Salary Bailout Fund, N99.04 billion from the outstanding balance on the loans for the excess crude account, N9.34 billion from the Real Sector Support Facility, and N1.14 billion from the Accelerated Agricultural Development Scheme.

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In addition, it contained N17.64 billion for the Health Sector Intervention Facility, N8.62 billion for the Non-Oil Export Stimulation Facility, and N955.61 million for the Creative Industry Financing Initiative.

This newspaper has learned that Fidelity Bank holds at least N310.52 billion of the intervention funds.

It consisted of N80.65 billion for the state bailout fund, N190.06 billion for the Real Sector Support Facility with Differentiated Cash Reserves Requirement, N7.28 billion for the Commercial Agriculture Credit Scheme, N2.5 billion for the Paddy Aggregation Scheme, and N6.36 billion for 100 for 100 PPP.

This newspaper also noted that Zenith Bank is where approximately N288.42 billion of the intervention monies are located.

It comprised loans of N23.54 billion for the Commercial Agriculture Credit Scheme, N1.86 billion for Power & Aviation Intervention Fund, N125.14 billion for Salary Bailout Fund, N71.53 billion for Excess Crude Loan Facility, N28.73 billion for Real Sector Support Facility, and N9.13 billion for Non-Oil Export Stimulation Facility.

This newspaper further noted that as of June 30, 2023, there was around N115.09 billion in GT Bank and N25.16 billion in UBA.

Olayemi Cardoso, the newly appointed governor of the Central Bank of Nigeria, said during his Senate confirmation hearing that the bank’s priorities needed to be refocused, and that the apex bank should be removed from direct development finance interventions.

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The new governor of the apex bank believes that rather than actively participating in a prominent position in the financing of these projects, the bank needs to transition into a limited advising role that supports economic growth.

By focused on its fundamental goal and fostering a culture of compliance, he highlighted the necessity of restoring the apex bank’s independence and credibility.

The distinction between monetary policy and fiscal intervention has been muddled as a result of the extensive attention given to previous CBN incursions into development funding.

The CBN must be shifted away from direct development financing interventions and into more constrained advising responsibilities that assist economic growth, he said, in order to refocus on its main mission.

Godwin Emefiele, the former governor of the CBN, claimed in 2015 that the bank has contributed to funding federal government initiatives and activities aimed at promoting growth throughout the years.

In order to promote the growth and development of the nation’s economy, he said that these involvements are incidental to the bank’s main mandates and a component of its corporate social responsibility.

By October 2022, the apex bank had released roughly N9 trillion as intervention funds.

According to the bank, beneficiaries had already paid back over N3.7 trillion, but over N5 trillion was still owed for recovery.

The PUNCH noted that the anchor borrower fund and the commercial agriculture credit scheme, in particular, have benefited the agricultural sector the most from the intervention monies.

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Nine banks have at least N208.33 billion in CBN funds that have not yet been distributed for the Commercial Agriculture Credit Scheme and the Anchor Borrower Fund, both of which have low interest rates.

Three of the banks, Guaranty Trust Holding Company, Wema Bank, and Sterling Financial Holdings, still had N114.10 billion of the Anchor Borrowers Fund, according to the first half financial accounts provided to the Nigerian Exchange Limited.

The Commercial Agriculture Credit Scheme funds were still in seven banks’ books as of the end of June, including GTCO, Wema Bank, Sterling Financial Holdings, United Bank for Africa, Access Holdings, Zenith Bank Plc, Fidelity Bank, Stanbic IBTC Holdings, and FCMB Group.

The CBN created the Anchor Borrowers’ Programme in accordance with its developmental role. On November 17, 2015, former president Muhammadu Buhari created it in order to establish a connection between smallholder farmers and the anchor corporations that handle important agricultural commodities.

The CACS is a programme run by the CBN in partnership with the Federal Ministry of Agriculture and Rural Development, which is the representative of the Federal Government, with the goal of promoting commercial agricultural firms in Nigeria by offering agriculture concessionary funding.

The recipients and repayments of the ABP money have generated controversy thus far.

High finance costs are another issue facing industry participants, and they have been impacting several industries’ expansion and production plans.

According to GTCO’s financial filings, the lender still had N75.35 billion from the Anchor Borrowers Fund as of June 2023 (compared to N78.42 billion in December 2022), indicating that only N3.06 billion had been released in that time period. The bank disclosed that the facility’s duration would be dependent on the gestation period of the target good but would not go beyond two years. A nine percent all-inclusive interest rate is applied to the facility’s disbursements.

GTCO still had N3.29 billion for the CACS intervention fund (December 2022: N5.05 billion). The facility has a seven-year term with a 2% yearly fee to the business. The maximum interest rate paid by debtors under the plan is 9% per year, all fees included.

ABP funds held by Sterling Financial Holdings totaled N37.90 billion, reflecting a N12 billion increase over the previous six months, indicating that fewer loans were released to the intended recipients. Sterling Holdco reported N33.40 billion for the CACS, an increase over the N31.59 billion recorded as of December 2023.

The CACS intervention fund was still in Zenith Bank’s coffers in the amount of N 23.53 billion. The bank distributed N9.35 billion between January and June 2023, compared to the N32.89 billion it had end of December.

According to Stanbic IBTC’s report, it received an interest-free loan from the CBN to re-lend to customers covered by the CACS. Additionally, the tenor is based on an agreement with specific beneficiary clients. By June 2023, it had N 6.78 billion (December 2022: N 8. 99 billion), indicating that N 2. 21 billion had been released.

According to Access Bank, the sum of N3.55 billion represents the remaining balance on the bank’s on-lending facility, which was established by the Central Bank of Nigeria and the Federal Government of Nigeria to support commercial agricultural enterprises in Nigeria.

READ ALSO: Amid an investigation, CBN discloses its seven-year consolidated statements

“The facility has a seven-year maximum term with a 0% interest rate to the Bank. Security was not offered by the Bank for this facility. As of June 30, 2023, the bank has no undrawn balance from this creditor.

In its mid-year report, Wema Bank reported having N848.23 million of the AB Fund in its bank accounts from N1.96 billion, indicating that it had disbursed N846.26 billion between January and June 2023.

While FCMB had N1.82 billion of the same intervention fund in its till as of June 2023, down from N3.58 billion as of December 2022, reflecting that N1.76 billion had been distributed, Fidelity Bank reported N7.27 billion in yet-to-be-disbursed CACS funds as of June 2023, a drop compared to N8.08 billion in 2022.

The intervention funds must be evaluated in order to determine what went wrong and what can be done to repair it, according to Dr. Muda Yusuf, chief executive officer of the Centre for the Promotion of Private Enterprise.

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If you want to reform the system, you must conduct a study of the situation there, he added. Making an evaluation for the intervention fund is an excellent idea. They are doing an assessment to see which areas they need to strengthen.

“As you are aware, there is a significant default rate. To find out what went wrong and what can be changed, it is crucial to conduct a thorough assessment.

Dr. Aliyu Ilias, a development economist who also spoke, emphasised that the top bank shouldn’t handle intervention monies.

He also attacked the Anchor Borrowers’ Programme’s structure, which has been a major source of contention.

First and foremost, CBN should not participate in any intervention funds, he declared. The Bank of Industry and the Ministry of Agriculture both exist. Therefore, any intervention should go through these organisations.

“Anchor Borrower’s structure, in my opinion, is not very excellent. I believe there is a problem with policy, and we need to look into it.

A CBN governor with a background in banking is typically not a good idea, he continued, as there is often “romance” between the banks and the central bank.

No way are they not going to call those bank CEOs. To evaluate the funds, a few persons must be contacted. To qualify for loans, banks must compile a list of applicants, he noted.

(Punch)