While talks are ongoing, Nigeria’s central bank pays itself $15m fine from Banks’ deposits

The Central Bank of Nigeria (CBN) has debited Stanbic IBTC Bank, the Nigerian subsidiary of the Stanbic IBTC Holdings PLC N1.886 billion from its deposit with the CBN, being the fine imposed on the Bank for breaching Nigeria’s forex regulations.

The central bank had claimed that Stanbic IBTC Bank was involved in illegal capital repatriation by MTN Nigeria Communications Limited. The Bank denied any wrongdoing and said it was in talks with the CBN to resolve the matter.

In a notice to the Nigerian Stock Exchange(NSE), the Bank stated that the CBN had executed the fine. “…we write to update The NSE that the CBN has debited the account of our banking subsidiary with the CBN for the full amount of the above stated fine advised to the Bank,” the Bank noted.

The CBN action came while talks between the Bank and the regulator were still ongoing. The Bank maintained that it had done nothing illegal in the repatriation of funds on behalf of MTN, and will provide the central bank with documents and details to prove this.

Three other banks were fined by the CBN last week after it announced that its investigation showed that on account of an illegal conversion of MTN shareholders’ loan to preference shares, the sum of $8,134,312,397.63 was illegally repatriated by the company.

Standard Chartered Bank was asked to pay a fine of N2.4 billion, Citibank N1.2 billion and Diamond Bank N250 million. Following the announcement, the banks opened talks with the central bank to resolve the issue.

An official of one of the affected banks, who spoke to The Nerve Africa but asked not to be named, lamented the central bank’s action.

“We’ve also been debited, and I’m sure same goes for other banks involved in this matter,” the source said. “But what beats me is why the CBN will take such action just because it can. We have engaged the Bank on this matter and no conclusions have been reached yet. One would expect the regulator to wait till we conclude engagements before making any deductions.”

The central bank requires banks operating in the country to have some funds on hand. This cash reserve requirement is held as deposit at the CBN. Banks in Nigeria are required to keep 22.5 percent of customer deposits.