FOUR BANKS QUALIFY AS CBN FOREIGN EXCHANGE DEALERS

The flexible foreign exchange regime begins from Monday and as banks begin to settle into it, the Central Bank of Nigeria, CBN, is set to name the lead players in the foreign exchange market today.

The lead players are called Foreign Exchange Primary Dealers, FXPD.
Though CBN’s guidelines indicated that about 8 or 10 banks would be registered as FXPD, but sources say about four banks are fully qualified, considering their examined financial positions as at end of 2015 and first quarter of 2016.

The apex bank would consider shareholders funds, liquidity ratios and volume of foreign currency assets of banks in arriving at top 10 that would be registered as FXPDs. Additional requirements may include capital adequacy ratios and historical volume of bids recorded in the CBN weekly forex market regime due to be phased out today.

FirstBank, Zenith, UBA, GTB qualify for FXPD. These four banks that have fully met the criteria, Further analysis of the top 10 banks in the country, using CBN’s criteria, shows that about four others may have also qualified with additional four close to meeting the benchmark. The banks are Access Bank Plc, Diamond Bank Plc, FCMB Plc, Fidelity Bank Plc, which have some of the key requirements as at end of 2015 and are expected to have qualified by the first quarter of 2016.

Access Bank, GTB, FirstBank, Zenith and UBA have been leading in volume of bids and allocation of foreign exchange from the CBN weekly foreign exchange trading since last year.
Other banks expected to fight for the ninth and tenth positions if CBN decide to move up the list, includes Stanbic IBTC Bank Plc, Skye Bank Plc and Sterling Bank Plc, but their financial positions could not be established due to non-availability of their financial reports as at end of 2015 and first quarter of 2016.

Also, Ecobank Nigeria is expected to make the top 10 but their financial reports were US dollar denominated and could not be immediately translated into Naira due to the transitional exchange rate as at today.
CBN had indicated a two-level trading structure where the apex bank would deal on wholesale basis with some banks that would in turn transact with other banks to be known as non-primary dealers, and other dealers at lower retail volume.