Six Leading Banks, Including UBA and Stanbic IBTC, Barred from CBN FX Auction
Six prominent Nigerian banks, including United Bank for Africa (UBA), Wema Bank, and Stanbic IBTC, were disqualified from participating in a recent retail Dutch Auction conducted by the Central Bank of Nigeria (CBN). The auction, held on August 6, 2024, saw the CBN selling $876.26 million to 26 qualified banks as part of its ongoing efforts to ease demand pressure in the foreign exchange (FX) market and promote price stability.
Under the leadership of Governor Yemi Cardoso, this auction marked one of the CBN's most significant FX interventions aimed at stabilizing the naira amid ongoing volatility in the FX market. A total of $1.18 billion in bids was submitted by 32 banks, but bids totaling $279.04 million from six banks were disqualified for various reasons.
-United Bank for Africa (UBA): UBA, a leading financial institution in Nigeria, had its bid of $13.21 million disqualified due to a late submission.
- First City Monument Bank (FCMB): FCMB submitted the largest bid among the disqualified banks, amounting to $178.65 million, but it was invalidated due to late submission, marking a significant setback for the bank.
- Stanbic IBTC: Stanbic IBTC's bid of $57.86 million was also disqualified for late submission, underscoring the CBN's strict adherence to submission deadlines.
- Wema Bank: Wema Bank, known for its growth and innovation, particularly with its ALAT digital banking platform, saw its bid of $21.94 million disqualified due to late submission.
- SunTrust Bank: Unlike the other banks, SunTrust Bank's bid of $7.38 million was invalidated for failing to provide bid rates, rather than for late submission.
- Rand Bank: Rand Bank was disqualified for failing to submit any bids, resulting in no associated amount for the auction.
The CBN's retail Dutch auction aimed to allocate FX to end-users, including those with trade-backed demands, as part of the central bank's strategy to stabilize the naira. The successful bids from the auction were settled on August 8, 2024, following the T+2 settlement process.
The disqualification of major banks like UBA, Wema, and Stanbic highlights the CBN's stringent regulatory standards to ensure transparency and efficiency in the FX market. It also underscores the importance of adhering to submission deadlines and accurately completing bid templates for future auctions.
These disqualifications removed a total of $279.04 million from the auction, reflecting the CBN's commitment to maintaining rigorous compliance in its FX operations.
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