Nigerian interbank rate tumbles on budget disbursal, matured bills

Nigeria's interbank lending rate fell sharply on Friday amid increased liquidity caused by an injection of funds from matured treasury bills and the disbursal of monthly budget allocations to states and local government, traders said.

Emefiele

The secured open buy-back (OBB) - the rate at which lenders can borrow from the interbank market using treasury bills as collateral - crashed to 0.5 percent from 7 percent last week, far below the central bank's 13 percent benchmark interest rate.
Traders said budget allocations to states and local government worth about 185 billion naira ($930.12 million) had been injected into the banking system, while around 140 billion naira in cash reserves requirements (CRR) were also credited to the accounts of some banks, further boosting liquidity.
Nigeria, Africa's top crude exporter, usually disburses revenue from oil exports among its three tiers of government - federal, state and local - on a monthly basis, while the portion of the states and municipal governments pass through the banking system.
Banks' credit balance with the central bank opened at 385 billion naira on Friday, from a surplus of about 256 billion naira last week, but with the additional funds from budget and CRR, market liquidity should exceed 600 billion naira.
Also on Thursday, the central bank repaid about 187 billion naira in matured open market operation (OMO) bills.
"The system is very liquid, with the interbank rate expected to stay low in the near term," one trader said.
Some banks have resumed overnight lending due to the increased liquidity in the market, traders said.
The overnight placement was at 1 percent on Friday.

Read More

Nigerian financial watchdog gives Stanbic IBTC 60 days to restate accounts

Nigeria's financial regulator has given banking group Stanbic IBTC 60 days to restate 2013 and 2014 accounts after it ordered the company to withdraw them over "misleading" disclosures relating to expenses, the watchdog said.

Emefiele, CBN governor

Jim Obaze, head of Nigeria's Financial Reporting Council (FRC), said it had imposed a fine of 1 billion naira ($5.03 million) on the local unit of South Africa's Standard Bank as stipulated in the regulations for inspection and monitoring of public companies.
The bank has rejected the watchdog's findings and said its books conform with international reporting standards.
"(Stanbic) has a 60-day window to restate the accounts, Obaze told Reuters.
He said that Stanbic IBTC will also have to show the difference between the past accounts and the restated statements for stakeholders to be able to assess the impact.
The FRC on Monday said the banking group had an "other operating expenses" category in its accounts for financial years 2011 through 2014, in which expense items were not properly disclosed.
The regulator said Stanbic IBTC had disclosed 6.08 billion naira in 2014 as professional fees, but this included several unrelated items that required separate disclosure to give a good understanding of their nature.
The mid-tier Nigerian lender had sought agreement to pay its parent Standard Bank an annual license fee of 151.5 million rand ($11.1 mln), which was declined.
Stanbic IBTC shares have fallen 17.6 percent since the regulator ordered the restatement on Monday. They fell 4.63 percent to 19.05 naira on Friday.

Read More

Nigeria's central bank weakens naira FX peg at interbank

Nigeria's central bank weakened its exchange rate peg to 197 to the dollar on the interbank market on Friday, down from 196.97 on Monday, traders said.
Traders said the regulator set the new rate for market closing price on Thursday, making this the 11th adjustment since the bank introduced tight currency controls in February.
The central bank has resorted to adjusting the rate on the local currency since pegging it to the dollar in February and abolishing two-way naira quotes to help conserve forex reserves.
Traders said the present method of exchange rate fixing has led to an erosion of the country's forex reserves, which stood at $30.13 billion as of Oct. 27, down from $30.38 billion a month earlier.The central bank has resisted calls to further devalue the naira in the face of a plunge in vital oil revenues. But the bank has continued to intervene periodically to provide forex liquidity support for the local currency.
It also sells dollars twice-weekly to bureau de change operators as part of efforts to support the naira and narrow the gap between the official and parallel foreign exchange markets.

Read More

Nigeria's bond yields to rise as offshore investors sell

Yields on Nigeria's local currency denominated bonds are expected to rise next week as offshore investors and some local investors sell holdings.
"We are anticipating a massive sell off next week from some offshore investors still holding their positions in the market," one dealer said, adding some local pension funds could follow suit.
JP Morgan is expected to remove Nigerian bonds from its Emerging Market Government Bond Index (EM-GBI) by the end of October, prompting the shift out.
Yields on the benchmark 2024 paper dropped to 13.49 percent on Friday from 13.60 percent last week, but are seen rising above 14 percent level next week.
"A sell-off either by the remaining offshore investors in the market or pension funds ahead of the auction on Nov. 11, would lead to increased yields in the near term," a senior treasurer said.

Read More

Nigeria's central bank says fraudsters out to dupe bank depositors on BVN

Nigeria’s central bank has issued a fraud alert on its project to ensure the identification of commercial lender customers through biometrics method, saying depositors should not respond to fraudulent email from some unscrupulous individuals out to defraud them.

Emefiele

In a statement signed by its director of communication, Ibrahim Muazu, that certain unscrupulous individuals have been sending unsolicited mails and text messages to unsuspecting bank customers, alerting them to the deactivation or suspension of their bank accounts due to uncompleted Bank Verification Number (BVN) registration process
“The public is therefore warned that neither the Central Bank of Nigeria and deposit money banks nor their employees or agents would ever call bank customers or send e-mail/text messages requesting for passwords, card details or personal identification number (PIN),” Muazu said.
Below is the details of the statement from the central bank:
“It has come to the notice of the Central Bank of Nigeria (CBN) that certain unscrupulous individuals have been sending unsolicited mails and text messages to unsuspecting bank customers, alerting them to the deactivation or suspension of their bank accounts due to uncompleted Bank Verification Number (BVN) registration process. 

"An example of such messages reads thus: “Dear customer, due to the new BVN policy by the CBN, your account has been deactivated and to reactivate, call……” The Central Bank of Nigeria wishes to warn individuals and the general public that those messages are intended to lure bank account holders to reveal their personal details with which the fraudsters could use to defraud them. 

"The public is therefore warned that neither the Central Bank of Nigeria and deposit money banks nor their employees or agents would ever call bank customers or send e-mail/text messages requesting for passwords, card details or personal identification number (PIN). Bank customers are therefore advised to personally visit their banks for any issue requiring disclosure of personal bank details."

Read More

Nigeria gives MTN until Nov. 16 to pay $5.2 billion fine

South African telecoms group MTN has until Nov. 16 to pay a $5.2 billion fine imposed by Nigerian authorities for failing to deactivate unregistered SIM cards before a deadline, Nigeria's communications regulator said on Friday.
Top executives from Africa's biggest mobile phone company are in Nigeria to discuss ways of resolving the massive fine, which has knocked around 20 percent off MTN's share price.
Nigeria's presidency and internal security agency were also involved in the talks, a regulatory source said.
"The outcome of the discussion may affect the date. That's why they are having the discussion so that they can reach a solution," National Communications Commission spokesman Tony Ojobo said.

Read More

Nigeria planning $25 bln infrastructure fund - official

Nigeria plans to set up a $25 billion infrastructure fund to invest in the transport and energy sectors in Africa's most populous nation, a spokesman for Vice President Yemi Osinbajo said on Thursday.

Laolu Akande said money for the planned fund would come from local and international sources including Nigeria's sovereign wealth fund and domestic pension funds.
"The vice president disclosed that other sovereign wealth funds have already indicated an interest in the fund, which would be used to address the nation's decaying road, rail and power infrastructures," said Akande.
He did not say when exactly the fund would be set up.
The nation of 170 million people is Africa's top oil producer, but it requires infrastructure development to help boost economic growth.
The West African nation's economy, the biggest on the continent, has been hammered by the fall in oil prices. The country relies on crude exports for around 70 percent of government revenues.
Osinbajo, who has been asked to oversee economic policy by President Muhammadu Buhari, referred to the infrastructure fund proposals while speaking to diplomats, including ambassadors from Italy and Canada, the vice presidency said in a statement.
Osinbajo also reiterated the administration's view that Nigeria's currency, the naira, does not need to be devalued, the statement said.
"It is not a solution. We are not exporting significantly. The way things are, devaluation will not help the local economy," he was quoted as saying.
His comments come days after former central bank governor Lamido Sanusi said Nigeria would have to devalue and loosen monetary policy to stimulate its economy.
The naira was officially devalued last November and underwent a de facto devaluation again in February.
Godwin Emefiele, the current central bank governor, has repeatedly said the currency was "appropriately" priced and has ruled out another naira devaluation. 

Read More

Nigeria launches televised bidding for oil contracts, to cut deals by a third

Nigeria's state oil firm Nigeria National Petroleum Corporation (NNPC) began auctioning annual crude term contracts on live television on Tuesday and vowed to cut the number of contract holders by a third in a drive to boost transparency at an institution dogged by corruption.
The contracts cover the bulk of Nigeria's nearly 2 million barrels per day (bpd) of crude oil exports, which are a key contributor to the country's economy.

NNPC HQ

President Muhammadu Buhari, who was elected in March on a campaign to "fix" Africa's biggest economy, has vowed to end graft at NNPC where billions of dollars were not remitted to state coffers in the past.
As in previous years, the tender was published in newspapers, inviting bidders to take part. But the bidding process itself and the tender awards, which used to take place behind closed doors, were now live on television.
"This is not business as usual. This is going to be different," an NNPC official said during the televised round.
NNPC chief executive Emmanuel Ibe Kachikwu said the new bidding process would help the sprawling firm to become more efficient.
"The essence of this really is ... that you can go to this process and sign off your long-term contracts...," Kachikwu told bidders assembled at the NNPC headquarters.
The company plans to cut the current number of 43 contract holders to just 16, which NNPC officials said would ensure companies get oil when they need it.
In the past, NNPC has allocated more oil to companies than it in fact produced, meaning some contract holders did not get everything they were promised.
A total of 278 companies submitted bids before the deadline last week. After roughly an hour and a half of proceedings, 75 bids had been opened.
Oil traders said the pressure would also be on NNPC to award contracts only to companies with the ability to sell or process it themselves in order to maximise Nigeria's income.
"Some contracts used to go to companies that didn't have the background to trade 950,000 barrels of crude," one oil trader said, adding they would just sell it on to international trading houses, adding a fee to the cost. In the current oil price environment, the trader added, NNPC could no longer justify such arrangements.

Read More

IMF paints gloomy outlook for sub-Saharan Africa

* African growth at lowest in six years, IMF says

* Weak commodity prices hitting many countries

* Ghana doing "reasonably well" under programme

This year's slump in commodity prices and the end of a flood of cheap dollars has pegged back African growth to its weakest in six years and things could get worse if the global economy continues to flounder, the International Monetary Fund (IMF) said on Tuesday.
In its latest African Economic Outlook, entitled "Dealing with the Gathering Clouds", the Fund said the poorest continent was likely to grow 3.75 percent this year and 4.25 percent next, a big drop from the years before and after the 2008/2009 financial crisis.

"The strong growth momentum evident in the region in recent years has dissipated," the report said. "With the possibility that the external environment might turn even less favourable, risks to this outlook remain on the downside."
Hardest-hit have been sub-Sahara's eight oil exporters - led by top producers Nigeria and Angola - although others such as Ghana, Zambia and South Africa were also suffering from weak minerals prices, power shortages and difficult financing conditions.
However, the Fund noted some bright spots, most notably Ivory Coast, which is scheduled to expand as much as 9 percent this year due to an investment boom that followed the end of a brief civil war in 2012.
This weekend's overwhelmingly peaceful election, which President Alassane Ouattara - a former IMF official - is widely expected to win, has reinforced hopes Francophone Africa's biggest economy has put its worst years behind it.
With commodities revenues forecast to remain depressed for several years, governments have to work quickly to diversify revene sources by improving domestic tax collection, said Antoinette Sayeh, head of the IMF's Africa department.
"Mobilising more revenues is an urgent matter - as is being more exacting in choosing expenditure," she told Reuters. "It's a difficult patch, but we definitely think that countries can move out of the very difficult terrain and grow more robustly."
Public debt levels have been rising, in part because of access since 2007 to international capital markets, and Sayeh said governments needed to be "very careful" in how they managed dollar financing to ensure it is invested wisely.
Some governments, such as Ghana, have been accused of frittering away Eurobond revenues on state salaries. Sayeh said Accra was doing "reasonably well" in its efforts to curb public spending under a $918 million IMF programme agreed in April.
Zambia, another country struggling with the rising cost of servicing dollar debt after a halving in the value of its currency this year, has so far chosen not to asked the IMF for financial assistance, Sayeh said.
"If Zambia feels that it can benefit from fund financial assistance, we stand ready to look at that," she said.

Read More

Nigeria's central bank strengthens naira fx peg on interbank market

Nigeria's central bank strengthened its exchange rate peg slightly to 196.97 to the dollar on the interbank market on Monday, from the mark of 197.00 set two weeks ago, traders said.
Traders said the regulator had announced the change in currency peg via a message, making this the 10th adjustment since the bank introduced tight currency controls in February.
"The central bank sent a broadcast today advising 195.97/196.97 as buying and selling rate on the interbank market at its intervention session," one dealer said.
Traders said a unit of French Total had sold $90 million to some lenders at the interbank market, but the effect was minimal as the exchange rate remained fixed. Banks are allowed to buy dollars from local units of oil firms at a margin of two naira above the fixed rate.
The central bank has resisted calls to further devalue the naira in the face of a plunge in vital oil revenues. It devalued the currency last November and later pegged the exchange rate in another de facto devaluation.
But the bank has continued to intervene at the interbank market periodically to provide forex liquidity support for the local currency. It also sells dollars twice-weekly to bureau de change operators as part of efforts to support the naira and narrow the gap between the official and parallel foreign exchange markets.
The local currency traded at 226 to the dollar on the parallel market, slightly weaker than Friday's price of 225.50.

Read More

MTN confirms Nigerian unit fined $5.2 bln, shares fall

South Africa's MTN confirmed on Monday it was fined $5.2 billion by the Nigerian regulator for failing to disconnect subscribers with unregistered and incomplete SIM cards at its firm in Africa's biggest economy.
Shares in MTN extended their losses to more than 10 percent and traded down 9.3 percent lower at 173 rand by 1236 GMT.
The Nigerian Communications Commission imposed the fine on MTN Nigeria and it relates to the timing of the disconnection of 5.1 million subscribers in August and September, Africa's largest mobile operator said in a statement.
"MTN Nigeria is currently in discussions with the NCC to resolve the matter in recognition of the circumstances that prevailed with regard to these subscribers," the company said.

Read More

Nigeria’s First Bank to cut deposit rates

*Non-remittance of NNPC funds earned 2 banks fine

* Central bank fine First Bank 1.8 bln naira

*UBA to cough out 2.9 bln naira fine

First Bank, one of Nigeria’s biggest banks may crash its deposit rate to below 5 percent in line with the falling cost of borrowing in the interbank market, which plummeted to 1 percent last week, but climbed to 7 percent at the close of business on Friday. Overnight borrowing among banks opened at 4 percent on Monday after the central bank injected additional funds into the banking system from their deposits fro forex purchase last week.

Sources said the commercial lender currently has a liquidity ratio of about 50 percent, 200 percentage points above the 30 percent stipulated by the central bank.

Emefiele, CBN chief

The bank customers may be getting lower returns on their savings deposits as from middle of October in line with its liquidity position. Sources said the plan was to reduce cost of borrowing from customers and be able to enhance returns on investment to its shareholders.

The slash in deposit rate by First Bank has nothing to do with the fine imposed on it by the central bank, another source said.

There was a report in one of the dailies on Monday which claimed the central bank has sanctioned the bank for refusal to remit about 37.55 billion naira belonging to the state-owned energy company Nigerian National Petroleum Corporation (NNPC).

The report stated that First Bank was fined 1.87 billion naira, which represents five percent of the NNPC money it refused to remit to the Treasury Single Account (TSA) as directed by the federal government on September 15.

According to the report, another tier-1 bank, United Bank for Africa (UBA) was also sanctioned for concealing a portion of the energy corporation’s fund totaling 58.84 billion naira. UBA was said to have been fined 2.94 billion naira for also refusing to remit the deposit of the energy firm into the TSA as at when directed.

Most Nigeria’s commercial lenders depend largely on public sector funds, while the transfer to the TSA last month led to shortage of funds in the banking system, leading to jump in the cost of borrowing at the interbank money market.

At the peak of the transfer of public sector funds to the TSA, overnight placement was quoted at 200 percent, while the interbank market frozen for over a week.

However, in a move to save the banking system from total collapse, the central bank reduced the cash reserves ratios (CRR) from 31 percent to 25 percent o free some money for the banks.

Consequently, about 700 billion naira was refunded to some banks after the slash in CRR, leading to crash in interbank lending rate to 1 percent early last week.

   

Read More

Ghana seeks fresh Eurobond this yr of up to $500 mln -finmin

Ghana will seek to issue a fresh Eurobond of up to $500 million by year end if market conditions are right, Finance Minister Seth Terkper told a news conference on Friday.
The government launched a $1 billion Eurobond at a 10.75 percent coupon rate on Oct. 7, after having initially targeted a $1.5 billion bond at 9.5 percent.
"We still have an approval from parliament for $1.5 billion for 2015 so if the opportunity presents itself before the end of the year and since it's part of the budget that was approved we could still go to the market depending on conditions," he said.
"If the markets are not favourable we will look for alternative financing and that means that your financing mix changes for the 2016 budget," he added.
A slowdown in China and an expected rate rise by the U.S. Federal Reserve has caused turmoil in emerging debt markets and also squeezed Ghana, Terkper said.
In addition, Ghana has attracted higher debt rates as it struggles to control a fiscal crisis with the aid of an International Monetary Fund programme. Until recently, the country had one of the strongest economies in Africa.

Read More

Nigerian interbank rate rises, as banks restrict lending on callaterised basis after defaults on overnight

Due to growing rate of defaults at the interbank money market, some banks are no longer willing to give out funds to other banks on overnight basis, banking source said on Friday.
"Most fund placers are no longer lending overnight because the default rate is gradually growing, hence the concentration on collateralised lending through OBB," one trader said.
Banking source said since the government ordered the transfer of its deposits to a Treasury Single Account (TSA) last month, some banks have defaulted in the repayment of funds borrowed on the interbank market.

Emefiele

In order to forestall further default and save the system from total collapse, top banks which control liquidity in the market has stopped lending to other banks on overnight basis, rather interbank lending is now conducted based on availability of collateral.
"Any banks that cannot provide treasury bills backing for its borrowing would not get overnight cash accommodation in the system," another dealer said.

bankers who spoke on the subject said the security of depositors' fund is paramount, hence the resorting to lending based on secured basis.
However, Nigeria's interbank lending rate has jumped to 7 percent as of Friday from 1 percent at the end of last week as payments for foreign exchange and treasury bills have drained liquidity from the banking system, traders said.
Liquidity in Africa's biggest economy showed a surplus of about 256 billion naira ($1.3 billion) on Friday, well down from over 1 trillion naira last week, traders said.
"Markets liquidity dropped significantly this week due to provision of about 300 billion naira made for foreign exchange intervention by the central bank and many banks' liquidity positions declined, leading to an increase in cost of funds," one dealer said.
The secured open buy back (OBB) - the rate at which lenders can borrow from the interbank market using treasury bills as collateral - rose to 7 percent from 0.5 percent last week, well below the 13 percent central bank benchmark interest rate.
Traders said with state-owned energy company NNPC's plan to recall the proceeds of its dollar sales to some banks to its account with the central bank next week, the cost of borrowing could rise further.
"Hopefully, budget allocation to some states and local government could come in next week to counter the impact of intending cash withdrawal by the NNPC and keep the rate at the present level," a senior treasurer with one of the top bank said.

Read More

World's first malaria vaccine delayed as WHO experts urge caution

The world's first malaria vaccine is promising but should be used on a pilot basis before any wide-scale use, given its limited efficacy, World Health Organization (WHO) experts said on Friday.
The decision is likely to delay a possible broad roll-out of the shot for between three and five years.
GlaxoSmithKline's Mosquirix could, in theory, help stop millions of cases of malaria in young children in Africa at risk of the deadly mosquito-borne disease.
However, it is less effective than vaccines against many other diseases and there is uncertainty as to whether countries can effectively administer the four doses needed.
Jon Abramson, chairman of the WHO Strategic Advisory Group of Experts, or SAGE, said experts recommended there should be three to five demonstration projects in children aged five to 17 months before considering wider use.
These projects could involve up to 1 million children and would likely take three to five years to run, he added. SAGE did not recommend the use of Mosquirix, also known as RTS,S, in young babies.
Committee experts said it was vital to give all four doses of the vaccine to ensure optimal efficacy, even though getting children back for multiple repeat shots could be challenging.
“If we can’t get four doses of this vaccine into the children, we’re not going to be using it,” Abramson told reporters.
“What we are recommending is that before we have widespread use of this vaccine - and we wouldn’t necessarily use it in a very low incidence area, but in all medium and high areas - that we know that we can get that fourth dose in.”
Hopes that GSK's vaccine could wipe out malaria were dampened when trial data in 2011 and 2012 showed it reduced malaria episodes in babies aged six to 12 weeks by only 27 percent, and by about 46 percent in children aged five to 17 months. Part of that could be down to genetics.
'A TON OF MONEY'
GSK said it was ready to work with the WHO to support the pilot implementation of the vaccine. "We hope this will provide the additional information needed about how to best deliver the vaccine in a real-world setting," a spokeswoman said.
Abramson said the vaccine was likely to cost around $5 a dose, or $20 for a four-dose course, which is four times the cost of an insecticide-treated bed net. It could be funded by the GAVI international vaccine alliance, though no decision on this has yet been made.
"If this vaccine is not effective and we use it widely we will have spent a ton of money which could have been better placed," Abramson said.
Medical charity Medecins Sans Frontieres said SAGE was right to be wary about using a costly intervention with a patchy record.
Adrian Hill, a vaccine expert at Oxford University's Jenner Institute, told Reuters: "This really underscores the need for work on developing other promising malaria vaccine candidates to be accelerated."
Alternative malaria vaccines are still at least five to 10 years away from being licensed.
This year alone, there have been an estimated 214 million new cases of malaria, with around 438,000 deaths.
GSK has said it will not make any profit on Mosquirix, since a planned mark-up of just 5 percent on the cost of production will be reinvested in research on tropical diseases.
The shot also contains an adjuvant, or booster, made by U.S. biotech company Agenus

Read More

Nigeria needs to devaluate naira, ease dollar restrictions- former cenbank governor

Nigeria will have to devalue the naira and loosen monetary policy to stimulate Africa's biggest economy hit by a plunge in oil prices, former central bank governor Lamido Sanusi said on Friday, criticising the bank's currency policy.

Eemfiele

Sanusi was removed in 2010 after he raised concern that tens of billions of dollars in oil revenues had not been remitted to state coffers.
"It is wrong to think that you can keep the naira at a certain level when the price of oil is falling without depleting your reserves," Sanusi told CNBC television. "It does not speak well of us to pretend that the naira is appropriately priced."
Central bank Governor Godwin Emefile has ruled out another naira devaluation, saying repeatedly the currency was "appropriately" priced despite a sharp fall of oil revenues whacking public finances. Emefiele's has won backing from President Muhammadu Buhari for his stance.
Sanusi, who is now the emir of Kano in Nigeria's Muslim north, also criticised foreign currency restrictions imposed by the central bank, which have frustrated local firms struggling to get dollars.
He also said interest rates were too high. The central bank let the main benchmark rate unchanged at 13 percent at its last monetary policy meeting in September while cutting the banks' cash reserve ratio to 25 percent from 31 percent.
"It's time to loosen monetary policy. We need to lower interest rates otherwise we compound an exchange rate crisis for businesses with high borrowing costs and declining demand," Sanusi said.

Read More

Nigerian banks face challenge to refinance loans - TRLPC

Nigerian banks could start facing financial restructurings within six months, with some banks now unable to repay their debt as depressed oil prices continue to weaken balance sheets, bankers said.
The continuing low oil prices and the Nigerian government& rsquo;s slowness to react to the country’s looming bank crisis could create difficult financial situations for Nigerian banks increasingly unable to repay their debt.

Dollars

In August, Nigeria’s Skye Bank started discussions to refinance a syndicated facility of US$84m that matured on September 18. After subsequently failing to repay US$42m of the loan the bank is now in discussions with individual lenders on how to reorganise its debt, one of the bankers said. 

The one-year deal was signed in September 2014 and was arranged by Mashreqbank “ It is not good & ndash; they have not repaid 50 percent of their loan. Skye needs to talk to its lenders,” the banker said.
Since July, a number of Nigerian banks have also been unable to repay shorter trade finance loans and if the situation continues this could lead to a wider restructuring or rescheduling of Nigerian bank debt. “I first started hearing about banks not repaying trade loans back in July. 

The government needs to address this quickly. If the situation continues for another six months, banks are going to have to start talks about some form of debt rescheduling,” the banker said.
NEW RULES
In December last year the Central Bank of Nigeria imposed new regulations on Nigerian banks that require those with exposure to the oil and gas sector in excess of 20 perceent of their total credit facilities to hold provisions of 125 percent against those assets.
This has deterred Nigerian banks from taking on new loans so far this year.
But with a growing need for dollar funding and funding in the swap markets, which earlier this year was costing Nigerian banks between 7.0 percent & ndash; 8.5 percent, now closed, Nigerian bank borrowers now have little choice but to approach the international syndicated loans market again, a second banker said. “I don’t think they have much choice, there is a liquidity concern, they need dollars,” he said.
For the stronger players that have managed to service their debt, a market for syndicated loans is there – but at double the prices paid last year, with new deal margins expected to be hiked up to between 550bp and 650bp, and with much shorter tenors. “There is still appetite for stronger Nigerian banks but they will be better priced with less ambitious tenors. There are no RFPs; select banks will lend to them on a relationship basis. Nigerian banks can’t pick and chose,” a third banker said.
IN THE MARKET
Ecobank and First City Monument Bank are both in the market to refinance their debut US$150m loans, which were signed in October 2014. Ecobank is looking for a US$120m loan and FCMB for a US$150m facility. Bankers expect that they will be able to raise these loans but only with a the steep increase in prices. “These deals will get done but the banks will pay a premium,” the
first banker said. “This will distort the market, nobody likes to refinance at a higher price.” Nigeria’s Stanbic IBTC Bank’s new US$100m deal, which was launched a month ago will fair slightly better due to its smaller exposure to the oil and gas sector, but even here a shorter tenor and higher pricing are expected.
The one-year loan, which is set to close on November 18, will pay just under 400bp, the second banker said. The same loan a year ago would have been able to attract US$500m for a three-year facility paying around 250bp, he said.
Mashreqbank is coordinating the deal for Stanbic IBTC but European relationship lenders from Germany and Austria have been leaned on to get the deal done, the second banker said. In addition pricing was revised up by 50bp post-launch.
In contrast, elsewhere in Africa appetite for bank deals is still strong, even from Middle East Banks that themselves are facing an increasing liquidity squeeze.

Read More

Without a cabinet, Nigeria is stuck "on hold"

Senate wrangling delays cabinet nominations
Lack of state spending raises pressure on economy
Poverty widespread despite Nigeria's energy wealth
Seven months after Muhammadu Buhari was elected president on a promise to "fix" Nigeria, a policy vacuum has brought decision-making to a halt, hampering everything from national budget planning to new roads and art exhibitions.

President Buhari

Late on Thursday, the Senate ended yet another session screening Buhari's ministerial candidates without giving its approval, leaving Africa's biggest economy with no government since the former military ruler took office on May 29.
With political wrangling in full swing, lawmakers will need at least another week for more vetting. After three weeks, only half of Buhari's 36-strong lineup has got the green light.
Buhari has launched the first steps to reform the oil sector in Africa's biggest producer and fight graft, which is blamed for most of the nation of 170 million people living in poverty despite Nigeria's vast energy wealth.
But some of his high-flying plans are gathering dust in rudderless ministries while entrepreneurs and businessman look on in vain as Africa's biggest economy reels from the decline in crude prices.
"We support Buhari's change but ministers need to get appointed and start working," said Chidubem Nnajiofor, whose computer shop has been struggling to pay for imports because of central bank currency controls imposed to protect the naira.
"You cannot get dollars even if you have a letter of credit."

BUDGET DEFERRED
The 72-year-old president has won praise for a bailout of federal states and audits designed to root out graft but, with the economy flatlining, investors wonder why he took four months to name a cabinet of familiar political faces.
"For a while, one could say that transparency reforms introduced by the new government and the state government bailout possibly trumped the appointment of a cabinet," said Razia Khan, Chief Economist, Africa, at Standard Chartered Bank.
"As we get closer to the budget cycle deadline and important decisions on subsidies and taxation need to be taken, the absence of a cabinet will likely become more glaring."
Parliament typically tables the annual budget in November but there is no draft yet for a planned supplementary budget for this year, let alone a proposal for 2016. Discussions are likely to take longer than normal because of the need of spending cuts.
The lack of a government has hampered even basic ministry work such as aid projects or state-sponsored art exhibitions. Business people and diplomats have been dealing with undersecretaries who are afraid to sign off on anything.
"No political decisions are being taken at the moment at ministries," said a Western diplomat who asked not to be named.
Even when the Senate clears Buhari's nominees, ministers will have to wade through reams of documents that have piled up on their desks over the last half a year before getting down to work.
ONE-MAN SHOW?
Many Nigerians support Buhari's cause to fight graft. Most people in the country struggle to make ends meet while a globe-trotting elite has enjoyed an oil bonanza.
To the delight of many, foreign airlines are reporting a slump in first-class bookings as high-rollers take care over displays of wealth, and noticeably fewer private jets jostle for space at Abuja's airport.
But in the absence of ministers, reforms aired before the election - such as curbing food imports to boost domestic farming - are stuck on the drawing board, and without any consideration for their consequences.
For example, if steel imports are curbed, as has been mooted, Buhari may have to drop some infrastructure projects because local steel output is insufficient, executives say.
The cabinet delay is also sowing confusion and intrigue, according to political insiders, with some ministers on the cabinet list telling friends which portfolio they have landed, only to call back later to say they are not so sure.
Emmanuel Ibe Kachikwu, head of state oil firm NNPC, is expected to become junior oil minister with Buhari maintaining oversight of the sector.
Buhari - by his own admission not an economist - has tasked his deputy president, Yemi Osinbajo, a commercial lawyer, with overseeing economic policy. Osinbajo has said dollar curbs are only a short-term measure to preserve currency reserves.
But the wider paralysis is blocking nearly all government spending, putting a big brake on growth.
"It's only when government starts embarking on capital projects that there is money," said Joel Mtsor, who runs a printing firm in Abuja that relies on government work.
"Nothing is happening - no workshops, no seminars. As I speak there is no printing company today that is busy," he said.

*Reuters

Read More

Nigeria's anti-graft agency says banks to strengthen e-platforms

The Economic and Financial Crimes Commission (EFCC) has urged banks to protect customers' transactions by strengthening their e-platforms.
EFCC said enacting the Cybercrime Act will help monitor electronic transactions and investigate real and potential cyber attack, as is done in countries like Britain.
The Commission recommended this through Ibrahim Shazali of its Bank Fraud Section at a presentation at the ongoing Nigerian Deposit Insurance Corporation (NDIC) workshop for financial correspondents in Ilorin, Kwara State.

Read More

Nigeria to raise electricity tarrif by 40 pct to off-set increase cost

Nigeria plans to raise electricity tariff by as much as 40 percent for some customers next month on the back of falling local currency value and increasing costs hinder efforts to end daily blackouts in Africa’s largest economy.
“We are working on the numbers and going through the processes,’’ Sam Amadi, chairman of the Nigerian Electricity Regulatory Commission, said in a phone interview late Wednesday from the capital, Abuja. Some bills will increase 5 percent while others will see prices raised as much as 40 percent depending on the power provider and class of customer, he said. The change in rates will take place by mid-November.
Nigeria dismantled its power monopoly and sold 15 state generation and distribution companies in 2013 to private investors in an attempt to end the crippling electricity shortages. Generated output has never risen above 5,000 megawatts, which is about a third of peak demand, while the state-owned transmission system can’t deliver any more than that before it starts breaking down.
Efforts to boost power supply have been hampered by factors including gas supply, foreign exchange and inflation, that have increased the cost of energy and infrastructure for the power companies, Amadi said. “The law provides for periodic price review when the cost profile changes.”
‘Good Tariff’
A slump in crude prices in the past year has put pressure on the naira, forcing the Central Bank of Nigeria, which bailed out the power companies last year, to twice devalue the currency since November. The inflation rate climbed to the highest in more than two years in September to 9.4 percent.
The government-set rates have hampered the distribution companies from paying their bills to the power plants. Just before elections in March, the regulator banned them from charging consumers for losses caused by billing mistakes, effectively cutting the tariff by more than half in some areas. This caused most of the distribution utilities to declare force majeure, saying they couldn’t pay for their power supply.
In June, NERC said it will approve higher prices for natural-gas supply to spur deliveries to power plants.
“If the electricity distribution companies have a good tariff they can pay for gas and they are happy to make more investments,” Amadi said. The average electricity tariff for some of the companies is in the region of 27 naira per kilowatt-hour, he said.

*Bloomberg

Read More

MTN Cuts Subscriber Target as Nigeria Customer Numbers Slide

Africa’s largest wireless operator, MTN group has cut its full-year forecast for subscriber numbers after more than 5 million Nigerian customers were disconnected following the regulator review the process of sim registration by the company.
The company will add 14.8 million net subscribers this year, compared with a previous forecast of 16.75 million, Johannesburg-based MTN said in a statement on Thursday. The carrier’s customer base grew 0.9 percent to 233 million in the three months through September compared with the previous quarter.
MTN, which operates in more than 20 countries across the Middle East and Africa, had 5.1 million subscribers cut off in Nigeria, its biggest market, at the end of August following checks on personal documents. The company is also facing “ongoing regulatory restrictions” related to its market-leading position in Africa’s most populous country, spokesman Nik Kershaw said by phone. About 3.4 million of the customers have been reconnected, the company said.
MTN shares gained 2.4 percent to 186.45 rand as of 3:31 p.m. in Johannesburg, valuing the company at 345 billion rand ($25.2 billion). The stock is down 16 percent this year, compared with a 14 percent gain for Vodacom Group Ltd, its cross-town competitor.
While the loss of Nigerian customers is a short-term setback, “it does point to a tough regulatory environment,” Steve Minnaar, a money-manager at Cape Town-based Abax Investment, said by phone. “They have been struggling with the regulator for many years in the Nigerian environment.”
Customers using contracts in South Africa fell 2.6 percent to 5.2 million, due in part to “low availability of handsets,” MTN said. Total subscriber numbers in Africa’s most industrialized economy gained 2 percent to 29 million, due to a rise in pre-paid customers.

* Bloomberg

Read More

Ghana in talks to head off Nigeria threat to cut gas supply

* President has vowed to end blackouts by New Year

* Loss of Nigeria supply could raise gas costs

* Threat shows strain of reforming Ghana energy sector
Ghana held emergency talks in Nigeria on Thursday to avert a threat to cut gas supply drastically, which could worsen the country's electricity blackouts and present an extra headache for the government.
The Nigerian National Petroleum Corporation (NNPC) said it will cut gas supply by 70 percent to Ghana's main power generation company by Friday due to unpaid debts of $181 million. Ghana already suffers power shortages and Nigerian gas meets about 25 percent of its needs.
"A high-powered government delegation led by the Minister for Power Kwabena Donkor is currently in Nigeria having discussions on this very important matter," Petroleum Minister Emmanuel Buah told a news conference. There was no immediate comment from NNPC.
Power cuts have raised the cost of doing business and angered voters at a sensitive time for President John Mahama's government ahead of what is expected to be a tough re-election battle next year.
Mahama has vowed to end the power cuts by the start of next year and Donkor has said he would resign if the problem has not been fixed by then.
The government's room for manoeuvre is limited, however, under the terms of an aid programme with the International Monetary Fund it is following to restore balance to its economy.
Ghana was for years one of Africa's economic stars but falling global commodity prices have blunted the value of its gold, cocoa and oil exports.
Its fiscal problems include inflation of up to 17.4 percent in September, a currency that has fallen sharply in the last two years and a debt-to-GDP ratio of around 70 percent with what economists say are high debt service costs.

The Nigerian threat is a sign of budgetary stress and the strain of energy sector reform in Ghana, experts said.

"It is extremely embarrassing for the government. It touches on credibility ... Every investor will be looking at that and saying, 'Is this a country to do business in?'" Ben Boakye of the Africa Centre for Energy Policy think tank told Reuters.

In the long term, Ghana aims to increase domestic gas production with new gas fields to meet rising demand and reduce its dependence on imports.

"In the next decade, 80 percent of our source of power will come from thermal generation with gas as the critical feed stock," Buah said, adding that government will also modify a pipeline so offshore gas can feed power stations east of Accra.

Nigerian gas flows to Ghana through the West African Gas Pipeline Company's pipe that runs via Benin and Togo. VRA buys the gas to fire power plants mainly in the east of the country.

Hydro supplies around 50 percent of Ghana's power with the rest from its own gas and other sources.

The power crisis stems from a fall in supply from Ghana's dams, government underpayment to the Electricity Company of Ghana, residents' illegal consumption and tariffs too low for VRA to recoup its costs. (Additional reporting by Ulf Laessing in Lagos; Editing by William Hardy)

Read More

Nigeria's central bank weakens naira FX peg on interbank market

Nigeria's central bank weakened its exchange rate peg slightly to 197 naira to the dollar on the interbank market on Thursday from 196.98 it set on Monday, traders said.
Traders said the regulator sent a message announcing the adjustment which is the ninth since the bank introduced tight currency controls in February.

Emefiele, CBN Gov

"The central bank sent a broadcast today advising us on its buy and selling rate on the interbank market at its intervention session," one dealer said.
The bank has resisted calls to further devalue the naira in the face of a plunge in vital oil revenues. It devalued the currency last November and later pegged the exchange rate in another de facto devaluation.
But the bank has continued to intervene at the interbank market periodically to provide forex liquidity support for the local currency. It also sells dollars twice-weekly to the bureau de change operators as part of bids to support the naira and narrow the gap between the official forex and parallel market.
The local currency traded at 225 to the dollar on the parallel market on Thursday, slightly weaker than 224 traded on Monday.

Read More

Nigeria raises 120 bln naira in 2020, 2024 bonds at lower yields

Nigeria issued 120 billion naira worth of naira-denominated bonds maturing in 2020 and 2024 at an auction on Wednesday, at lower yields than the returns at its previous auction, the Debt Management Office said on Thursday.

Nwankwo, Debt office boss

The returns on the paper reflected the prevailing low yields on local bonds at the secondary market.
The debt office raised 40 billion naira in the 2020 debt at 13.11 percent compared with 15.95 percent at the previous auction in August. The same tenor bond closed at 13.28 percent at the secondary market on Wednesday.
A total of 80 billion of the benchmark bond maturing in 2024 was issued at 13.87 billion naira compared with 16.84 percent the same tenor debt attracted at the March auction when it was last issued. The 2024 paper closed at 13.71 percent at the secondary market on Wednesday.
Yields on Nigerian debt have dropped sharply since last month due to increased naira liquidity in the banking system, spurring demand for the local bond by pension and commercial lenders.

Read More

Nigeria threatens to cut gas supplies to Ghana

Nigeria's N-Gas on Wednesday threatened to reduce by 70 percent its gas supplies to Ghana's main power generation company on Friday over unpaid debts that total $181 million, the West African Pipeline Company (WAPCo) said.
Any curtailment of gas would lead to an "ugly situation" for power generation in Ghana, said Walter Perez, the managing director of WAPCo, which is itself owed $103 million by the Volta River Authority (VRA) power company.
Ghana already faces crippling power shortages and electricity blackouts that have hurt the economy, raised the cost of doing business and angered voters ahead of elections next year.
"N-Gas informed WAPCo of the intent of one its major gas suppliers, Nigeria National Petroleum Company, to curtail gas supply as a result of N-Gas being in payment default due to the inability of VRA to settle its gas supply and transportation invoices," Perez told a news conference on Wednesday.
All of Ghana's gas came through the WAPCo pipeline in 2014 from Nigeria, though this year the country now gets some supply through Ghana's Jubilee offshore oil and gas field, an official said. The pipeline also serves Benin and Togo.
Since July around 100 million cubic feet of gas per day has flowed through the pipeline, Perez said. There was no immediate comment from Ghana's government or from VRA.

Read More

Nigeria revamps oil exploration firms in first step to reform

* Reuters exclusive

Joint ventures to be given budget control
NNPC reform a priority as oil slump hammers economy
Letter gives details of restructuring

Nigerian President Muhammadu Buhari has taken his first steps towards overhauling the troubled state oil firm by giving its exploration joint ventures control over their own budgets as a way to overcome chronic cash shortages.

NNPC HQ

Corruption and mismanagement at the Nigerian National Petroleum Corporation have hampered an industry that provides 70 percent of state income. NNPC has been accused of failing to account for tens of billions of dollars, while no new exploration blocks have been sold since 2007.
Buhari, who took office on May 29, wants to make reform of the sprawling NNPC a priority at a time when a slump in oil prices is hammering the economy.
The former military ruler has fired the NNPC board and plans to break up the company, whose opaque structures have allowed corruption and oil theft to flourish.
To speed up an often glacial decision making process at NNPC, Buhari has given the green light to revamping several joint ventures involving its poorly managed production and exploration arm, according to a letter by NNPC head Emmanuel Kachikwu signed by Buhari, a copy of which was reviewed by Reuters.
NNPC did not respond to a request for comment but several oil sources confirmed the authenticity of the letter.
Nigeria produces about 2.2 million barrels per day of oil with foreign and local companies through production sharing contracts and joint ventures (JVs).
But projects have been held up because NNPC needs parliamentary and regulatory approval to spend anything. Officials and lawmakers are often six months late in giving their nod, making proposals irrelevant as costs exceed the original budgets. As a result, unpaid bills have been piling up.
According to the letter, the JVs will be turned into firms that control their own budgets. This will be similar to gas firm Nigeria LNG (NLNG), which finds "sources for its own funding, pays taxes and royalties and also pays dividends," the letter said.
NLNG, in which Shell, Eni and Total have stakes along with NNPC, is one of the few efficient oil operations in Africa's top crude producer.
There won't be any immediate impact on oil exploration and production from the new model, so-called incorporated joint-ventures, as it will be tested on a few blocks first. If successful, it could be expanded to other arms of NNPC, an industry source said.
But analysts see the new joint-venture structure as a sign that reforms are finally underway.
"This could be an important early indicator for a key aspect of reformed oil sector policy - how to incentivise and maintain upstream investment by local private companies, and resolve operational issues between them and NNPC," said Roderick Bruce, West Africa energy analyst at IHS.
To bypass time-consuming parliamentary approval, NNPC is expected to reduce its stake in joint ventures to below 50 percent from 55 percent by selling assets to local firms.
"Now the incorporated JV can raise funding more easily as it's a model international investors will understand and there will be a balance sheet behind the IJV," said Kola Karim, chairman of energy company Shoreline.
The letter states that this plan will apply to five oil blocks sold by Shell in 2011-2012 to local companies Shoreline Natural Resources Nigeria Ltd, First Hydrocarbon Nigeria Ltd, ND-Western Ltd, Elcrest E&P Nigeria Ltd and Neconde Energy Ltd.
It also covers West African Exploration and Production Co, which bought two licenses in 2015 from Shell.
SEARCHING FOR INVOICES
Oil traders and executives said dealing with NNPC has become more efficient under Kachikwu, who took over in August. He is expected to become junior oil minister under Buhari, who has retained the oil portfolio for himself, to oversee the industry's daily operations.
The exploration overhaul is seen as a start to further changes at NNPC after years of relative standstill under Diezani Alison-Madueke, the former oil minister under Buhari's predecessor, Goodluck Jonathan. She is being investigated by Britain for money laundering but has denied any wrongdoing.
Apart from dealing with stagnating oil production, Buhari needs to shake up the ailing refinery business, which forces the government to rely on expensive imported fuel for 80 percent of its energy needs.
Since his arrival, Kachikwu has been wading through piles of receipts ‎in the four towers of NNPC's Abuja headquarters to get an idea what the state giant owes foreign firms, part of an audit ordered by Buhari to tackle corruption.
With oil exploration firms working more efficiently under the new model, NNPC hopes to make a small step towards reducing its pile of unpaid bills.
But uncomfortable talks loom as oil firms say they are owed as much as $7.5 billion from the past few years, while NNPC puts the amount at $6 billion.
"During Diezani, the board hardly met, so expenses were not approved. Now NNPC is saying they won't honour those that weren't approved ... the paper trail did not keep up. There has been a disconnect between expenditure and approval," a source close to the matter said.
For example, for one joint-venture project worth about $3 billion, NNPC still disagrees over $300 million spent ages ago, an industry source said.
"It'll take three months to reconcile and another six months at least to figure out how to cover it. The obligations date back three years to 2012," a banking source said, speaking of the overall debt.

Read More

South African regulator wants Shoprite fined for reckless lending

South Africa's credit regulator has asked a consumer tribunal to impose a fine on grocer and furniture retailer Shoprite for reckless lending, it said on Wednesday.

A branch of Shoprite

The National Credit Regulator (NCR) said Shoprite should also not have sold retrenchment and occupational insurance to pensioners and consumers receiving government welfare grants.
"The sale of retrenchment and occupational disability covers to pensioners and consumers receiving government social grants is unreasonable and imposes an unreasonable cost," said Jacqueline Boucher, manager at the NCR.
The NCR said it would ask the National Consumers Tribunal, which adjudicates on such cases, to impose a fine on Shoprite, refund consumers and have "reckless" loans written off.
Shoprite said it was unable to comment on the announcement by the NCR because the retailer had not yet received any formal documentation from the regulator.
"Once such documentation has been received the relevant allegations will be investigated immediately," Shoprite said.
In July, the regulator referred a case involving furniture retailer Lewis Group to the tribunal for allegedly mis-selling credit insurance. The Lewis Group said it would challenge the complaint.

Read More

Ghana Sept consumer inflation rises to 17.4 pct yr/yr -stats office

Ghana's annual consumer price inflation rose slightly to 17.4 percent in September from 17.3 percent the previous month, the statistics office said on Wednesday.
The figure reflects fiscal problems facing the country, which is following a three-year aid programme with the International Monetary Fund aimed at restoring economic stability.
Inflation among non-food items declined to 23.2 percent in September from 23.4 percent in August while food inflation increased to 7.8 percent last month from 7.7 percent in August, government statistician Philomena Nyarko told a news conference.
The main drivers of non-food inflation included education at 29.6 percent, recreation and culture, while vegetables at 13.6 percent was the only item in the food group whose inflation was higher than average inflation, Nyarko told a news conference.
"Some components of the non-food group have really hiked as far as their levels of inflation, like education and housing and utilities, and that's what's driving the overall inflation up," Nyarko said.
Ghana had one of Africa's fastest growing economies based on exports of gold, cocoa and oil but GDP growth has slumped since 2014 due to lower global commodity prices and a fiscal crisis that has seen its debt-to-GDP ratio rise to nearly 70 percent.
The government launched a $1 billion Eurobond last week with a coupon rate of 10.75 percent, higher than it had initially hoped for.

Read More

ANALYSIS- A $70 oil floor? Fat chance, but OPEC price plan may be first step

The safe money for oil traders is betting that Venezuela's plan to resurrect OPEC's old price band mechanism, attempting to set a $70 floor for the battered market, will be doomed from the start.
Saudi Arabia, the group's de facto leader, has shown zero interest in returning to a strategy of supporting prices; big producers outside the Organization of Petroleum Exporting Countries, namely Russia, have essentially ruled out cuts. And most analysts say attempting to set a price range is futile, or that the $70 price is unsustainably high, or both.

OPEC and oil

Yet a handful of experts and observers say the proposal - articulated by former oil minister Rafael Ramirez in an interview with Reuters - may be a catalyst for moving away from OPEC's laissez faire approach to collapsing oil prices, which throttled investment, shredded budgets and left some economies, such as Venezuela's, teetering on the brink.
Even if the idea fails to advance, it could represent the first meaningful step in months toward finding common ground that could help stabilize the oil market.
The plan, to be discussed at an Oct. 21 meeting of technical experts in Vienna, seems simple: progressive production cuts to control prices, with a "first floor" of $70 per barrel and a later target of $100 per barrel, Ramirez explained.
His comments come after months of presidential visits and vague statements by President Nicolas Maduro, most of which has been dismissed as a desperate effort by a precarious leader with little history of petro-diplomacy.
Ramirez, by contrast, was the public face of Venezuela's oil policy for over a decade, working closely and often with Saudi Oil Minister Ali al-Naimi - one of the only remaining OPEC ministers from the previous decade, among the group’s most cohesive periods - as oil prices raced from $20 a barrel to nearly $150 and back down again after the financial crisis.
"I think this one might have more substance," said Paul Horsnell, head of Commodities Research from Standard Chartered, who has been writing about oil markets and OPEC for two decades.
"Signing up to a $70-$100 band doesn't seem too difficult for anyone," he said. "As long as there is no automatic mechanism linking the band to output, it seems a very low cost way of expressing solidarity with the aspirations of other members."
Eight non-OPEC countries were invited: Azerbaijan, Brazil, Colombia, Kazakhstan, Norway, Mexico, Oman and Russia, according to Venezuela's oil minister Eulogio Del Pino.
SEEKING AN ANCHOR
The price band formula has been used before as a way out of crisis. After the late 1990s collapse in prices to $10 a barrel, the group set a band of $22 to $28 a barrel. It was abandoned in 2005 as soaring demand caused prices to race higher, and the group has never formally set any target or range since then.
Attempts by Venezuela in past years to make OPEC go back to the band system have failed. This year prices are lower, but big producers - including Saudi Arabia and Kuwait - are reluctant to sacrifice again their market share to revive them.
Yet there are other signs that nearly a year of depressed prices, and deep uncertainty over how long sub-$50 a barrel oil may last, is wearing thin.
Russian Energy Minister Alexander Novak met with Naimi last week in Istanbul, and has said Russia is ready to meet with OPEC and non-OPEC producers. In a speech in Kuwait, senior Saudi energy advisor Ibrahim al-Muhanna bemoaned the lack of an "anchor" in the oil market, the absence of which fuelled volatility and depressed investment.
"This is an unnatural situation and it is difficult to see it continuing," Muhanna said, but offered no firm ideas on what might be done to remedy the situation.
A source close to Venezuela's OPEC delegation said it will be almost impossible to make Saudi Arabia and Russia sit at the same table to negotiate a cut given past acrimony over Moscow's failed promises to curb output, but to start with a floor price discussion at a technical level may help toward that goal.
Many analysts said targetting a notional price without any real commitments to production constraints would be a largely meaningless gesture, but others said it could help ease a jittery market and potentially soften the stance of some in OPEC.
"Countries can use the band as a broad reference," said Alvaro Silva, who served as OPEC's general secretary in 2002 and 2003, when the first price band was in effect.
"It worked fine in the past to give the market a price reference and avoid large price oscillations."
Apart from the mechanism itself, it is an open question whether producers would agree that $70 is the right goal. While several members including Iraq and Angola suggested in June that $75 to $80 a barrel was a reasonable area, core Gulf members may worry about losing too much market share at that level.
At that price, U.S. shale oil production would likely come roaring back, according to one veteran analyst. "But set the floor $10 lower and it could work."

Read More

Nigerian inflation edges up to 9.4 pct in September

Nigeria's consumer inflation was at 9.4 percent year-on-year in September, up 0.1 percentage point from August and staying above the central bank's target ceiling, the National Bureau of Statistics said on Wednesday.
Food inflation rose marginally to 10.2 percent year-on-year in September versus 10.1 percent in August.
Inflation in Africa's biggest economy has been rising this year as the effects of a weaker currency filters through the economy via imports. Due to its inadequate manufacturing capacity, Nigeria imports the bulk of what it consumes.
"The largest increases were recorded in books and stationeries groups as a result of the start of the new school year," the bureau said. "Pressures were recorded in the bread and cereals, meat, fish, and oils and fats groups."
Nigeria's inflation rate is at its highest level since February 2013. It rose above a central bank's upper limit target of 9 percent in June.
Africa's biggest oil producer has been hit hard by the slump in global crude prices, which has sent its naira currency spiraling. The central bank has restricted access to dollars for certain imported items to conserve its hard currency reserves, frustrating businesses.
Vice president Yemi Osibanjo has said Africa's most populous nation will keep the currency restrictions for now to preserve its foreign reserves but will eventually relax them.

Read More

Nigerian Stock Exchange appoints advisors to prepare possible IPO

The Nigerian Stock Exchange has appointed South African bank FirstRand and local investment firm Chapel Hill Denham to advise it on a possible share flotation, it said on Tuesday.
The bourse, which has the second biggest weighting on the MSCI frontier market index after Kuwait, is a major entry point to invest in Africa.
The stock exchange said in November that it was considering an initial public offering to attract more foreign investors.
As a first step, the stock market plans to change its ownership structure from a mutual company of 240 brokers to add new shareholders.
This year, shares in the oil producing-nation have lost around 12.8 percent to add to the 16 percent loss last year. Foreign funds sold shares after the naira lost value due to the slump in the oil price.
The exchange, the second-largest African bourse by market value after South Africa, plans to allowing the trading of derivatives such as futures and options in interest rates, currencies and equity indexes by next year, it has said.
Nigeria's equities market, was until 2013 one of the world's best performing frontier markets but low liquidity levels and currency restrictions have now deterred foreign investors.

Read More

Nigeria's Buhari asks head of biggest private equity firm to join cabinet

Nigeria's President Muhammadu Buhari has asked the head of the country's biggest private equity firm to join his cabinet, Senate President Bukola Saraki said on Tuesday, as lawmakers started screening candidates for a long-awaited government.

Enelamah

Saraki did not specify a portfolio for Okechukwu Enyinna Enelamah, head of African Capital Alliance (ACA), as he read out a second batch of Buhari's cabinet nominees that need to be approved by the upper house.
Enelamah, a former Goldman Sachs banker, is a founder and chief executive of ACA, which has raised over $750 million in managed funds since its inception in 1997.
Buhari was elected in March on a campaign to "fix" Africa's top oil exporter, which is gripped by corruption and mismanagement, but has come under fire for being slow to name a cabinet while the economy is hammered by a plunge in oil prices.
Buhari will disclose the cabinet portfolios only once the upper house approves his list. He had submitted a first batch with 21 names to the Senate earlier this month and has added an extra 15 to fulfil the constitutional need for a minister from each of Nigeria's 36 states.
Among other technocrats nominated by Buhari is Aisha Abubakar, a banker who until recently headed the Abuja Enterprise Agency, a government body to help smaller firms, Saraki said.
Buhari, a former military ruler, had already asked Emmanuel Ibe Kachikwu, head of state oil firm NNPC, to join his cabinet. The former Exxon-Mobil manager is expected to become junior oil minister as Buhari wants to keep the oil minister portfolio for himself.
He has also nominated former state governors such as Babatunde Fashola, the former governor of the commercial capital Lagos, and Rotimi Amaechi, former governor of Rivers State.

Read More

Oil glut to persist as global growth demand slows - IEA

• Slower demand, possible Iran return weigh on 2016 outlook

• Non-OPEC supply growth disappearing fast on low prices

• OPEC output rises in September, seen remaining elevated
A global oil supply glut will persist through 2016 as demand growth slows from a five-year high and key OPEC members maintain near-record output, the International Energy Agency said, even as low prices curb supply outside the producer group.

Oil tangle

The IEA, which advises industrialised countries on energy policy, said in a monthly report on Tuesday that world oil demand will rise by 1.21 million barrels per day (bpd) in 2016, down 150,000 bpd from last month's forecast.
"A projected marked slowdown in demand growth next year and the anticipated arrival of additional Iranian barrels – should international sanctions be eased – are likely to keep the market oversupplied through 2016," the Paris-based IEA said.
The cut in the demand outlook, due in part to a weaker world economy, makes the IEA's 2016 growth estimate lower than the two other closely watched government forecasters, the U.S. Energy Information Administration and OPEC.
Oil prices, which rose earlier on Tuesday, turned negative after the release of the IEA report.
A drop in prices because of abundant supply to around $50 a barrel - half the level of June 2014 - has led to a downgrade in supply forecasts from countries outside OPEC such as the United States.
Next year, non-OPEC output is expected to contract by nearly 500,000 bpd, the IEA said, as drilling activity slows in the United States and companies elsewhere delay projects.
"Non-OPEC supply growth is disappearing fast," it said. "The sharpest slowdown is in the U.S., where onshore crude and condensate production has started to drop."
OPEC PUMPS MORE
While the IEA still sees a contraction in non-OPEC supply next year, it expects supply to be about 100,000 bpd higher than in last month’s report. This, plus the weaker global demand projection, prompted the IEA to cut its estimate of the demand for OPEC oil to 31.1 million bpd.
The Organization of the Petroleum Exporting Countries is already producing more than that, even before a potential lifting of sanctions on Iran clears the way for Tehran to increase exports in 2016.
OPEC raised supply in September by 90,000 bpd to 31.72 million bpd, the IEA estimated, saying it expected output to hover around 31.5 million bpd in coming months.
The group, in a move led by Saudi Arabia, in 2014 dropped its longstanding policy of supporting prices by cutting output, choosing instead to defend market share against higher-cost producers, and there has been no sign of a change of tack.
Iran, traditionally OPEC's second-largest producer, is keen to recover the market share it lost as a result of tighter sanctions. The pace at which this oil returns is a big uncertainty for next year, the IEA said.
Oil inventories could rise by 1.1 million bpd if Iran brings back an extra 600,000 bpd of oil output over 2016, according to the agency, compared with the 600,000 bpd inventory build-up it assumes otherwise.
This, as well as rising geopolitical tension over Russia's military intervention in Syria and a wide range in the demand and supply forecasts for 2016, clouds the outlook for now.
"Some of this uncertainty may start to clear next year although, considering Iran, the market may be off balance for a while longer," the IEA said.

Read More

Nigerian interbank rates fall to average of 0.75 pct on excess cash

Nigeria's interbank lending rates fell further to an average of 0.75 percent on Friday, down from 1 percent the previous day and from 3 percent a week ago, after the central bank made a large cash injection into the banking system.

Dada, Anchoria Investment boss

The cost of funds fell to 1 percent for overnight lending and 0.5 percent for the secured Open Buy Back (OBB) on Friday after additional cash in banks' deposits with the central bank were refunded on Friday.
Banking system credit opened at 1.20 trillion naira ($6.03 billion) on Friday, compared with 1.05 trillion on Thursday and 189 billion naira last week Friday.
The regulator has been injecting cash into the banking system in a bid to ease liquidity and stave off recession in Africa's biggest economy, which has suffered as oil prices fell.
"The market is very liquid and the central bank has refused to issue fresh open market operations (OMO) bills to mop up the excess liquidity in the system," one dealer said.
Traders said they expect system liquidity to drop marginally late on Friday after some banks transfer government revenue to the treasury single account (TSA) with the central bank before close of business.
Last month, liquidity dried up as authorities ordered commercial lenders to move government deposits into a single account at the central bank, part of anti-graft drive by President Mohammadu Buhari's new government.
The central bank then lowered cash reserve requirements (CRR) for lenders to 25 percent from 31 percent to loosen monetary policy while leaving its benchmark interest rate on hold at 13 percent.
The central bank injected about 740.8 billion naira in CRR refunds into the banking system on Thursday, forcing down the cost of borrowing among banks to a five-year low.
Traders said some commercial lenders were investing their surplus cash in fixed income assets to reduce their losses.
Nigeria plans to issue 80 billion naira of bonds with maturities between five and 10 years on Oct. 14.
But traders said the level of expected cash outflows into bond purchases would not be enough to reduce the impact of excess cash on the cost of borrowing among banks next week.
"Unless the central bank embarks on an aggressive mopping up exercise, we expect money market rates to remain at the present level," another dealer said.

Read More

Nigeria's bonds to attract lower yields at next week's auction

Nigerian bonds are seen attracting lower yields at an auction next week amid a liquidity boost in the money market arising from fresh injection of cash by the central bank.
Nigeria plans to issue 80 billion Nigerian naira ($402.01 million) worth of local currency-denominated bonds with a maturity range of between 5-years and 10-years on Oct 14.
Dealers said yields on local bonds have dropped this week since the central bank injected fresh cash into the banking system from retired Treasury bills, refunds from cash reserve requirements (CRR) and foreign exchange intervention funds.
"The market is very liquid with the injection of cash by the central bank, bringing up the banking system cash balance with the central bank to around 1.2 trillion naira on Friday," one dealer said.
Dealers said the bulk of liquidity in the market is being invested in fixed income assets by commercial lenders and pension funds, causing yields to drop further.
"Bonds are expected to close lower (at next week's auction), in line with their current levels in the secondary market." Citibank local unit said in a research note.
Yields on the benchmark 2024 paper fell sharply to 13.79 percent on Friday from 15.12 percent last week, while the longest-dated paper also fell to 14.74 percent against 15.04 percent.

Read More

StanChart CEO plans to cut about 1,000 top staff - memo

Standard Chartered's new Chief Executive Bill Winters plans to cut up to a quarter of the bank's most senior staff to reduce costs, according to a memo sent to staff, which is likely to see about 1,000 top jobs go.
Winters said he planned to reduce the number of staff who are graded in bands 1-4 by a quarter, according to an internal memo seen by Reuters. Those bands cover bankers at director level and higher, and include about 4,000 staff.
"Our situation requires decisive and immediate action. Each member of the management team has a mission to drive through improvements in our returns and part of this will be further streamlining of our organisation, eliminating management layers and duplication of roles," Winters told staff.
Winters, a former JP Morgan investment bank boss who took over in June, said the bank would also make disposals and cut clients as part of his strategic review.
Disposals would be in areas where the bank was "not differentiated" or an activity or location "was not critical to a core strength."
Standard Chartered shares were up 3.6 percent at 775.6 pence by 1030 GMT, the top performing European bank stock.
Standard Chartered has had a troubled three years, hurt by weakness in many of its key emerging markets, rising losses from bad loans in India, China and on commodities, as well as fines from U.S. regulators and strained relations with shareholders. Its shares have fallen 43 percent since the start of 2014.
"We lost some discipline during that time, leading to our recent problems with loan impairments and relatively high expenses," Winters said in the memo.
He is expected to outline his plans to investors and staff in November or December.
"We have a clear sense of our direction of travel and the key areas of focus – superior execution, targeted investments, divestment where we are not advantaged and innovation in our product and process design," he said in the memo.
The bank would tighten its belt through targeted reductions and not across-the-board cuts, he said.
Winters halved Standard Chartered's dividend in August and said the bank would raise capital from investors if needed. It said at that time it had cut 4,000 staff since the start of the year, to about 88,000.
Winters said his plans were not all about cuts, however, and he had identified areas for investment. He said to make room for investment the bank would cut the number of its clients.
"We will focus on those clients who value our capabilities and compensate us accordingly. For others, we will be there when they need us but will withdraw resources in the meantime."
Standard Chartered has also been fined more than $1 billion for breaching U.S. sanctions, including with Iran, and authorities there are still investigating some issues.
Winters said the bank was making progress in improving its processes and systems, its behaviours and remediating past issues, and told staff any violations would not be tolerated.
A spokesman for Standard Chartered said a note sent to staff by Winters this week said kick-starting performance was a priority. It said the bank had indicated in July there could be personnel changes to come.

Read More

Nigeria interbank overnight rate falls to 5-year low as funds buy bonds

Nigeria's interbank overnight lending rate fell to a five-year low on Thursday, hit by excess liquidity in the market that spurred renewed bond buying from commercial lenders and pension funds, traders said.

Emefiele, CBN chief

The overnight lending rate halved to 1 percent from the previous day. It had hovered around a three-month low of 3 percent last week after the central bank repaid matured open market bills and did not issue fresh ones to mop up the funds, in a bid to keep borrowing costs low.
The regulator has been injecting cash into the banking system in a bid to ease liquidity and stave off recession in Africa's biggest economy, which has suffered as oil prices fell.
"The problem with allowing excess liquidity to drive interbank rates lower is that it calls into question the effectiveness of the monetary policy rate," said Razia Khan, head of Africa research at Standard Chartered Bank
Last month liquidity dried up as authorities ordered commercial lenders to move government deposits into a single account at the central bank, part of an anti-graft drive.
The central bank then lowered cash reserve requirements for lenders to 25 percent from 31 percent in a bid to loosen monetary policy but left its benchmark interest rates on hold at 13 percent.
Analysts doubted the excess cash will trickle down to businesses by way of lending as commercial banks look to the bond market for yield.
Yields on the 10-year bond fell 71 basis points on Thursday to 13.59 percent while the seven-year <> bond shed 77 basis points to 13.31 percent as the excess liquidity filtered through.
"Most banks will likely still take their guidance from the policy rate in order to set loan rates. Unless interbank rates are sustained at these extremely weak levels ... it is unlikely that we will get a real economy lending spurt on the back of this," Khan said.
Banking system credit opened at 1.05 trillion naira ($5.3 billion) on Thursday, traders said. The regulator on Wednesday refunded 740.80 billion naira withdrawn from lenders before the cut in cash reserve requirement.

Read More

Nigeria raises 127 bln naira in T-bills at lower yields

Nigeria raised 127.07 billion naira ($638.86 million) selling Treasury bills with maturities of between three months and one year at lower yields compared with the previous auction, the central bank said on Thursday.
The bank sold 25.40 billion naira of the 91-day paper at a yield of 10 percent, down from 10.50 percent at the previous sale last month.
It sold 33.49 billion naira worth of six-month paper at a yield of 12.20 percent, down from 13.39 percent 0n Sept. 2, and paid 12.50 percent to sell 68.18 billion naira of one-year debt less than the 14.69 percent yield at the previous auction.
Yields were higher than in the secondary market, the three-month paper was trading at 9.13 percent, six-month debt at 11.69 percent and the one-year paper at 13 percent.

Read More

Nigeria overnight rate at record lows as central bank eyes lending

 Nigeria's overnight lending rate fell to record low 2 percent on Wednesday, as the central bank refunded excess withdrawals from lenders before it loosened monetary policy last month to spur credit growth, traders said.
The regulator has been injecting cash into the banking system in a bid to ease liquidity and stave off recession in Africa's biggest economy, which has suffered as oil prices fell.
It cut cash reserve requirements for lenders to 25 percent from 31 percent two weeks ago and left interest rates on hold at 13 percent. Liquidity had dried up as authorities ordered banks to move government deposits into a single account at the central bank, part of an anti-graft drive.
"We expect rates to remain low until central bank issues new bills," one dealer said.
The overnight lending rate has hovered around a three-month low of 3 percent since last week after the central bank repaid matured open market bills and did not issue fresh ones to mop up funds, in a bid to keep borrowing costs low.
Banking system credit opened at 355 billion naira ($1.79 billion) before the inflow hit the system, lifting the sector's total cash balance with the central bank to 1.1 trillion naira, traders said.
Before this, lenders in Africa's most populous nation had lowered their loan growth guidance for this year, citing rising regulatory and economic uncertainty and a weaker output growth.
Economic growth dropped to 2.35 percent in the second quarter from 6.54 percent a year earlier.

Read More