State gas firm Nigeria Liquefied Natural Gas (NLNG); Central Bank of Nigeria; Nigerian banks First City Monument Bank (FCMB), First Bank, United Bank Africa (UBA), Heritage Bank, Keystone Bank, Skye Bank, Diamond Bank, Sterling Bank and Fidelity Bank.
What & When
Investors sold shares in nine Nigerian banks one day after the central bank barred the banks from trading in the forex market. The banks were barred on August 23.
Diamond Bank and Sterling Bank were most affected in the stock market. Diamond's stocks slumped by 7.2% after news of the bar broke and Sterling's stocks also fell by nearly 4%.
The naira also dropped to NGN402 per US dollar in the parallel market—the lowest yet.
The banks were suspended because they didn't remit the government's share of NLGNG's revenue to the government's account with the central bank. Remittances summed up to US$2.1 billion and the central bank wanted the payments in US dollars, which has been scarce in the country.
Nigeria mostly earns its foreign exchange from oil exports, but output has fallen this year owing to the militancy in oil bases and a slump in the upstream of the oil sector, and this has reduced the inflow of petrodollars.
Foreign investors have also kept some distance partly because of the struggling economy, leaving the central bank as the chief supplier of foreign exchange. Some of the banks have blamed this illiquidity and the state of the economy for their delinquency.
The central bank placed the bar on the banks to send a strong message and pressurise them to pay up. This is working so far. One of the banks UBA has paid all outstanding remittances and has been reinstated. The other banks are still suspended as of this date, but they've met with the central bank and sources say some of the banks will try to sell assets to settle their debt.
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