Banking & Finance
CBN Rejects UBA, Stanbic, Wema Bank, Others From Its $1.18 Billion Bid Retail Forex Dutch Auction
The Central Bank of Nigeria (CBN) has disqualified Stanbic IBTC, United Bank for Africa (UBA) Wema Bank, and others from its Retail Forex Dutch Auction, held last week.
BrandNewsDay reports that on Tuesday, August 6, 2024, the CBN conducted retail foreign exchange (FX) sales to end users through the Authorized Dealer Banks via the Retail Dutch Auction System (RDAS).
This initiative followed an assessment of FX demand and supply in the Nigerian foreign exchange market, aimed at enhancing supply and encouraging price discovery.
The Retail Dutch Auction System Forex involves the sale of FX to end users through an auction system. It begins with a call for bid submissions, with all bids being collected and arranged from the highest to the lowest bid. The call for bids focused on the naira/US dollar (N/U$$) currency pair for unmet FX demand supported by verifiable Forms A and M only.
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According to the CBN: From the total of $1.18 billion bids submitted by thirty-two (32) banks, bids totalling $ 279.04 million from six banks were excluded/disqualified for various reasons.
The six banks affected included:
- United Bank for Africa (UBA) – $13.2m;
- First City Monument Bank (FCMB) – $178.65m;
- Stanbic IBTC – $57.86m;
- Wema Bank – $21.94m;
- SunTrust Bank – $7.38m; and
- Rand Bank – No amount (no bid submitted).
The statement, signed by Omolara Omotunde Duke (PhD), Director of the Financial Markets Department, indicates that the successful bids ranged from N1495.00/US$ to N1650.00/US$ across 26 banks. Six (6) banks were disqualified, with four (4) submitting their bids after the 6-hours submission period (9:00 am-3:00 pm).
Adding that, additionally, two (2) Nigerian banks did not provide bids in the supplied template.
The Central Bank of Nigeria (CBN) reiterated that “each end user will be allocated foreign exchange at the rate submitted by their bank. Retail FX sales to banks were settled on Thursday, August 8, 2024. Only funded accounts by that date are eligible.”
