The apex bank of Nigeria has increased the numbers of principal players in the new forex market initiated through the flexible policy introduced.
The highly anticipated and celebrated flexible policy by the Central Bank of Nigeria under the governance of Godwin Emefiele has been amend before its final kick off today, 20th of June, 2016.
The controversial aspect was the Foreign Exchange Principal Dealers, FXPD, arrangement under which the apex bank said it would trade forex principally with about eight to 10 banks which it would register as principal dealers or FXPDs, who in turn would deal with other banks and traders, Vanguard reports.
Vanguard learned that about 13 banks shut out of the initial FXPD class have pressured the apex bank to either jettison the FXPD arrangement or accommodate more or all banks, a request the apex bank was said to have accepted as a compromise, thereby, jettisoning its initial criteria for admitting banks into the FXPD class. Consequently, the apex bank, Vanguard learned, had reversed itself by weekend, issuing FXPD license to 15 banks instead of maximum 10.
According to the CBN’s initial stipulations the FXPDs must meet two or three of the following criteria: Liquidity ratio of 40 per cent or more; shareholders’ funds (unimpaired by losses) of at least N200 billion; and foreign currency assets of N400 billion or more. A source in the apex bank told Vanguard that following protests by some non-FXPD banks, the apex bank had to open the class to all banks, asking them to apply. Moreover, the CBN had to soften the considerations in what it called “internal criteria” so as to enable more banks qualify and be admitted into the FXPD class.
There were also indications that more banks would come into the class as they qualify though CBN did not make the new criteria public. About eight banks are currently outside the FXPD class.
According to banks’ reports filed with the CBN for full year 2015 and first quarter 2016 as well as other banking industry analysts’ reports, only about seven or less banks qualified under the criteria earlier given by the apex bank.