Over two weeks after the Central Bank of Nigeria, CBN promised to clear over $10 billion in foreign exchange debts owed by Deposit Money Bank, the apex bank has yet to do so, according to recent findings.
This occurred as the naira was sold between 990 and 995 naira per dollar by Bureau de Change operators on Friday and Saturday in Lagos, Abuja, and Kano.
On the Investor & Exporter forex window, the naira, however, appreciated to 747.76/$ on Friday from 772.98/$ on Thursday.
The immediate past acting CBN Governor, Folashodun Shonubi, on September 6, 2023, said the apex bank had concluded negotiations on dollar debts with commercial banks, disclosing that all forex exchange backlogs would be cleared within one to two weeks.
According to him, deposit money banks have assisted the apex bank in clearing the majority of its overdue FX forward contracts at maturity.
As a result, he claimed that after lengthy debt restructuring negotiations that lasted for a long time, the CBN had come to an agreement to repay the lenders within one or two weeks.
“In response to questions about the backlogs, the banks have been working with the CBN on various structures to clear them. So, what happens is that, at maturity, they make the foreign exchange available to those that need it.
“We are discussing this with them so we can structure their own. So, we are working towards clearing them in the next one or two weeks. It is something we have been discussing for a while,” Shonubi told the audience at a forum in Lagos
However, multiple top bank executives said on Sunday that almost three weeks after the promise, the Central Bank of Nigeria had yet to make good on its promise.
They said the development had put banks in a very tight FX liquidity position, a situation that has caused many lenders to temporarily suspend several FX transactions, including school fees and personal travel allowance applications.
Findings show the situation has also worsened dollar liquidity in the parallel market as bank customers shift to the black market to meet their forex needs.
“The FX backlogs have not cleared. The promise has not been made good. We are hoping that the new CBN governor will begin a discussion with banks on it or clear them immediately,” the executive director of a commercial bank said on condition of anonymity.
Also, a top official of a Tier-2 bank privy to the development said, “We have yet to see the FX backlogs cleared, including the overdue forward contract obligations. We don’t know when this will be cleared. Unfortunately, the situation has worsened our FX position, making many banks put some FX demands of their customers on hold.”
According to a report by the American lender JPMorgan, the CBN owes $6.84 billion in total on its forward contract debt. The report, however, has been rejected by the CBN.
Reports had put forward contracts and dollar swap deals between the apex bank and banks worth over $10 billion. The CBN could not be reached for immediate comments as of Sunday.