Six prominent banks, including United Bank for Africa (UBA), Wema Bank, and Stanbic IBTC, were disqualified from participating in a recent retail Dutch Auction conducted by the Central Bank of Nigeria (CBN).
The auction, which saw the CBN selling $876.26 million to 26 qualified banks, was part of the apex bank’s ongoing efforts to alleviate the demand pressure in the foreign exchange (FX) market and promote price discovery.
This auction marks one of the most significant FX interventions by the CBN under the leadership of Governor Yemi Cardoso, who has been actively working to stabilize the naira and address the ongoing volatility in the FX market.
According to the CBN, a total of $1.18 billion was submitted in bids by 32 banks. However, bids amounting to $279.04 million from six banks were disqualified for various reasons.
Banks affected by disqualification
- United Bank for Africa (UBA), one of Nigeria’s leading financial services institutions, had its bid of $13.21 million disqualified due to a late submission.
- Similarly, First City Monument Bank (FCMB), which submitted the largest bid among the disqualified banks, also fell victim to late submission. The bank’s bid of $178.65 million was invalidated, marking a significant setback in its efforts to secure a portion of the CBN’s allocated foreign exchange.
- Stanbic IBTC, another prominent bank in the Nigerian financial landscape, submitted a bid of $57.86 million. However, like UBA and FCBM, Stanbic IBTC’s bid was disqualified due to late submission. The disqualification of such a sizable bid from a major player in the industry further reflects the rigorous compliance standards enforced by the CBN.
- Wema Bank, which has been on a trajectory of growth and innovation, particularly with its ALAT digital banking platform, also faced disqualification. The bank’s bid of $21.94 million was rendered invalid due to late submission.
- SunTrust Bank, a relatively newer entrant in the Nigerian banking sector, submitted a bid of $7.38 million. However, unlike the other disqualified banks, SunTrust’s bid was invalidated not for late submission, but for failing to provide bid rates.
- Finally, Rand Bank was disqualified for failing to submit any bids. As a result, there was no amount associated with the bank in this auction.
In total, these disqualifications resulted in the exclusion of $279.04 million from the auction.
What you should know
- The CBN’s retail Dutch auction, which was conducted on August 6, 2024, aimed to distribute FX to end-users, including those with trade-backed demands, as part of its strategy to stabilize the naira.
- The successful bids were settled on August 8, 2024, as part of the T+2 settlement process.
- This disqualification of major banks like UBA, Wema, and Stanbic highlights the strict regulatory requirements imposed by the CBN in its efforts to maintain transparency and efficiency in the FX market.
- It also highlights the importance of adherence to submission deadlines and the accurate completion of bid templates for future auctions.
