Reduce regulatory fines, shareholders tell banks


Shareholders have called on financial institutions to work together to get regulators to reduce fines and other charges paid to them.

The call came as shareholders expressed concerns over the amount financial institutions w pay to regulators and to the Asset Management Corporation of Nigeria

seven Deposit Money Banks paid over N1bn fine to the Central Bank of Nigeria, Securities and Exchange Commission, National Insurance Commission, Pension Commission and others in the 2022 financial year.

The affected financial institutions are Access Holdings Plc, Wema Bank Plc, Union Bank of Nigeria, Guaranty Trust Holding Company, FCMB Group Plc, Fidelity Bank Plc, and Stanbic IBTC Holdings.

Some of the infractions the lenders were sanctioned for ranged from mismatched details on accounts, foreign exchange guidelines contravention, late rendition of monthly returns, late rendition of daily returns, publication of unapproved adverts, and unethical conduct.

Speaking on the impact of the fines at the last Annual General Meeting of Access Holdings Plc, the Chief Equity Analyst/CEO of Palesa Capital Markets Associates, Nornah Awoh, lamented that the fines and charges paid to the National Deposit Insurance Corporation and AMCON were too much.

He said, “Contravention for some of us is an indication that there is a need for more work. If you look at what the NDIC and the CBN are taking from us; both organisations collected from Access Holdings alone, N75bn.”

According to its 2022 annual reports, Access Holdings paid N52.734bn as AMCON surcharge and a deposit insurance premium of N22.53bn, totalling N75.264bn.

Awoh called on banks to work together and present their demands to the regulators through associations in the sector.

“We must again join other banks in making sure that this attitude will not continue. Fortunately, there is going to be a new National Assembly. We need to do everything humanly possible to make sure that even if AMCON must continue to stay, the ratio that we pay to AMCON must also come down, otherwise, we might as well close all the branches and hand over the bank to AMCON,” he said.

Reiterating a similar stance, the Chairman Emeritus of the Independent Shareholders Association of Nigeria, Sunny Nwosu, said the Bankers’ Committee and the Association of Bank Directors could spearhead the move to bring down the costs, and in the process, boost returns to shareholders.

He said, “I want the Bankers Committee or the Association of Bank Directors to look into this. Because if you want to go it alone, it may be very punitive. You know like the central bank system, when you complain, they increase your penalty but when you go through the Association of Bank Directors, they will know that it is not a single bank that is actually talking about this.

“We are worried. The money is getting too much that is going to the NDIC. AMCON has outlived its usefulness. The bankers should work on that and save us from this. So when we ask you for two naira dividends, you will be able to give us. It is very important.”

Meanwhile, the Chairman of the Bank Directors Association of Nigeria, Mustafa Chike-Obi, has said that the charges paid to the NDIC and AMCON need to be reviewed to reduce the operational costs of banks in Nigeria.

Chike-Obi in a recent interview on an Arise TV programme expressed the belief that while AMCON is still in existence the NDIC should not charge an insurance premium on bank deposits.

“There must be a discussion on the AMCON and the NDIC charges with a pathway to resolving the lingering issues around it. The most important issue is a plan that agrees on a cap on the amount chargeable to banks,” he added.

Chike-Obi, who is a former Managing Director of AMCON, pointed out that the two charges are the second-highest operating costs of banks in the country.

BDAN in a 2022 report done in partnership with Proshare titled ‘Between NDIC and AMCON: Recalibrating Regulatory Roadmaps’ stated that “The NDIC charges an insurance premium on bank deposits. In contrast, AMCON charges banks a proportion of total assets remitted to a sinking fund to pay off AMCON intervention payments for acquiring toxic bank loans. The twin charges place an additional operating burden on bank account maintenance costs.”

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