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‘This is discriminatory’ — CIBN seeks meeting with Edun, CBN over windfall tax

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The Chartered Institute of Bankers of Nigeria (CIBN) has urged the federal government to reconsider the imposition of a 70 percent windfall tax on banks’ foreign exchange (FX) gains.

In a statement on Wednesday, CIBN said the windfall tax could exacerbate currency volatility due to reduced market participation, with the potential to destabilise the economy.

On July 17, the national assembly said President Bola Tinubu requested the amendment of the 2023 Finance Act to impose a one-time windfall tax of 50 percent on banks’ FX gains last year.

Tinubu said the windfall tax will be used to finance infrastructure projects, education and healthcare, among others.

The national assembly passed the bill on Tuesday and increased the windfall tax to 70 percent, with retroactive application from January 1, 2023.

Sani Musa, chair of the senate finance committee, said any bank that withholds the windfall tax would be liable to pay 10 percent in addition to the levy the financial institution ought to have paid.

CIBN asked if the windfall tax would not amount to double taxation as banks already paid 30 percent income tax when they filed 2023 tax returns.

“Will this not amount to double taxation? Or the tax already paid be deducted from this new imposition? This proposed tax will violate fairness and equity in taxation as banks are the only entity singled out for this payment,” the bankers said.

“This is discriminatory. What about other sectors or businesses that have recognised the same foreign exchange gains in their books in 2023? In countries where such windfall tax has been imposed, there is always a corresponding incentive to cushion the effect on the affected entities but nothing to that effect has been stated in the proposed bill.”

CIBN cautioned that imposing taxes on forex gains may deter foreign investors and negatively impact Nigeria’s investment landscape, especially at a time when banks are required to raise capital and may be looking towards foreign investors.

“The CIBN recognises the need for improving government revenue which is one of the reasons for proposing levy on forex gains of banks. As an institute, we advocate careful consideration and thorough analysis before imposing taxes on forex gains by banks,” the bankers added.

CIBN proposed stakeholders’ consultations comprising the ministry of finance, the Central Bank of Nigeria (CBN), the banks, and other relevant stakeholders to do a holistic review of the implications of the proposed windfall tax on the banks.

‘WITHHOLD ASSENT TO BILL SEEKING TO TAX BANKS’ FX GAINS’

Rasheed Bolarinwa, president, Association of Corporate & Marketing Communication Professionals of Banks (ACAMB), said banks have shown enormous support for government’s economic agenda and should not be burdened with a new levy that “obviously would be counterproductive at this time”.

Bolarinwa said with the ongoing recapitalisation — which is also aimed at supporting the government’s $1 trillion economic agenda — banks need more monetary and fiscal incentives now.

“We shouldn’t kill the goose that lays the golden eggs. Government should have a rethink. We think further consultation is needed in this case. We know the President has listening ear, as demonstrated on many occasions, and we expect banks should be given fair hearing on this,” he said.

Bolarinwa called on Tinubu to withhold assent to the bill to allow for further consultation and dialogue on the windfall tax.

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UBA to raise N239bn through rights issue to expand lending capacity

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November 16, 2024 2:23 pm

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The United Bank for Africa (UBA) says it will raise N239.4 billion through a rights issue to existing shareholders.

According to a statement on Thursday, the bank is offering a rights issue of 6.83 billion ordinary shares of 50 kobo each at N35 per share.

The financial institution said the offering, opened on November 15, gives existing shareholders the opportunity to buy additional shares in proportion to their current holdings and is being offered based on one new ordinary share for every five existing ordinary shares held by shareholders, as of November 5.

Speaking to shareholders, Tony Elumelu, group chairman of UBA, said the rights issue is the first step in its broader capital-raising programme.

“UBA’s rights issue aims to raise N239.4 billion, through the issuance of new Ordinary Shares to our shareholders,” Elumelu said.

“The primary objective of this Rights Issue is to further strengthen our capacity to take advantage of growth opportunities and sustain our leadership in the banking industry.”

Elumelu said beyond regulatory compliance, the funds would expand UBA’s lending capacity, investment in digital infrastructure, support sustainable business practices, and expand its African operations.

The group chairman also highlighted how UBA is driving economic growth across Africa.

“Our historic partnership with the Africa Continental Free Trade Area (AfCFTA) Secretariat, where UBA pledged up to US$6 billion in financing over the next three years to support eligible SMEs across Africa underscores our commitment to fostering economic development,” he added.

The businessman also said the issuance complies with the revised minimum capital requirements for Nigerian commercial banks announced by the apex banking regulator in Nigeria — the Central Bank of Nigeria (CBN) earlier this year.

In April, UBA sought shareholders’ approval at the company’s 62nd annual general meeting (AGM) to raise capital.

The development followed the CBN’s directive to commercial banks with international licences to raise their capital base to N500 billion, pegging the capital requirement for national and regional financial institutions at N200 billion and N50 billion, respectively.

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FBN Holdings to change brand name to First Holdco

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15 hours ago

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November 16, 2024 7:54 am

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First Bank of Nigeria (FBN) Holdings Plc says shareholders have approved its plan to change the company’s name to First Holdco Plc.

In a notice on Friday, Adewale Arogundade, the company secretary, said the decision was approved by shareholders at its 12th annual general meeting held virtually on Thursday.

According to the company, the change will be extended to all subsidiaries.

“That there should be a change of the legal and brand names of the Company from FBN Holdings Plc and FBNHoldings to First Holdco Plc and FirstHoldco, respectively,” FBN Holdings said.

“That there should be a change of the legal and brand names of the Company from FBN Holdings Plc and FBNHoldings to First Holdco Plc and FirstHoldco, respectively,” FBN Holdings said.

“That the change of legal and brand names should be extended to the subsidiaries of FBN Holdings Plc

“That the directors be and are hereby authorised to perform all such other acts and do all such other things as may be necessary to give effect to the above resolutions, including, without limitation, complying with the directives of any regulatory authority.

“That upon completion of the processes for the change of name, Increase of the Company’s share capital and allotment of the new ordinary shares in accordance with the resolutions above, the Memorandum and Articles of Association of the Company be amended as necessary to reflect the Company’s new legal name and Issued share capital.”

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Nigeria’s inflation rate rises to 33.8% as food prices’ surge persists

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November 15, 2024 2:10 pm

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The National Bureau of Statistics says Nigeria’s inflation rate was 33.88 percent in October — up from 32.7 percent in September.

The data is captured in the NBS’ latest consumer price index (CPI) report for October published on Friday.

The CPI measures the rate of change in prices of goods and services.

The data bureau said the headline inflation rate in October rose by “1.18% points when compared to the September 2024 headline inflation rate”.

“On a year-on-year basis, the Headline inflation rate was 6.55% points higher than the rate recorded in October 2023 (27.33%),” NBS said.

“This shows that the Headline inflation rate (year-on-year basis) increased in October 2024 when compared to the same month in the preceding year (i.e., October 2023).

“Furthermore, on a month-on-month basis, the headline inflation rate in October 2024 was 2.64%, which was 0.12% higher than the rate recorded in September 2024 (2.52%).

“This means that in October 2024, the rate of increase in the average price level was higher than the rate of increase in the average price level in September 2024.”

‘INCREASE IN RICE, YAM PUSHED FOOD INFLATION RATE TO 39.16%’

The NBS also said the food inflation rate in October surged to 39.16 percent, compared to 33.77 percent in September.

On a year-on-year basis, the food inflation rate was 7.64 percent higher compared to the rate recorded in October 2023 (31.52 percent).

“The rise in food inflation on a year-on-year basis was caused by increases in prices of the following items: guinea corn, rice, maize grains, etc (Bread and Cereals Class), Yam, Water Yam, Coco Yam, etc (Potatoes, Yam & Other Tubers Class), Palm Oil, Vegetable Oil, etc (Oil and Fats Class) and Milo Lipton, Bourvita, etc (Coffee, Tea & Cocoa Class),” the bureau added.

The statistics firm also said the month-on-month food inflation rate in October was 2.94 percent, showing a rise of 0.3 percent compared to the 2.64 percent recorded in September.

“The rise can be attributed to the rate of increase in the average prices of Palm Oil, Vegetable oil, etc (Oil & Fats Class), Mudfish, Croaker (Apo), Fresh fish (Obokun), etc (Fish Class), Dried Beef, Goat Meat, Mut-ton, Skin meat, etc (Meat Class), and Bread, Guinea Corn flour, Plantain flour, Rice, etc (Bread and Cereals Class),” the NBS said.

“The average annual rate of food inflation for the twelve months ending October 2024 over the previous twelve-month average was 38.12%, which was an 11.79% point increase from the average annual rate of change recorded in October 2023 (26.33%).”

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