April 17, (THEWILL) – Stanbic IBTC Bank, the major financial services subsidiary of Stanbic IBTC Holdings Plc, coughed out a total of N2.76 billion to pay penalties imposed on it by the authorities for contravening various industry regulations within the last five years (2017-2021), data from its audited financial statements revealed. The penalties, which range from a lower-middle double figure of N41 million in 2017, hit the peak of N1.9 billion in 2018, before dropping to N102 million in 2019. The penalty curve resumed in an ascending order to hit N277 million in 2020 before climbing further to its 2021 ‘resting’ point of N435 million.
The major chunk of the total penalty the bank paid in 2021 was the sum of N200 million for flouting the Central Bank of Nigeria (CBN) directive on Cryptocurrency, a sanction Stambic IBTC Bank said it would press for reversal. “The CBN debited the Bank’s position with the sum of N200 million for an alleged contravention of CBN circular with reference number BSD/DIR/GEN/LAB/14/001 on Cryptocurrency. The bank has written a letter of appeal for a review of the circumstances surrounding these accounts and a waiver of the N200 million fine imposed on the bank,” the group said in its 2021 Annual Report.
The mid-tier bank also received the regulatory hammer of the authorities with a huge penalty of N230 million in 2021 for violating foreign exchange regulations. “The CBN debited the Bank’s position with the sum of N230 million for an alleged contravention of extant FX regulations from January 2013 to July 2020,” the financial services holdco stated.
The report further revealed that “CBN debited the Bank’s position with the sum of N2 million for an alleged Non-Compliance with CBN/CIBN Press Statement/Section 50 of BOFIA.” Another N2 million penalty was imposed on the bank “following an alleged unfair termination of employment of a former employee, whose employment was terminated for being unable to meet the performance criteria required to confirm his employment in line with policy.”
The major penalty the bank paid in 2020 was linked to foreign exchange violations in textile importation transactions. “Penalty on Involvement in Textile Importation Using FX Sourced from the Nigerian Market. The CBN imposed a penalty of ₦152 million on the bank following the investigation which was conducted on foreign exchange used to import textiles for the period of 02 and 15 October 2019,” the company revealed.
The fines imposed on the bank in 2018 were mainly capital market related. These include a penalty of N20 million for its role in the MTN listing on the Nigerian Stock Exchange where it was accused of breaching the rule on trading in unlisted securities. It also paid a penalty of N30 million for breaching Securities and Exchange Commission’s rules and N50 million for a similar capital market rule violation.
The highest penalty of N1.9 billion the bank paid during the 5-year period relates to capital importation documentation which earned it the CBN’s hammar: “Penalty arising from CBN investigation on “irregular” Certificates of Capital Importation (“CCI’s”) issued to MTN Nigeria Communications Limited (MTN Nigeria), between 2007 and 2015 – N1,885,852,847.46.”
The N41 million penalty the bank suffered in 2017 consists of various CBN regulatory guidelines with the imposition of “a penalty of N14m for failure to notify the CBN within thirty days of the re-deployment of members of the staff of Stanbic IBTC to the bank,” – the highest for the year. Others are N4 million imposed for consummating a transaction of N16.35 billion without obtaining CBN approval and for contravening CBN circular.
“CBN imposed a penalty of N4 million for the following breaches: (a) Late reporting of twenty nine (29) suspicious transactions in a timely manner to the relevant authorities; (b) Untimely reporting of Currency Transaction Reports (CTRs) to the relevant authorities.
“SEC imposed a penalty of N4,510,000 for the failure to obtain the approval of SEC to utilise the custodian function of the Bank and to hold securities owned by its clients in a nominee account and accept payment on behalf of its clients from individual issuers of securities in contravention of Rule 61(2a) of SEC Rules and Regulations,” the bank stated.
The Chairperson, Pragmatic Shareholders Association of Nigeria, Mrs Bisi Bakare, described the development as unfortunate and worrying, though not peculiar with Stanbic IBTC Bank. She said some of the penalties are avoidable if the banks can be more proactive. “It is not peculiar with Stanbic IBTC Bank; other banks pay penalties. My candid advice to the management is to be proactive in their dealings,” she said in a note to THEWILL, adding that the CBN was unnecessarily hard on the banks in matters relating to contravention penalties.
When contacted, the bank did not confirm if it intends to appeal the several contraventions it tagged “alleged” having published the certified and audited accounts for the year. The Department of Corporate Communications said it has no further explanations to its statement that “The bank has written a letter of appeal for a review of the circumstances surrounding these accounts and a waiver of the N200 million fine imposed on the Bank.” The N435 million contravention penalty in 2021 was higher than the N408 million the bank spent on Training Expenses during the year.
Stanbic IBTC Bank is a topmost channel of foreign investment inflow to Nigeria, according to the National Bureau of Statistics (NBS) Capital Importation Reports. Stanbic IBTC received a total of $1.77 billion or 27 percent of the total of $6.7 billion capital inflow recorded in 2021, the highest among the receiving banks. The mid-tier bank received $461 million of $1.9 billion investment inflow in Q1 2021, the second after Standard Chartered Bank’s 633 million.
In Q2 2021, Stanbic IBTC recorded the highest capital inflow of $310.21million out of the $875.62 million recorded by the NBS for the period. The highest investment inflow of $537.92 million came through the bank in Q3 2021 out of a total of $1.74 billion during the period. It received $453.82 million of the $2.19 billion capital importation, second to Ecobank’s $708.59 million in Q4 2021.
The group’s gross earnings decreased by 12.22 percent to N206.65 billion from N234.45 billion in the preceding year, while profit before tax also recorded a decrease from N94.72 billion to N66 billion reflecting a 30.32 percent. Profit after tax decreased by 31.54 percent to N56.97 billion from N83.22 billion for the year ended 31 December 2021.
Its net interest income rose marginally by 1.5 percent to N2.74 billion from N2.49 billion in the preceding period. Loans to customers however rose to N921 billion in 2021 from N625.14 billion in 2020 – reflecting 47.33 percent.
Earnings per share dropped to N4.20 kobo from N6.25 achieved in the previous year as dividend payout also declined to a total of N38.9 billion from the entire sum of N44.5 billion approved in 2020.
Fitch Ratings in September 2021 affirmed the National Long-Term Ratings of Nigeria-based Stanbic IBTC Holdings PLC (Stanbic IBTC) and its 99.9 per cent owned subsidiary, Stanbic IBTC Bank PLC (Stanbic IBTC Bank), at ‘AAA(nga)’.
The mid-tier bank is active in the support of the agriculture sector. In 2017, the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) and Stanbic IBTC Bank signed a N50 billion Memorandum of Understanding for agricultural finance scheme through which it has offered robust support to the sector that contributes most to Nigeria’s GDP. The bank said the partnership was aimed at fast-tracking the government’s diversification bid by turning the agric chain to something that can generate revenue for the country.
About the Author
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
