I'm really not sure the CBN did anything wrong here. If, instead of giving that money to CBN, the banks instead kept it in their lockers and didn't touch it for a whole year, they still would have recorded the same humongous fx gain, no? The only advantage the banks gained here seems to be whatever interest they earned on those securities (I'm just going with your explanation).
It's all above aboard. But an alternative option for them would have been to sell the dollars in the market. After all they are Nigerian banks mainly earning and reporting in Naira and that may have helped some of the exchange rate scarcity.
The banks will always do what is in the interest of the shareholders, it's what they are expected to do. My question is did the CBN act in the interest of its own shareholders i.e. the Nigerian people? If they didn't, are there any penalties for this level of mismanagement?
Femi i loved your cbn files which earned you an avid reader so i think youre much more capable of better analysis. The CBN structured these deal this way as the all powerful regulator. I think this is way more on the CBN than the actual banks...
Again,this is very informative and really simple to understand for some of us that do not know how these things work. I think it is the stance of a lot of people that profit in Nigeria,banks,politicians,justices,police to bet against the normal workings of institutions.
I'm really not sure the CBN did anything wrong here. If, instead of giving that money to CBN, the banks instead kept it in their lockers and didn't touch it for a whole year, they still would have recorded the same humongous fx gain, no? The only advantage the banks gained here seems to be whatever interest they earned on those securities (I'm just going with your explanation).
It's all above aboard. But an alternative option for them would have been to sell the dollars in the market. After all they are Nigerian banks mainly earning and reporting in Naira and that may have helped some of the exchange rate scarcity.
The banks will always do what is in the interest of the shareholders, it's what they are expected to do. My question is did the CBN act in the interest of its own shareholders i.e. the Nigerian people? If they didn't, are there any penalties for this level of mismanagement?
Femi i loved your cbn files which earned you an avid reader so i think youre much more capable of better analysis. The CBN structured these deal this way as the all powerful regulator. I think this is way more on the CBN than the actual banks...
Please keep up the good work.
I agree
Again,this is very informative and really simple to understand for some of us that do not know how these things work. I think it is the stance of a lot of people that profit in Nigeria,banks,politicians,justices,police to bet against the normal workings of institutions.
Great and enlightened post as usual. When should we be expecting a post on "Card maintenance"? I guess this is another legal profit Banks thrive on.
Hmmm…that’s a different kettle of fish entirely :)