CBN suspends 195 BDCs, 19 banks for breaching FX directives

The Central Bank of Nigeria (CBN) has suspended 195 bureau de change (BDC) operators from the Nigerian foreign exchange (forex) market, over their failure to renew their operating licences.

The bank also suspended 19 commercial banks from selling their forex remittances to BDCs, instead mandating them to sell only to travelex, which just sealed a deal with the BDCs.

A circular to the banks showed that only First Bank of Nigeria, one of the most capitalised banks in the industry, was exempted from the apex bank’s big stick.

The naira has seen a dramatic appreciation against the dollar over the past few days, but the turbulence that comes with the latest suspension may see some depreciation in the days ahead.

Aminu Gwadabe, president of the Association of Bureau De Change Operators of Nigeria (ABCON), had initially said its deal with Travelex, a global money transfer agent, would see the naira firm dramatically.

Since the deal was sealed, the naira has appreciated from 490 against the dollar, to 460 on Wednesday, and it was also seen as trading at 550 to the pound on Thursday morning.

CBN had initially barred nine banks from the foreign exchange market on allegations that they were aiding the Nigerian National Petroleum Corporation (NNPC) in hiding over $2.1 billion from the Treasury Single Account (TSA).

That decision saw the naira fall by about nine percent in less than 24 hours to trade at 342 to the dollar – its biggest daily slip since the inception of the new forex regime.

A source within the apex bank said this suspension would not lead to this manner of depreciation earlier recorded.