TSA: CBN Fines Skye Bank N4bn for Concealing MDAs' Funds

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Less than two weeks after it sanctioned two major banks for flouting Federal Government directives on Treasury Single Account, the Central Bank of Nigeria (CBN) has imposed a fine of N4 billion on Skye Bank for concealing funds belonging to Ministries, Departments and Agencies (MDAs).

In a circular from CBN, addressed to the Chairman, Board of Directors of Skye Bank, the apex bank slapped Skye Bank with a fine of N4,005,228,976.35, which it said represents 10 percent of the concealed funds belonging to Federal Government MDAs.
The circular said the amount would be debited from Skye Bank’s current account with CBN.

The CBN circular obtained by THISDAY from industry sources, showed that Skye Bank failed to report MDAs’ balances amounting to N40,052,289,769.47, as at October 23, 2015, more than a month after the TSA deadline had expired.

The Federal Government had directed that balances/receipts due to the government or its agencies be paid into a TSA domiciled in the CBN except otherwise expressly approved. The TSA is a bank account or a set of linked bank accounts through which the government transacts all its receipts and payments and gets a consolidated view of its cash position at any given time. A September 15 deadline was given for full compliance with the directive.

CBN's hammer had earlier fallen on two major banks - First Bank of Nigeria Limited (FirstBank) and United Bank for Africa (UBA) Plc for failing to comply with the directive on TSA. While a fine of N1,877,409,905.12 was imposed on FirstBank, UBA was fined N2,942,189,651.45.

The fines imposed on the two banks represented 5% of unremitted funds.
Unlike UBA and First Bank that were sanctioned two weeks ago, a higher percentage (10%) of fine was imposed on Skye Bank because it shrouded the MDAs' funds until the funds were uncovered by CBN examiners during a visit to the bank.

While notifying Skye Bank of the fine, the apex bank’s circular signed by the Governor, Mr. Godwin Emefiele, noted an October 14, 2015 request by its Director of Banking Supervision, Mrs. Tokunbo Martins, for information on Skye Bank’s total amount remitted and unremitted to TSA in a prescribed format with a submission deadline of 12pm, October 15, 2015.

It however stated that the bank’s initial submission on “15th October 2015 in respect of the information requested indicated unremitted amount of N442, 916,642.92, a rendition which was false as your bank failed to report FGN MDAs’ balances amounting to N40,052,289,769.47 as at 23rd October 2015.”
The unreported sum, it said, was unearthed during CBN examiners’ onsite visit to Skye Bank on October 26, thereby aggravating the offence.

“The fact that it took CBN Examiner's visit to your bank before this was unearthed is unacceptable,” the circular stated.
CBN also issued a strong warning to the board of the bank to desist from allowing a similar situation to reoccur as such would be met with stiffer sanctions.

“For the avoidance of doubt, the CBN shall continue to frown at incidences of non-rendition of returns, late or false/inaccurate returns, other false/inaccurate information or any infraction whatsoever. The CBN shall, in such instances, impose sanctions as appropriate,” it further stated, signaling a stricter regulatory regime where deliberate breaches would not be tolerated.

THISDAY had exclusively reported three weeks ago that two prominent banks faced sanctions for circumventing the presidential directive on Treasury Single Account (TSA). The THISDAY report had noted that CBN was considering imposing a hefty financial sanction, suspension or removal of the CEOs, and the dissolution of the board of directors.

A week after the report, the central bank imposed a N4billion sanction on First Bank and UBA for concealing funds belonging to Nigerian National Petroleum Corporation (NNPC).

The Federal Government directive on TSA had sent shock waves around the financial sector due to the huge government deposits in commercial banks that would be affected by the policy as fears mounted that it would further tighten liquidity.

Some banks had tried to hide under the authorisation letter from the Accountant-General of the Federation, Alhaji Ahmed Idris, who tried to exempt certain agencies, and were using that as a basis not to comply with the TSA.
But CBN, in line with its September 9 circular, restated its resolve to punish any commercial bank that failed to comply with the policy on the TSA.

CBN however moved to ease liquidity in the banking system, in response to a severe liquidity squeeze in the interbank market at the last meeting of the Monetary Policy Committee by ensuring that the Monetary Policy Rate (MPR) remained unchanged at 13 per cent+/- 200 basis points around the symmetric corridor and also reduced Cash Reserve Requirement (CRR) from 31 per cent to 25 per cent to reflate banking sector liquidity.

Source: ThisDay