The Central Bank of Nigeria (CBN) disqualified six Nigerian banks in its latest Retail Dutch Auction System (rDAS) on 6 August.
Details of the transaction disclosed in a statement by the Director of the Financial Markets Department at the CBN, Omolara Duke, explained that six banks were rejected due to various compliance concerns, including late submissions and invalid forms.
The disqualified bids amounted to $279 million.
According to the Apex bank, the disqualified bids stemmed from late submissions.
It explained that some banks, including major financial institutions such as First City Monument Bank (FCMB), Stanbic Bank and Wema Bank, were penalised for missing the 3:00 P.M. submission deadline.
Additionally, two banks (Suntrust and Rand) were disqualified for failing to submit bids in the required format.
The regulator emphasised the importance of adhering to submission guidelines, reiterating that all bids must be submitted between 9:00 AM and 3:00 PM on auction days.
The central bank also highlighted that bids must comply with the approved template to be valid.
“The call for bids was in naira/US dollar (N/US$) Currency pair for unmet Fx demand backed by verifiable Forms A and M only.
“All bids were password protected and submitted through the dedicated email address provided by CBN between 09:00 a.m. and 3:00 p.m. Bids received after 3:000m were disqualified. Passwords for the bids were sent after the auction closed. The total bids received were valued at US$1,191,071,651.59.
“After the collation, the Committee of Governors of the Central Bank of Nigeria approved a cut-off bid of N1495.00/US$ with the total successful bids of $815,362.006.30,” the statement read.
According to financial advisor, the affected banks will be unable to meet their forex obligations at the best rate in the market, which may force them to approach the secondary market and tension demand.
“This may lead to increase in the rates in the general market,” he explained.
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