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CBN owes JP Morgan, Goldman Sachs $15bn – Report

The audited financial statements of the Central Bank of Nigeria (CBN), its first in seven years, indicate that the apex bank received combined $15 billion cash from JP Morgan and Goldman Sachs in one year.


According to the CBN’s financial statements for the financial year ended December 31, 2022, the CBN Group had entered into a securities lending agreement with Goldman Sachs and J. P. Morgan with the Group pledging its holdings on foreign securities in return for cash.


The statement put the cash received from Goldman Sachs at N.23 trillion ($500 million) in 2021; N.22 trillion ($500 million) and JP Morgan N3.23 trillion ($7 billion) in 2021; while N3.05 trillion ($7 billion) was recognised in other foreign securities, bringing liabilities with both global institutions to $15 billion.


The securities lending forms part of the CBN’s total external reserves of about N14.3 trillion or $29 billion using the official exchange rate of N494/$1 as of 2022.


Further analysis of the breakdown of the apex bank’s external reserves reveals the followings:


Time deposits and money placements – N4.6 trillion; other foreign securities – N5.8 trillion; Current accounts with foreign Banks (GS and JPM) – N3.34 trillion and Domiciliary accounts- N294.8 billion.


Included in overdraft balances and short-term advances of the apex bank are temporary advances to the Federal Government, amounting to N23.3 trillion (Dec 2021: N17.1 trillion), and financial accommodation to Banks put at N56 billion (Dec 2021: N55 billion).


“The Bank also purchased N535 billion debenture stocks issued by the Bank of Industry (BOI) in 2010. The investment is to fund intervention activities initiated by the Bank and was executed through the BOI. The sum of N300 billion will be applied to power projects, N200 billion applied to the refinancing/ restructuring of Deposit Money Bank’s existing loan portfolios to Nigerian small and medium scale enterprise and manufacturing sector with N35 billion to the manufacturing sector,” the report said.


The financial statement was signed on behalf of the board of directors by suspended CBN Governor, Godwin Emefiele and Deputy Governor, Corporate Services Directorate, Edward Adamu.


The financial sector regulator recorded a profit of N65.63 billion in 2022 — more than double the figure it reported for the previous year (N31.04 billion).


The apex bank said the financial statements of the last seven years had been approved by its board in accordance with the provisions of the CBN Act of 2007.


The 2022 financials showed that the CBN (the Group) recorded a profit of N103.85 billion. The Group comprises the CBN and its subsidiaries including the Nigerian Security Printing & Minting Plc (MINT), Nigerian Electricity Supply Industry Stabilisation Strategy Limited (NESI SS Ltd), among others.


“The Group and bank’s profit for the year was N103,854 million and N65,626 million respectively (2021: N75,125 million and N31,044 million respectively). In line with the provision of the Fiscal Responsibility Act 2011, 20 per cent of the net income of the bank will be credited to retained earnings, while the balance will be paid to the federal government of Nigeria,” the report stated.


The Group spent N265 billion on personnel, while N257 billion was spent on personnel.


Currency issue expenses for the group stood at N29.6 billion, and N96.4 billion for the bank.


The total operating expenses for the group stood at N1.21 trillion, and N1.2 trillion for the bank.


The financial statements were jointly endorsed by Ernst & Young (EY) -Chartered Accountants and KPMG Professional Services- Chartered Accountants.


On the results, CBN Corporate Secretary, Alice Karau, said: “The Bank, as the Central Bank of Nigeria, should be an institution of integrity which maintains the highest ethical standards. The executive management of the Bank is aware of this core value and expectation and commits itself to creating a working environment that encourages and facilitates honesty, integrity, and ethical behaviour. The Bank is committed to equality, meritocracy, and international best practice.”


In the last couple of years, Godwin Emefiele, the suspended CBN governor, was criticised for not releasing the apex bank’s financial statements to the public.


Since 2005 when it started publishing details of its annual report on its website, CBN never failed to publish the report until 2016 when the regulator abruptly stopped the publication of the document — an act that contravenes the law regulating its operations.


The CBN Act 2007 stipulates that the apex bank must publish its report within two months after the end of each financial year.


“The bank shall, within two months after the close of each financial year, transmit to the National Assembly and the President a copy of its annual accounts certified by the Auditor,” the Act reads in part.


“A report required to be submitted to the national assembly and the president shall be published by the bank in such a manner as the governor may direct.


“The board shall ensure that accounts submitted pursuant to this section shall, as soon as possible, be published in the Gazette.


“The bank shall, as soon as may be practicable after the last day of each month makeup end, publish a return of its assets and liabilities as at the close of business on that day, or if that day is a holiday, as at the close of business on the last preceding business day.”


In August, President Bola Tinubu appointed Jim Obazee, former chief executive officer of the Financial Reporting Council of Nigeria, as a special investigator to probe the CBN and related entities.

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