EXCLUSIVE: How Standard Chartered Bank ignored Nigeria’s rules on Forex

Central-Bank-Of-Nigeria

Standard Chartered Bank Nigeria PLC is to refund about N1.7 billion to the Central Bank of Nigeria (CBN) for alleged “irresponsible market behaviour” involving a $48.6 million foreign exchange deal.

The bank is to make the refund, being excess profit made from the sale of $48.6 million to a foreign customer above the inter-bank market exchange rate agreed by all operators and approved by the CBN.

The deal, which came in three tranches of $13.2 million, $10.4 million and $25 million each, was exchanged by Standard Chartered Bank at about N380 to the dollar, instead of a maximum of N345 to the dollar agreed by all banks and approved by the CBN.

Following the introduction of the flexible exchange rate policy by the Central Bank, replacing the previous N197-N199 per dollar exchange rate, the banks were said to have agreed on a fresh exchange rate in an attempt to strengthen the Naira, which was depreciating at an alarming rate.

To bridge the widening gap between the inter-bank and parallel market exchange rates by the bureau de change operators, the banks resolved to set an exchange rate band, initially, between N305 and N315 to the dollar, within which they would compete and trade.

A senior official in one of the banks told PREMIUM TIMES the band was later reviewed to between N315 and N345, when the Naira value plunged further, with an agreement that any bank seeking to sell above the range must inform the CBN and obtain clearance to proceed.

The official, who requested his identity not be revealed because of the sensitivity of the information, said the clearance was necessary, particularly with foreigners coming into the country, to enable the CBN be aware of the transaction and why it had to be at that high rate.

He said no fewer than eight banks that had reason to trade above the agreed N315 exchange rate range, sought and received the CBN’s nod to proceed with their transactions.

Surprisingly, the official said, Standard Chartered Bank, whose top officials were part of the understanding on the exchange rate range, opted to ignore the agreement when it received a request from one of its foreign clients to bring in about $48.6 million into the country.

Rather than trading within the agreed exchange rate band of N315-N345 to the dollar, Standard Chartered Bank was accused of trading at the rate of N380 to the dollar.

Consequently, the bank realized about N18.5 billion, about N1.7 billion in excess of the maximum N16.8 billion it should have made, if it traded within the agreed exchange rate band with a maximum of N345 to the dollar.

“Every market has written and unwritten rules guiding the conduct of operators. In this case, it was a resolution by all of us that the CBN must be carried along in such transactions. If other banks complied and got the CBN nod to proceed, it was sabotage and a breach of the market rules for Standard Chartered to have gone ahead without the CBN nod,” the official explained.

CBN spokesperson, Isaac Okorafor, declined to give specific details on the transaction.

“Let me clarify that Standard Chartered Bank was neither sanctioned nor fined for any FOREX round-tripping offences,” he said. “In as much as the CBN would not want to be seen joining issues with any bank on any issue, it will not condone any irresponsible market behaviour.”

Mr. Okorafor refused to give further details on the “irresponsible market behaviour”. He, however, said the Central Bank has already written to inform the bank that the full value of the excess amount realized outside the agreed exchange rate band would be recovered from its account.

Standard Chartered Bank spokesperson, Dayo Aderugbo, also refused to give details of the alleged offence the bank was accused of. He neither denied nor confirmed if the bank was sanctioned or fined by the Central Bank for the Forex offences.

“Standard Chartered is committed to complying with all local laws and regulations,” Mr. Aderugbo said in a terse response to a mail by PREMIUM TIMES requesting the bank’s clarification on some of the issues.

“We continue to engage with the Central Bank of Nigeria officials on this matter in an effort to reach an amicable resolution. I appreciate your interest, but given we are still in consultation with the regulator, I am sure you can empathize it’s not suitable for us to comment further at this point in time,” he stated.


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  • Money Matters Inc.

    Premium Times Editor,

    Standard Chartered Bank’s fraud: Fish rots from the head

    You can see why people are saying Nigeria is a failed state?
    Nobody is in jail for stealing under President Buhari. Till today nobody is in
    jail – not one person. Is that a serious president or a scammer who is just
    flattering to deceive? In the private sector too it is impunity galore. See
    STANDARD CHARTERED BANK in this clear fraud.

    If it was abroad, in a sensible country like America, heads
    would roll. A fine of 300% would firstly be imposed. Two, the Legal Adviser, the
    Company Secretary, the Managing Director, and, the Head of Foreign Exchange
    Operations would be fired and barred from working in a financial institution
    for the next ten years. But see the mess Central Bank is doing. Central Bank just

    wants to pocket only the profit made from the fraud and then leaves the criminals
    in the Standard Chartered Bank to continue other people tomorrow. Is that how to
    instill trust and honesty into a financial system?

    But Nigeria’s Central Bank can say that since President Buhari himself is not
    fighting corruption, why should Central Bank cry more than the bereaved. Or is
    it not President Buhari that was having private meeting thrice a week last week
    inside the presidential villa with an accused criminal – BUKOLA SARAKI –
    who is similarly on trial for fraud and for fraudulent concealment of illicitly
    acquired assets? Fish rots from the head. Buhari is a wrong man for the job.

  • sirOscie

    Pure corruption and EFCC is no where near STANDARD CHARTERED BANK.
    PMB fighting corruption indeed.

  • Spoken word

    when is emefiele going to be fired.this clown is making a mockery of the CBN

  • Galantman

    Nigerian banks break the rules because they are sure of getting ONLY a pat on the wrist. Unless and until we have serious and honest people handling oversight functions at CBN, this trend will get worse. The question is WHY IS THE CBN UNTOUCHABLE?

  • persona

    PT, you didn’t do any justice to what happened here. Zenith bank did the same and even at a higher rate than StanChart but CBN said nothing because the governor has ties with that bank.
    We are on the one hand complaining no inflow of forex and here we are sanctioning those who seek to secure same. CBN is out of its depth and Nigerians will suffer for it.

  • Rommel

    Why not shut down all bureau de change operators and parallel market so that everyone who requires forex will simply buy from banks,are Nigerians different from the rest of humanity? are Nigerians irredeemably corrupt? one thing that bureaucracy does in undeveloped economies it to create room for corruption to thrive,eliminate bureaucracy and corruption goes down by over 80%

  • Ifeanyi

    I’m deeply worried by the fact that the CBN is actively conniving with poltical authorities and some banks to flout it’s own policy. The fact that a completely ignorant report like this one would find it’s way to the platform of a mainstream media, is even more worrisome. When you agree to FLOAT your currency, you are no longer in the business of fixing the exchange rates! Market operators will now have to bid/sell forex based on market determined rates! So this issue of ‘agreed exchange rate band’ is retrogressive and sounds so 1980s. We must come to terms with the fact that Naira has lost it’s value & we cannot restore it by force or through incoherent policies. The earlier the authorities do the right thing, the better for the economy and all of us. By the way, have you seen NBS’s GDP numbers released today? Recession doesn’t seem to be ending anytime soon.

  • Dejandon

    Only refund, no penalty? Why won’t they do it again in the future, after all if they are caught, they will only return the excess. Impunity rules!