In a recent retail Dutch auction conducted by the Central Bank of Nigeria (CBN), six prominent banks, including United Bank for Africa (UBA), Wema Bank, and Stanbic IBTC, were disqualified from participating.
The auction, which took place on August 6, 2024, saw the CBN sell $876.26 million to 26 qualified banks as part of its ongoing efforts to ease demand pressure in the foreign exchange (FX) market and promote price stability.
This auction is one of the most significant FX interventions by the CBN under the leadership of Governor Yemi Cardoso, who has been actively working to stabilise the naira amidst ongoing volatility in the FX market. A total of $1.18 billion was submitted in bids by 32 banks, but $279.04 million worth of bids from six banks were disqualified for various reasons.
Details of Disqualified Bids:
- United Bank for Africa (UBA): The bank’s bid of $13.21 million was disqualified due to late submission.
- First City Monument Bank (FCMB): submitted the largest bid among the disqualified banks, with $178.65 million invalidated due to late submission.
- Stanbic IBTC: The bank’s bid of $57.86 million was also disqualified for late submission.
Wema Bank: Disqualified for late submission of its $21.94 million bid. - SunTrust Bank Submitted a bid of $7.38 million, but it was invalidated for failing to provide bid rates.
- Rand Bank: Disqualified for failing to submit any bids.
The disqualification of these banks resulted in the exclusion of $279.04 million from the auction.
The CBN’s retail Dutch auction was aimed at distributing FX to end-users, including those with trade-backed demands, as part of its strategy to stabilise the naira. The successful bids were settled on August 8, 2024, as part of the T+2 settlement process.