No bailout for banks currently suffering squeeze shocks from TSA stress—-FG
Federal government yesterday put to rest speculations that it may give bailout facility to banks currently suffering shocks from the movement of funds belonging to Ministries, Departments and Agencies (MDAs) to the Treasury Single Account (TSA).
Even though the Central Bank of Nigeria (CBN) had severally claimed that all banks are healthy, analysts say there are few that are yet to recover from the shock of the mass movement of funds to the coffers of the government at CBN. The shocks may be the reason why some banks had been sacking staff while others are still withholding some funds belonging to MDAs, begging for more time.
TSA is a federal government policy to move all funds belonging to any of the MDAs to a dedicated account in the CBN which came to effect since September 2015.
A top official of the Ministry of Finance told Business Hilights in Abuja on Monday that this is time for banks to either shape in or shape out because the government has no business bailout any institution that failed to plan for the rainy day in this economy.
The official made it clear that the government was not considering any palliative in the banking sector to cushion the negative impact of the decline in revenue caused by the TSA.
It would be recalled that the Accountant General of the Federation, Mr. Ahmed Idris had late last year made similar comment that government will not provide any form of assistance to banks who cannot withstand the shocks that came with the TSA policy because banks by licence are supposed to do business and generate their income.
The Ministry senior staff who pleaded anonymity said “The TSA has challenged banks to return to traditional banking business,” stressing that “Banks are never created to hold public funds or government funds virtually for free. No, that is not banking. Nowhere in the world are banks relying on public funds to survive. So, banks are now becoming more innovative and that innovation is what will bring them back to business.”
The officer also confirmed that the CBN had brokered a repayment plan for Heritage Bank which is still with holding some funds belonging to the Nigerian Ports Authority (NPA).
The new managing director of NPA had on assumption of office in July last year looked into the books of the agency and observed series of trapped funs in some banks.
In the process of reconciliation, NPA observed that heritage Bank was withholding some millions of dollars belonging to it and after series of approach reported the matter to the apex bank.
r Since the commencement of the Treasury Single Account in September 2016, a total of N75.2bn has been lost in revenue by the Deposit Money Banks as a result of the implementation of the policy.
The amount represents the various charges and account maintenance fees, which where hitherto imposed by banks for holding government funds estimated at N4.7bn monthly.
The TSA is a platform, introduced by the Federal Government to unify all its accounts by ensuring that all monies belonging to the government are kept with the Central Bank of Nigeria.
The initiative, which commenced fully in September 2015, had been complied with by over 900 agencies of the government with 20,000 bank accounts closed and the sum of N5.2tn moved from banks to the CBN.
A monthly sum of N4.7bn was incurred by the Federal Government as bank charges, interest on loans, and account maintenance fees among other charges.
These fees, it was learnt, served as income to the various banks where the fund of the ministries, departments and agencies of government were domiciled.
It was gathered that the withdrawal of the funds from banks had made it difficult to impose any charges on the Federal Government’s funds as the government now maintains a single account for all its agencies with the CBN.
