CBN Allocates Maximum FX To Zenith Bank, Access, FBN Holdings, And Seven Other Firms

To address the mounting demand and stabilise the foreign exchange (FX) market, the Central Bank of Nigeria (CBN) recently concluded its Retail Dutch Auction System (RDAS) where Zenith Bank, Access Bank, FBN Holdings, and seven others chalked up massive FX that boosted the NGX Banking Index up by 5.1 per cent.

The auction, conducted by the CBN to enhance price discovery in the FX market, saw a total of $876.26 million allocated to 26 qualified banks at a rate of N1,495 per dollar. This system allows commercial banks to bid for foreign currency on behalf of their customers, with the CBN supplying the currency through an auction. Of the 32 banks that participated, six were disqualified for submitting incomplete bid templates, leaving the remaining 26 banks to share approximately 75 per cent of the total bid amount, which stood at $1.18 billion.

Zenith Bank secured the highest allocation of $267.86 million after submitting bids ranging from N1,500 to N1,650 per dollar. First Bank, despite recent changes in its board under regulatory scrutiny, successfully obtained $228.99 million with bids between N1,500 and N1,600 per dollar. Access Bank followed with $79.09 million.

Fidelity Bank, steadily expanding its market share, received $43.62 million, while GTCO secured $29.54 million. Standard Chartered Bank, known for its robust international banking operations, acquired $28.43 million after bidding within the N1,500 to N1,600 per dollar range.

The auction also saw Taj Bank, Jaiz Bank, Sterling Bank, and Union Bank secure $19.11 million, $16.71 million, $14.4 million, and $13.27 million, respectively. The FX allocations not only reinforced the financial stability of these banks but also propelled the Nigerian Exchange Limited (NGX) Banking Index by 5.1 per cent, bringing the year-to-date returns of the domestic bourse to an impressive +31.7 per cent.

The auction is one of the most significant FX interventions under the leadership of CBN Governor Olayemi Cardoso, who has been actively working to stabilize the naira and address the ongoing volatility in the FX market.

Reacting, Victor Chiazor, Head of Research at FSL Securities, emphasised the importance of FX allocations through the RDAS for banks to meet the demands of importers, businesses, and other entities requiring foreign currency for international transactions. He noted that banks with higher allocations generally have a larger customer base or more significant demands for foreign currency, reflecting their ability to bid effectively in the auctions.

Chiazor also highlighted the CBN’s commitment to transparency and efficiency, as evidenced by the exclusion of the six banks with incomplete bid submissions. This, he said, signals the CBN’s determination to uphold stringent standards in future auctions, ensuring that banks adhere to submission deadlines and accurately complete bid templates.