The Central Bank of Nigeria (CBN) recently held a retail Dutch Auction in which six major banks were excluded, including United Bank for Africa (UBA), Wema Bank, and Stanbic IBTC.
 The CBN held an auction in which it sold $876.26 million to 26 eligible banks. This was a part of the central bank’s continuous attempts to ease demand pressure and encourage price discovery in the foreign exchange (FX) market.
Under the direction of Governor Yemi Cardoso, who has been actively attempting to stabilize the naira and address the continued volatility in the FX market, this auction represents one of the CBN’s most important FX interventions.
The CBN reports that 32 banks put in bids totaling $1.18 billion. Six banks, however, had bids totaling $279.04 million rejected for a variety of reasons.
Banks impacted by the exclusion
One of the top financial services companies in Nigeria, United Bank for Africa (UBA), had its $13.21 million proposal rejected for being submitted too late.
First City Monument Bank (FCMB), the bank that made the highest bid out of all the banks that were eliminated, also suffered from a late submission. After the bank’s $178.65 million proposal was ruled illegal, its hopes of obtaining a share of the CBN’s allotted foreign exchange were severely impeded.
Another well-known bank in the Nigerian financial system, Stanbic IBTC, put in a $57.86 million proposal. Nevertheless, Stanbic IBTC’s proposal was rejected since it was submitted too late, much as UBA and FCBM’s. The rejection of a proposal this size from a significant industry participant is another evidence of the strict compliance guidelines that the CBN enforces.
Wema Bank was also disqualified, despite its growth and innovative trajectory, especially with its ALAT digital banking platform. The bank’s $21.94 million bid was deemed void since it was submitted too late.
A somewhat more recent arrival to the Nigerian banking market, SunTrust Bank, made a $7.38 million proposal. In contrast to the other banks that were eliminated, SunTrust’s proposal was deemed ineligible due to an omitted bid rate rather than a delayed submission.
In the end, Rand Bank was eliminated for not making a proposal. Consequently, the bank was not linked to any sum in this auction.
A total of $279.04 million was disqualified from the auction as a result of these disqualifications.
Disqualified Banks
| S/N | BANK | AMOUNT USD$ | REASON |
| 1 | UBA | 13,213,785.91 | Late Submission |
| 2 | FCMB | 178,652,316.84 | Late Submission |
| 3 | STANBIC | 57,857,408.12 | Late Submission |
| 4 | WEMA | 21,940,547.84 | Late Submission |
| 5 | SUNTRUST | 7,379,787.50 | No Bid Rates |
| 6 | RAND | 0.00 | No Bid Submitted |
| TOTAL | 279,043,846.21 |
What to note
As part of its plan to stabilize the naira, the CBN held a retail Dutch auction on August 6, 2024, intending to distribute FX to end users, including those with trade-backed demands.
On August 8, 2024, the winning bids were resolved as part of the T+2 settlement procedure.
The CBN has rigorous regulations in place to promote efficiency and openness in the foreign exchange market, as seen by the exclusion of large banks such as UBA, Wema, and Stanbic.
It also emphasizes how crucial it is to complete bid templates accurately and on time in order to participate in future auctions.
