CBN Issues Guidelines for Development Finance Institutions

The Central Bank of Nigeria on Thursday issued guidelines to regulate the operations of development finance institutions in the country.

The guidelines issued in Abuja, the CBN said, are to provide a level playing field for operators in the development finance subsector, to further direct private capital to participating financial institutions.

Also, the CBN said the guidelines would provide a framework for licensing, regulation and supervision of both wholesale and retail development finance institutions.

The wholesale institutions would require a minimum capital of N100billion payable over a maximum period of four years, out of which N20billion is paid prior to being granted the approval in principle, in addition to N250,000 non-refundable application fee and N1million licensing fee.

The capital for retail institutions has been put at N10billion, with a non-refundable application fee of N100,000 and licensing fee of N500,000.

Rather than compete directly with the retail institution at the retail market, the CBN said the whole institution shall mainly provide wholesale financial products (at least 80 percent of total credit) and facilitate technical assistance to eligible participating financial institutions nationwide.

The establishment of development finance institutions was to provide financial interventions in micro-, small and medium enterprises as the engine of growth, to complement the efforts of banks and other financial institutions.

Also, the institutions were to accelerate the pace of development of the country's economy and realization of the key roles of some critical sectors in the process.

However, due to limited access to long-term and low-interest funds, the development finance institutions had recorded limited success.

To bridge the gap and increase the availability and access to finance micro-, small and medium enterprises, the Federal Government in collaboration with development partners and international financial institutions established the wholesale development finance institutions.

The institutions are to help fund these enterprises for economic development; foster growth in sustainable businesses; create jobs, reduce poverty and improve quality of lives.

The institutions, like all financial institutions regulated by the CBN, would be subject to regulation and supervision by the CBN under the Banks and Other Financial Institutions Act, CAP B3, Laws of the Federation of Nigeria, 2010.

The guidelines, the CBN said, are designed to be consistent with CBN's existing regulations for all licensed financial institutions, to ensure that they operate in a safe and sound manner.

While the institutions are authorized to provide finance and credit facilities to eligible borrowers; refinance micro- small and medium enterprises and loans to large enterprises as well as invest in government securities, they are not permitted to accept or demand, savings and time deposits, or any type of deposits.

Also, they are barred from taking proprietary positions in real estate other than for its own business; management of pension funds/schemes; provide fund/asset management services; engage in foreign exchange, commodity and equity trading as well as finance capital market operations.

Extract: http://allafrica.com/stories/201503230079.html

Europe Stocks, U.S. Futures Drop After Rally; Oil Falls

European stocks and U.S. equity-index futures slipped after global equities capped their biggest weekly advance since July 2013. Crude declined, while the dollar gained versus European currencies after tumbling on Friday.

The Stoxx Europe 600 Index fell 0.6 percent by 8:21 a.m. in London, after nearing a record on Friday, while Standard & Poor’s 500 Index futures retreated 0.2 percent. The MSCI Asia Pacific Index extended a six-month high as China’s Shanghai Composite Index capped its longest streak of gains since 2007. The dollar strengthened at least 0.3 percent against the euro, pound and Norwegian krone. U.S. oil fell 2 percent as Saudi Arabia said it was pumping near record amounts of crude.

The value of global equities rose to a record $68.4 trillion on March 20 as investors bet shares will benefit from delayed Federal Reserve interest-rate increases and record central-bank stimulus in Europe and Japan. Three Fed members speak Monday after policy makers lowered their rate outlook, sending the dollar to its worst week since 2011. Greek Prime Minister Alexis Tsipras is set to meet German Chancellor Angela Merkel on Monday as he seeks to salvage a bailout deal.

“The overriding factor for the Fed is whether they can afford to overstimulate the economy or raise rates too soon,” Tim Schroeders, a portfolio manager who helps oversee about $1 billion in equities at Pengana Capital Ltd. in Melbourne, said by phone. “They can’t be too aggressive in raising rates as the underlying U.S. economy isn’t as strong. Equities will continue to trend higher but as valuations become stretched, markets will be more vulnerable to a pullback.”

Stock Moves

The MSCI All-Country World Index capped a 3.2 percent gain last week, its steepest advance since July 2013. The measure is up 7 percent over the past year as policy makers from Europe to Japan expand stimulus programs to stave off deflation and preserve growth. Their actions have helped temper the impact of the Fed’s unwinding of its own quantitative-easing program.

Both the Nasdaq Composite Index and the Stoxx 600 came within 0.5 percent of record highs last week. Fed officials said in their statement that they’ll be waiting for confidence in the recovery before boosting borrowing costs.

Seventeen of the 19 industry groups on the Stoxx 600 retreated today. The gauge rose to as high as 404.51 on Friday, close to the March 2000 all-time closing high of 405.5.

Christian Dior SE fell 3.2 percent and LVMH Moet Hennessy Vuitton SE tumbled 3 percent after JPMorgan Chase & Co. analysts cut the luxury-goods companies’ shares to neutral.

The Shanghai Composite Index advanced 2 percent from its highest close since 2008. The gauge is heading for a ninth straight gain even after China’s securities regulator urged investors to consider risks from the nation’s surging stock market.

Hang Seng

Hong Kong’s Hang Seng Index climbed 0.5 percent Monday and the Hang Seng China Enterprises Index was 0.2 percent higher, extending its winning run to eight days. Japan’s Topix rose 0.7 percent to the highest since November 2007.

The Nasdaq Composite advanced for a fifth straight day Friday, gaining 0.7 percent to 5,026.42. The rally put the technology-heavy index within seven points of wiping out all its losses since the Internet bubble and came in the same week as Apple Inc., the Nasdaq Composite’s biggest member, entered the the Dow Jones Industrial Average.

In currency markets, the euro was 0.4 percent weaker at $1.0776 after surging 1.5 percent Friday to cap its biggest weekly advance since 2011. The pound was 0.6 percent weaker and the krone slipped 0.6 percent to 8.0676 per dollar.

The Bloomberg dollar index added 0.2 percent after losing 1.3 percent Friday to cap a slump of 2.2 percent for the week, the biggest since October 2011. The gauge of the U.S. currency against 10 major peers was at a decade high as recently as March 13.

Bonds Hold

Yields on 10-year Treasury notes were little changed Monday after tumbling 18 basis points last week to 1.93 percent. The rate on similar German bunds was little changed at 0.17 percent after dropping to a record 0.168 percent on Friday.

Fed Vice Chairman Stanley Fischer speaks at the Economic Club of New York on Monday, while San Francisco Fed President John Williams will deliver a speech via videoconference to the Australian Business Economists. Cleveland Fed President Loretta Mester speaks on a panel discussion in Paris with Bank of France Governor Christian Noyer.

Oil Slide

European leaders, including Merkel, French President Francois Hollande and European Central Bank President Mario Draghi pressed Tsipras to make good on a February accord and “present a full list of specific reforms” in the coming days before any further aid can be disbursed.

West Texas Intermediate crude dropped to $45.61 a barrel after its first weekly increase in five weeks. Oil has been on the brink of both bull and bear markets this year as a declining rig count in the U.S. is countered by data showing the nation’s stockpiles are at a record high. Brent was down 1.6 percent at $54.43 a barrel.

Saudi Arabia’s Oil Minister Ali al-Naimi said at the weekend that the world’s biggest crude-exporting nation is pumping about 10 million barrels of oil a day, close to a record amount produced in 2013. Mohammed al-Madi, the Saudi governor to OPEC, said oil prices won’t return to $100 a barrel because higher prices would draw more shale and output from higher-cost producers to the market.

Extract: http://www.bloomberg.com/news/articles/2015-03-22/u-s-futures-climb-after-global-stock-surge-dollar-slips

ADB, IMF, World Bank To Cooperate With China-Led Asian Infrastructure Investment Bank, Leaders Say

The Asian Development Bank (ADB), International Monetary Fund (IMF) and World Bank all expressed support Sunday for the new kid on their block, a $50 billion multilateral lender led by China, which gave the financing operation most of the seed money upon its founding last year. Inside and outside the Asia-Pacific region, more than 30 countries are now members of the Asian Infrastructure Investment Bank (AIIB). Additional nations may join by a March 31 deadline, as BBC News reported.

The AIIB is designed to provide project loans to developing countries, with operations beginning by the end of this year.

ADB President Takehiko Nakao and China’s Finance Minister Lou Jiwei have conducted discussions about possible cooperation between the two regional lenders, they said at a China Development Forum 2015 session in Beijing, Reuters reported. At the same event, IMF Managing Director Christine Lagarde said her fund would be “delighted” to work with the AIIB, as there was “massive” room for cooperation on infrastructure financing in the Asia-Pacific region.

Meanwhile, one of the World Bank’s leaders said Sunday her institution also would be cooperating with the AIIB. “Any new initiative that will mobilize funding in order to fill infrastructure gap is certainly welcome. World Bank really welcomes the AIIB initiative,” Managing Director Sri Mulyani Indrawati told China’s official Xinhua News Agency in an exclusive interview. “We will definitely open for cooperation with AIIB.”

Most of the AIIB’s regional members joined last year, while most of the bank’s nonregional members joined this month. The former encompass India, Indonesia and Pakistan; the latter include France, Germany and the U.K. Conspicuous by their absences on its membership roll are Japan and the U.S. Neither country has expressed support for the venture, which some observers have attributed to their rivalries with China. Among national economies around the world, the U.S. ranks No. 1, China No. 2 and Japan No. 3.

China’s finance minister has previously indicated the AIIB’s approach would be not to compete but to complement existing international institutions such as the ADB, IMF and World Bank. The ADB is based in the Philippines capital of Manila, while the IMF and World Bank both are headquartered in the U.S. capital of Washington.

Eight more countries may join the AIIB by the March 31 deadline, Jin Liqun, secretary-general of the bank’s interim secretariat, said Sunday, according to Reuters. At the start of operations, it will have the approval of shareholders to double its capitalization to $100 billion, the news agency said.

Extract: http://www.ibtimes.com/adb-imf-world-bank-cooperate-china-led-asian-infrastructure-investment-bank-leaders-1855012