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CBN reacts on Access Bank/AP’s $35m loan rift

By Emmanuel Edeki
THE Central Bank of Nigeria (CBN), has absolved Access Bank of violating any regulatory laws on foreign exchange.

According to CBN, this is because the foreign exchange for the disputed transaction was not sourced from it.

In a letter to African Petroleum Plc, dated July 24, CBN stated that after examining the issues raised in AP’s letter to it as well as the response of Access Bank Plc on same, it found out, among others that:

AP, vide its letter dated June 24, 2008, instructed Access Bank to establish an irrevocable letter of credit (LC) on its behalf for $38,937,000 in favour of Glencore Energy UK Ltd (supplier) for a tenor of 180 days using its USD 50 million trade finance line.

And that on July 25, 2008; an LC was opened on AP’s behalf in favour of Glencore which LC was due for payment on November 30, 2008; and that on November 12, 2008, Access Bank advised AP to provide the naira cover for US$35,153,822 to enable it purchase foreign exchange for the repayment of its obligation to its correspondent bank; and that as of the date of the transaction (i.e. December 1, 2008) the foreign exchange regime in operation was the WDAS; which allowed banks to buy foreign exchange in their accounts for trading.

It added that Access Bank offered to sell foreign exchange to AP at the rate of N127/US$ to cover its outstanding and unpaid facility – exposure of US$35,153,822.15 in line with the bank’s offer letter which clearly stated that it would not be responsible for any foreign exchange risk;

CBN added that Access Bank then debited AP’s current a/c vide its letter of December 2, 2008 which debit was rejected by AP; while Access Bank subsequently reversed the debit entry in AP’s favour.

(CBN added that its records of transactions during the relevant period revealed that Access Bank did not source for foreign exchange from CBN for the LC transaction in dispute; and that it was not aware of any violation of any regulatory laws on foreign exchange by Access Bank since the foreign exchange for the disputed transaction was not sourced from CBN.

Access Bank and African Petroleum are in dispute over a loan facility of $35.15m granted by the former to the latter.

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