The disqualified bids, which included $279 million from six banks, were rejected due to various compliance failures, including late submissions and invalid forms.
The Central Bank of Nigeria (CBN) disqualified some prominent Nigerian banks in its latest Retail Dutch Auction System (rDAS) on 6 August.
Details of the transaction are disclosed in a statement by the Director of the Financial Markets Department at the CBN, Omolara Duke,
The disqualified bids, which included $279 million from six banks, were rejected due to various compliance concerns, including late submissions and invalid forms.
The auction, which saw the CBN offer foreign exchange (FX) to end users through authorised dealer banks, initially attracted bids valued at $1.19 billion. However, after evaluations, only $815.36 million worth of bids were deemed successful, meeting the central bank's compliance requirements.
"The call for bids was in naira/US dollar (N/US$) Currency pair for unmet Fx demand backed by verifiable Forms A and M only.
"All bids were password protected and submitted through the dedicated email address provided by CBN between 09:00 a.m. and 3:00 p.m. Bids received after 3:000m were disqualified. Passwords for the bids were sent after the auction closed. The total bids received were valued at US$1,191,071,651.59.
"After the collation, the Committee of Governors of the Central Bank of Nigeria approved a cut-off bid of N1495.00/US$ with the total successful bids of US$815,362.006.30 (Eight Hundred and Fifteen Million, Three Hundred and Sixty-Two Thousand and Six US dollars and Thirty Cents)," the statement read.
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The Banks
According to the CBN, most disqualified bids stemmed from late submissions. Four banks, including major financial institutions such as United Bank for Africa (UBA), First City Monument Bank (FCMB), Stanbic Bank and Wema Bank, were penalised for missing the 3:00 P.M. submission deadline. Additionally, two banks (Suntrust and Rand) were disqualified for failing to submit bids in the required format.
The CBN emphasised the importance of adhering to submission guidelines, reiterating that all bids must be submitted between 9:00 AM and 3:00 PM on auction days. The central bank also highlighted that bids must comply with the approved template to be valid.
The auction is part of the CBN's ongoing efforts to manage liquidity in the FX market, promote exchange rate stability, and improve price discovery in the wake of increased demand.
The CBN said it would settle the successful bids, ranging between N1495/US$ and N1650/US$, on 8 August.
The CBN has warned that any accounts not funded by this date will not qualify for the FX allocation.
Successful Bids
Zenith Bank emerged as the top recipient of the 26 approved bids by authorised banks, valued at $876.26 million, securing over $267 million. Its bidding was at the lowest and highest ends of the accepted range (N1,500/US$ to N1,650/US$).
Following closely, Union Bank managed to secure $82 million, making it the second-highest recipient.
GTB (Guaranty Trust Bank) also featured prominently among the successful bidders, with over $29 million allocated to the lender.
