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Zenith Bank has reduced its swap exposure to the Central Bank of Nigeria (CBN) to less than $1 billion from about $1.6 billion in 2024.
“As at 2024 we had an exposure of $1.6bn, and presently it has come down significantly to less than $1 billion,” Group Managing Director/Chief Executive of Zenith Bank Plc, Dame (Dr.) Adaora Umeoji, said during a conference call held last week to discuss the banks Full Year 2024 results.
“The maturities have been invested into other high yielding instruments to diversify our portfolio in that segment.”
Currency swaps with the CBN avails USD liquidity to the apex bank while providing an avenue to boost earnings for Zenith Bank. As at 31 December 2024, the Zenith Group had outstanding SWAP transactions with various counterparties.
The SWAP transaction creates for the Bank both a right to receive US dollars of the notional SWAP amount at different maturities and an obligation to deliver Naira of the notional SWAP amount at different maturity.
The total USD receivables at various maturity dates is USD 810 million while the Naira equivalent of treasury bills will mature to the respective counter parties, according to data from the notes in Zenith Bank’s financials.
The Central Bank of Nigeria (CBN) recently reported a substantial improvement in its Net Foreign Exchange Reserve (NFER) position at the end of 2024 of $23.11 billion, the highest level in over three years, and a marked increase from $3.99 billion at year-end 2023, $8.19 billion in 2022, and $14.59 billion in 2021.
NFER, adjusts gross reserves to account for near-term liabilities such as FX swaps and forward contracts, meaning the CBN unwound some swap positions to counterparties like Zenith Bank.
Meanwhile Zenith Bank has suspended its plans to transform into a Holding Company (HoldCo) structure.
“Following shareholders’ approval for HoldCo, the bank set out to get regulatory approval, however the CBN came up with a recapitalization exercise along the line. So pursuing the HoldCo would have delayed the recapitalization exercise for us as a bank. So we decided to suspend the HoldCo structure to actually enable us to raise the capital, more so as our peers were already getting prepared for the market,” according to the CEO, Dame (Dr.) Adaora Umeoji.
After the capital raise, Zenith Bank’s focus is now on global market expansion and efficient deployment of the new capital.
“If the need arises, the HoldCo structure will be revisited, but for now it has been suspended as we focus on making sure we grow our market share in the industry,” the CEO said.
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