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Banks groan under N1.25tr loans to 'big five' Website Search
National
Metro z CBN may opt for full disclosure soon
Africa By Ade Ogidan (Business Editor) and Taiwo Hassan
World
Business
AN air of discomfort enveloped Nigeria's banking industry
OPINION following disclosures that about five companies and their
Editorial directors have literarily compromised funds of shareholders and
Columnists customers of the financial institutions.
Contributors
Letters
Cartoons Already, the Central Bank of Nigeria (CBN) has opted for a full
Discussions disclosure strategy to stem the tide of anxiety faced by the
Outlook lending banks.
SPORTS
As at yesterday, over N1.25 trillion was being owed the banks
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Abroad by the high profile individuals and their companies, with a
Golf Weekly significant percentage of the debt stock in foreign currencies.
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But the debtors have seemingly kept the banks on tenterhooks,
forcing them to categorise the liabilities as bad debts that are
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Policy & Politics
being written off to cleanse the financial institutions' books.
Arts
Media Indeed, two of the companies and their directors have a debt
Science overhang of $3.75 billion (N550 billion), with a further N280
Natural Health
billion representing the local currency component of their
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Education
collective liabilities.
Weekend
Friday Review Another well-known group of companies, with an equally visible
Executive Briefs entrepreneur as its majority stakeholder, is allegedly owing
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$400 million (N58 billion).
Food & Drink
Auto Wheels
Friday Worship Although some of the alleged debtors have denied that they
Saturday Magazine owe the banks, hopes of the affected institutions to recover the
Sunday Magazine loans are fading.
Ibru Ecumenical
Centre
Agro Care A survey by The Guardian indicated that objectives for which
the loans were collected remained largely unachieved, with
BUSINESS some of the banks strategising on how to present acceptable
SERVICES
financials to their respective shareholders.
Property
Appointments
Money Watch Some of the financial institutions, reeling under the pangs of
Market Report the high bad debt stocks, have even been postponing dates of
Capital Market shareholders' meetings, while about two have decided to hold
Business Travels the mandatory forum in locations far away from Lagos, to
Maritime Watch prevent attendance by critical stakeholders.
Industry Watch
Energy Report
Insurance Already, three banks have written off over N76 billion in loans,
Compulife thereby assailing profitability and dividend payouts.
The CBN is flooded with petitions from some of the banks, over
difficulties in debt recovery, especially from the major five
debtors.
The full disclosure option appeared to have got the CBN's nod.
Recently, it sent a circular to all banks, demanding that they
"submit to the acting Director of Banking Supervision details of
their total exposures to the companies in the energy sector,
namely upstream, downstream and oil service companies, as at
May 31, 2009."
The on-going court case involving Access Bank Plc and AP Plc
has thrown up one such "stress points," and stakeholders await
today's judgment, which coincides with AP's yearly general
meeting.
The bank claimed that it entered into an agreement with the oil
company in a transaction deal with the option that AP agreed
to pay the loan within one year, but the company refused to
honour the contract due to the shortfall of the dollar at the
international market.
He said that the bank is one of the bankers that the oil
company transacts business with, but relating to the specified
oil contract, Access Bank was compelling the oil firm to pay the
$35.1 million at $127 per dollar when the exchange rate as at
when the oil business deal was transacted was $116.
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