The Oasis Reporters
November 6, 2018
The reality of a harsh economic climate has pushed business concerns to the brink leading to non-performing loans (NPLs) which have dropped to 12.4 percent as at June 2018 from 15 percent a year ago, still a long way above its 5 percent threshold.
“To further consolidate on the improvement, the Central Bank of Nigeria directed banks to intensify efforts at debt recovery, realisation of collateral for lost facilities and strengthening their risk management processes,” it said in a recent report.
Many microfinance lenders have noticed a rash of resignations amongst it’s credit operations staff who are unable to meet up with the obligations of recovering loans from disappearing debtors who run away after collecting loans at high interest rates in Nigeria. Operators have to pay back from deductions in their salaries.
In September, the regulator withdrew the license of Skye Bank for failing to recapitalise. It then transferred Skye’s assets to a “bridge bank” Polaris wholly-owned by the state-backed asset management company AMCON.
Nigerian banks have been trying to raise fresh capital after huge loan losses worsened by an economy that has just emerged from a recession.
Diamond Bank last week denied it was in talks with investors to raise cash but said it was managing its capital, which borders on the regulatory minimum, to grow.
Another lender Unity Bank has been seeking to raise fresh funds to recapitalise. ($1 = 305.5500 naira).
The identity of the three distressed banks who did not pass liquidity test ratio of 30 percent have not been released by the Central Bank of Nigeria. This has come at a time that Foreign Direct Investment, FDI into the Nigerian economy has dropped by 29 percent.
Additional reporting by Chijioke Ohuocha