The Nation Newspaper

Tag: lenders

  • Etisalat, lenders disagree over $1.2b loan settlement terms

    Etisalat, lenders disagree over $1.2b loan settlement terms

    Local lenders have opposed a proposal by Etisalat Nigeria to convert part of the $1.2 billion loan into naira. Rather, the lenders want its parent, Abu Dhabi telecoms group Etisalat, and its shareholders to recapitalise the telco, it was gathered yesterday.

    A source privy to the negotiations said the seven-year syndicated loan, on which the telco defaulted in payment schedule, has a dollar portion of $235 million which the carrier wants to convert into naira to overcome chronic foreign exchange (forex) crunch at the interbank market.

    “Etisalat is asking for us to convert the dollar component to naira but banks don’t want that option and have told them to talk to their parent to settle the loan,” Reuters quoted a banking source as saying. The source said the regulators, the Nigerian Communications Commission (NCC) and the Central Bank of Nigeria (CBN) which had waded into theimpasse and prevented a possible takeover of Etisalat Nigeria are favourably disposed to the  naira conversion idea.

    Vice President, Regulatory and Corporate Affairs at Etisalat, Ibrahim Dikko, said he would not be able to give update about the outcome of discuissions with the lenders. He promised to do that today.

    The UAE’s Etisalat own 45 per cent of Etisalat Nigeria, while Abu Dhabi’s Mubadala owns 40 per cent of the company.

    This meeting came about after the CBN and NCC agreed with local banks to prevent Etisalat Nigeria from going into receivership.

    Global crash in oil prices has seen the country grappling with forex shortage since oil is the country’s major forex earner. The economy slipped into a recession last year for the first time in 25-years.

    Most of the 13 lenders involved in the loan syndication had raised dollars abroad to participate, meaning that further naira weakness would see them receive fewer dollars.

    The currency had lost half of its value since the loan, which matures in 2020, was made. Interest is due monthly and the next principal payment is due in May, the source said.

    Etisalat, which generates 3.7 per cent of its revenues from the Nigerian business, has questioned the rationale of investing more in it and may sell its stake, sources say.

    Etisalat had written down the value of Etisalat Nigeria last year to $50 million due to naira weakness, Moody’s said in a note, adding that the default at the affiliate company did not affect the parent’s credit profile.

    Etisalat owes GT Bank N42 billion, and Access Bank N40 billion. It also owed Fidelity Bank N17.5 billion, the bank’s investor relations team told Reuters.

    Etisalat  has 20 million subscribers, according to NCC;s figures, making it the country’s number four mobile operator with a 14 per cent market share. South Africa’s MTN has 47 per cent, Globacom 20 percent and Airtel – a subsidiary of India’s Bharti Airtel – 19 per cent.

  • Skye Bank CEO urges lenders to deepen financial literacy

    Skye Bank CEO urges lenders to deepen financial literacy

    The Group Managing Director/CEO, Skye Bank Plc, Tokunbo Abiru, yesterday urged banks to deepen their support for financial literacy among youths and and promote the operations of Small and Medium Enterprises (SMEs).

    Speaking at the end of 329th meeting of the Bankers’ Committee in Lagos, Abiru disclosed the Committee’s commitment and plans to continuously improve the level of financial literacy among the youths as well as create more awareness to support the operations of microfinance banks.

    The bank chief said the committee unanimously agreed that the banking industry should unite to ensure that financial education is promoted in schools across the six geo-political zones.

    He said the committee agreed that each of the commercial banks take at least, two schools in each of the six geo-political zones.

    “Part of what we discussed was the need to continuously improve on financial literacy. And one of the resolutions is for the entire industry to act as one to play an active role in the forthcoming World Savings Day Celebration on October 30,” Abiru said.

    He explained that part of the role of the banks was to ensure that each of the banks take on at least, two public schools in each of the six geopolitical zones of the country. “We suggested that at least 12 public schools will be taken up by each bank for this years’ event,” he said.

    Abiru also disclosed the Committee’s commitment and plans to promote Small and Medium Enterprises (SMEs). “We also talked about Small and Medium Enterprises (SMEs), general commerce, general commerce, manufacturing, micro-finance bank and other banking-related products so as to create awareness as our nation gets older and stronger in banking services,” he said.

    Skye Bank Plc has been at the forefront of mentoring of students in financial literacy as endorsed by the Bankers’ Committee. The lender has taken the financial inclusion message to various states within the federation to underscore the imperatives of the savings culture among students.

    The bank’s officials were recently at Biedomo Premier School, Yenagoa, Bayelsa State to teach the students the fundamentals of financial planning, investment instruments and the need to imbibe the saving culture at an early stage.

  • Foreign banks mull credit cut to local lenders

    Foreign banks mull credit cut to local lenders

    Foreign banks are contemplating reducing the volume of credit extended to local lenders in the midst of declining oil prices, The Nation has learnt.

    The move has prompted the Central Bank of Nigeria (CBN) to advise lenders against such decision, which it sees as inimical to the economy.

    The slide in the cost of crude to around $57.8 per barrel from $110 six months ago, is no doubt straining Nigeria’s earnings and indirectly affecting cash flow of oil firms that borrowed from banks.

    So far, foreign investors are rethinking their investment plans in the country and the equities market, seen as the barometer for the economy has received serious beating in recent months.

    CBN Governor, Godwin Emefiele, who reiterated the call for continued extension of credit to the banks during the last stakeholders’ meeting held in Lagos, assured the global lenders that all is well with Nigerian banks.

    Meanwhile, while the foreign banks are exercising more due diligence in giving out fresh credits, Nigerian banks are pulling back from internationally syndicated dollar loans as falling oil prices and new regulation introduced by the CBN late last year has pushed up borrowing costs.

    In December, the CBN imposed new regulations on Nigerian banks, requiring banks with exposure to the oil and gas sector in excess of 20 per cent of their total credit facilities to hold provisions of 125 per cent against these assets.

    “The CBN is clearly trying to stop the occurrence of non-performing oil and gas loans (in Nigeria) by imposing these hefty provisioning rules. It is not clear how long these rules will be in place, but they will deter Nigerian banks from borrowing at the moment,” analysts at Reuters said.

    Beside the higher cost of provisioning, Nigerian bank borrowers also face the prospect of higher pricing for dollar loans from international lenders, which have become more cautious about lending into Nigeria. “We did see some last minute flexing on the price of one deal at the end of last year after the liquidity for the deal changed,” they said.

    A combination of these issues, including the devaluation of the naira, which has also made the cost of local borrowing more expensive, means Nigerian banks are likely to steer clear of international dollar lending where possible — at least in the short term.

    Bankers had hoped that Nigeria would become the new African sweet spot, perhaps even taking over from South Africa as the centre of African syndicated loan activity, reported Reuters.

    The Chief Executive Officer, Sterling Bank Plc, Yemi Adeola has described the continuous fall in prices of crude oil as purely political.

    The bank chief said the fundamentals of the oil industry, do not justify the fall in prices. “What has happened is purely political. The fundamentals in the oil industry does not justify the sharp fall in prices. It will get to a point, after all the political issues are resolved, the price will bottom-out, and will start bouncing back. This is not the first time that oil prices will go down. In 2008/2009, it tested $47 per barrel not for too long, and it bounced back. This one will drag for a while, maybe six months or so, but it will bounce back,” he predicted.

    Adeola said he does not want to discuss the politics of the US and the Gulf countries, but the truth is that in advanced countries, banks do not panic when crude oil prices go down, because asset is there and it is permanent.

    “For as long as you have proven reserves, what you need to do is restructure the tenor of your loans.  So, if I lend for five years and oil price goes down, I will not get my money in five years, but I will get it in 10 years by simply restructuring the loans. At Sterling in particular, we looked at oil accounts in our books and there is nothing to worry about. We stress-tested them, and we found that our customers can still do well even if oil price drops to $50 per barrel,” he said.

    Nigeria expects economic growth this year to be 5.54 per cent, down from an estimated 6.23 per cent for 2014, after the government trimmed its expenditure following a slump in the price of oil.

    Inflation is expected to rise this year to 8.78 per cent, up from an estimated 8.0 per cent last year, driven by the CBN’s devaluation of the naira, which has been hit by the drop in the price of oil, Nigeria’s main export.

  • 13 Nigerian banks among top 1000 world lenders

    13 Nigerian banks among top 1000 world lenders

    Thirteen Nigerian banks have been lifted among the world’s 1,000 lenders.

    Influential magazine  The Bankers  stated this in its 2014 edition on the review of banks and their performance.

    According to the report, the banks are in attaining the feat in their second year.

    The Country Representative of the magazine, Kunle Ogedengbe, listed the 13 banks that made the ranking, which he said is based on Tier-1 capital, as Zenith Bank, Guaranty Trust Bank, First Bank, Access Bank, United Bank for Africa, Fidelity Bank and Ecobank Nigeria.

    The others are: Skye Bank, First City Monument Bank, Diamond Bank, Stanbic IBTC Holdings, Standard Chartered Bank and Union Bank.

    Zenith Bank is ranked top in Nigeria at 293. GTB is next on number 415.  First Bank  and Access Bank stand at  number 424 and  532.  United Bank for Africa is ranked 539. Fidelity occupies the 622 spot.

    The Banker said profit on capital of three Nigerian banks that are not foreign-owned subsidiaries increased. These are First Bank that has its profit on capital increased to 25.32 per cent from 25.13 per cent, Access Bank, from 21.19 per cent to 21.24 per cent  and First City Monument Bank, 15.77 per cent from 15.07 per cent.

    The magazine said the share number of local banks that made the ranking, “underlines Nigeria’s number one position in Africa, as no other African country has up to 13 in the Top 1000 World Banks.”

    It said the 13 Nigerian banks along with their global counterparts, “for the first time since the global financial crisis, returned profit of $920 billion which is 23 per cent  more than their previous peak of $786 billion achieved in 2007 before the financial crisis,” that reverberated across the financial centres of the world, that crippled the economies of many European countries and was a major campaign issue in the US Presidential election that saw Barack Obama elected as the first Black US President.

    The Editor of the magazine, Brain Caplen, explained that the 23 per cent increase in profit of global banks from 2007, “is good news,”  but pointed out that “the better news is that capital has also increased at a reasonable pace, whereas assets have stayed flat. This means that returns on capital are only slightly improved but the hope is that this upturn is more sustainable than the last one,” he added.

    Mr. Caplen disclosed that a large proportion of the profit is from China – about 32 per cent of the total which is more than the next three highest profit countries of USA, Japan and Canada combined.

    Of the 25 top banks in Africa from the ranking, the highest of eight is from Nigeria, the largest economy in the continent while the United Bank for Africa is the only Nigerian bank in the top 10 highest movers in Africa.

    In all, Africa has 31 banks in the Top 1000 World Banks 2014 with Nigeria having 13 representing 41.94 per cent. The 31 African banks in the ranking are from nine countries: Nigeria, South Africa, Egypt, Angola, Gabon, Kenya, Mauritius, Morocco and Togo.

    Globally, Senior Editor of the magazine, Philip Alexander stressed that banks in this 2014 ranking “are stronger than ever” as “the level of capital held by banks in this ranking continues to accelerate, with the minimum Tier 1 capital required to enter the Top 1000 World Banks now fast approaching $400m. This has almost doubled since the 2005 ranking”, he added.

    The Banker, a publication of Financial Times Newspaper which is regarded as the most influential newspaper in the world, is a global financial intelligence magazine published since 1926. It is the definitive publication that provides guide to bank ratings and analysis globally and the definitive reference on international banking for finance experts, governments, chief finance officers, CEOs, Central Bank Governors, Finance Ministers, and other decision makers globally.

    According to The Global Capital Markets Surveys (GCMS), the only independent media benchmarking study available in the capital markets industry and provides insight into who reads what at the world’s financial institutions, amongst monthly finance titles globally The Banker is number one monthly finance title read globally, in capital markets; Europe, Middle East and Africa (EMEA) region; emerging markets and bank as well as financial institutions in the world.