Comments on: 11 banks groan under N422bn share loans

By: Rele Adesina

Rele Adesina — Fri, 19 Jun 2009 12:09:28 +0000

This data comes from the FITCH ratings annual update on the banking sector thus has not been ‘uncovered’ and is not new. The information is based on currently available financial information and is therefore not likely to represent a full picture as all banks do not disclose data in the same way nor at the same time. Many banks are stated as having zero loans to corporates collateralised with shares – I believe this is simply on account of limited information at time of writing. The report also states that loans to corporates with shares as collateral are viewed as less risky as they have been based on corporate cashflows rather than on a rising stock market. The position of these banks is better than it was six months ago in any case. There is now at least a sense that the market has bottomed out and the market has risen 50% since the end of March so to be alarmist at this stage is rather late I think.

By: Rele Adesina

Rele Adesina — Fri, 19 Jun 2009 11:58:26 +0000

These figures are taken from the Fitch Rating agency annual update on the Nigerian banking sector and is not new information. Industry analysts have been discussing this for several months. The more important question therefore is whether the corporates to whom the money has been lent with shares as security is able to repay the loans. As for the margin loans – how robust is the capital base of the lending? In any case, these banks are somewhat better off vs. where they were during the first quarter thanks to some market recovery so now is not the moment for alarm. Anyone with a subscription to Fitch can go and see the names of the banks.

By: Sullivan Arinze .Chinwuko

Sullivan Arinze .Chinwuko — Tue, 16 Jun 2009 06:43:59 +0000

What is going to happen in Anambra state governorship election 2010 ? There are cases of kidnapping in the state.i thing this is a strategies by the politian to extort money from there opponent for campaign. the culprits are nowhere to be found showing that they has backings.

By: Sullivan Arinze .Chinwuko

Sullivan Arinze .Chinwuko — Tue, 16 Jun 2009 06:28:29 +0000

Other countries of the world is experiencing economic meltdown but here it is a different thing what we are experiencing is a General crisis. Sullivan Arinze Chinwuko from Awka

By: Emeka

Emeka — Tue, 16 Jun 2009 05:14:17 +0000

GREED@NIGERIABANKS.COM

By: FASH:

FASH: — Tue, 16 Jun 2009 00:11:21 +0000

pls name d banks in question and let the public know how secured the banks are in terms of their continue operation. Dont leave it too late like Royal Bank of Scotland in UK

By: Newdawn

Newdawn — Mon, 15 Jun 2009 22:46:36 +0000

With the bulls staging a comeback in the market, it may not be a total loss to the banks after all. I hope the banks have learned their lessons. You do not lend money to every Tom, Dick and Harry to play the market. It must be investors that have solid collateral to back the loans, not just the shares themselves, as they can become worthless in a market meltdown as recent events have shown.

The banking sector cannot boom while the real sector is comatose. The banks have to return to the drawing board. I doubt if this will happen under the watch of Sanusi, as he is one of their own

By: luca

luca — Mon, 15 Jun 2009 18:58:30 +0000

the banks in nigeria are just trying to see if they can get a bailout money from the federal govt. were they not the ones that caused the stock market problems in the first place today? they should better wait for the share prices to rise so that they can as well get back their loans and other instruments issued.

By: Dennis Don

Dennis Don — Mon, 15 Jun 2009 16:56:03 +0000

Quick profit base on speculations,why is our banks not lending to the productive sector of the economy

By: omolola

omolola — Mon, 15 Jun 2009 14:30:58 +0000

Sanusi should make sure banks write down their loans form now on. They should make sure they report using their international standards by December. Any bank that refuses to that, the CBN should the removal of the CEO and Chairman form the board.

By: Patrick Agbobu

Patrick Agbobu — Mon, 15 Jun 2009 10:35:06 +0000

Most of Nigerian banks are just senseless money lenders. They ask and encourage you to over value your asset or security and Nigeria being what it is, you can get this done at a cost. Some banks even recommend you or send you to their agents. The banks demand a lot of kick back from you and as a matter of fact, the banks give you the loan less the kick back and make you sign for the whole amount of the loan. As a result people hardly pay back the loan and the bank is lumbered with over valued asset or security. At the end of the day the banks are the losers and the dubious managers laugh all the way to the banks. With avaliable statistics, most banks in Nigeria will soon be going under and this will be up to 75% of the banks. The Central Bank has a responsibility to tell the public the truth and name such banks.

By: Sullivan Arinze .C.

Sullivan Arinze .C. — Mon, 15 Jun 2009 09:44:23 +0000

Our problem today is lack of accountability and transparency for this eco. Problem tell them. By sullivan arinze

By: Onwa 1 of Australia

Onwa 1 of Australia — Mon, 15 Jun 2009 09:09:01 +0000

umya economic legacy

By: Jimmy

Jimmy — Mon, 15 Jun 2009 09:02:44 +0000

The Banks To Hands Up For Takeover

The value of a loan is the lesser of the balance of the loan and the actual value of the security on it at the crystallisation of the loan. For example, if you accept a stock of shares as the security for the loan you give, on crystallisation of the loan, you can only get the lesser of the balance of the loan and the value of the shares. That is you either get the balance of your loan or get the lesser amount of the value of the security if the value of the security had decreased.

The banks are responsible for their loan transactions and the security they accept for the loans. Therefore, in the enforcement or maturity of loans that are secured on speculative instruments such as shares need only to be realised when the value of the shares is higher or equal to the balance of the loan. If the realisation is critical to your cash flow and the value of the shares is at your loss, you either wait for the value to go up, make alternative arrangement for your cash flow problem or realise your security at a loss.

Our banks who are today in precarious situations in their self-lending on risky and speculative instruments should not expect any handout from what is left on the PDP Government looted public fund. Moreover, the banks could not invariably lent to themselves and now expect the public to bear the burden, when they never lent to the real sector of the economy in the first place. Those banks that can no longer trade, are limping on as a result of their losses from trading and lending on speculative instruments should hands up now for either takeover or outright liquidation. There is no bailout available from public fund. Twenty commercial banks that do not serve the economy of the country are even too many.