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Banks face new credit squeeze

By Babajide Komolafe & Michael Eboh

LAGOS—BANKS in the country are beginning to experience difficulties in addressing the new and rising wave of non-performing loans in their operations, brought about by the current credit freeze and slowdown in economic activities.

According to a senior banker who spoke to Vanguard, last week, on the condition of anonymity, accounts that were performing before had become non-performing as a result of the problem in the industry.

Also speaking, a bank treasurer hinted of a possible increase in provisioning for bad debts and negative bottom lines by banks in the coming financial year.

He said: “The meaning is that we have to do more provisioning for non-performing loans, resulting to more losses than was declared last year.

“What we are seeing is the multiplier effect of the banking reforms. Now because the banks and bankers are not spending, other businesses are suffering lack of patronage and sacking staff. But it is also aggravating the problem in the industry as those of them that took bank loans can’t repay and thereby worsening the problem of banks.”


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