For many a Nigerian bank MD, insomnia is the companion that won’t quit. These days, time has taken on a different form; it is now more plentiful than it ever was. The days are long and the nights are even longer. If sleep were a commodity off the shelf, these bank honchos would conveniently buy them at any price because even the pills some of them pop to induce sleep no longer work. Sleep is now a luxury that all the billions in their vaults cannot afford. And it is not hard to fathom why. Many Nigerian banks are barely surviving in the face of bad loans running into billions of dollars.
According to figures from the Central Bank of Nigeria (CBN), banks’ non-performing loans (NPLs) stood at N1.2trillion as at the end of June 2020, representing about 6.4 per cent of the gross credit of the banks in the economy which stood at N18.9trillion for the period under review. This continued increase in non-performing loan ratio has affected the banks’ capital base with the consequent loss of depositors’ money.
Sources within the banking industry say some of the bank MDs have gone for broke and are deploying legal and all sorts of means to reduce their bad loan portfolios. For instance, about two years ago, First Bank of Nigeria Plc was at the top of the ladder of Nigerian banks with bad debts profile in absolute terms estimated at billions of naira. With shareholders and customers’ confidence fast eroding, the bank had to drag Lister Flour Mills Nigeria Limited, owned by deceased Ibadan-based businessman, Alhaji Arisekola Alao, to court for defaulting on its N8.85billion loan.
Before his death in 2014, Arisekola was one of the biggest customers of the bank. Upon his demise, however, it emerged that his companies were indebted to the bank. The refusal of Lister Flour Mills Nigeria Limited to service the debt made the bank go to court, stating that the funds packaged as facilities to the company were third party depositors/stakeholders funds, and failure to liquidate the indebtedness was adversely affecting the bank’s business operation with a potentially more devastating multiplier effect on the Nigerian economy.
Other First and New Generation banks are not faring any better. Loans, running into billions, which are in the hands of otherwise well-heeled, long-standing customers that cannot be stampeded into repaying or threatened with a lawsuit have sunk a huge hole beneath their feet.
The new generation bank MDs are even worse off because of their exposure to the high yielding but volatile oil and gas sector. Many of the banks that gave out huge loans to top players in the industry are running from pillar to post as the global oil price continues to crash. Attempts to sustain the present decline in bad and toxic debts with the diversification of loan portfolios into other viable sectors such as manufacturing and export has not yielded better gains in view of the corona virus pandemic ravaging the whole world.
Bank directors silenced by luxury gifts and threats
Oftentimes, a billionaire debtor would give a bank director the gift of a new car, apartment in a highbrow area or return vacation tickets to exotic spots anywhere in the world, to induce the bank director to provide illicit cover for them – consequently, rather than ensure that their billionaire friends refund loans taken, senior bank staff actually teach them to avoid repayment even as they provide the culprits protection from any sort of backlash from within the bank.
In more desperate cases, chronic billionaire debtors urged their friends in government to harass and force bank directors to grant them multi-billion naira non-performing loans. This was always the last recourse for prominent billionaires whose efforts to access outrageous loans from banks are rebuffed by a seemingly conscientious director or bank manager. The latter eventually cows to the harassment or bullying tactics of the billionaire’s friends in government, the presidency for example, or he gets fired or forced to make an unceremonious exit.
The Capital investigations however, revealed that more often than not, senior bank directors are always willing to play ball and thus do the bidding of their billionaire friends cum chronic debtors, for a fee. This was the situation until very recently when the CBN set this year as deadline for chronic bank debtors to start meeting their loan repayment obligations or be disgraced by media advertorials exposing their financial debts to the public.
No rest for the guilty
More worrisome is the fact that, no bank director or manager has been able to call the bluff of the billionaire debtors because they are scared that the culprits might make good their threats and reveal details of questionable loans among other shady deals they had jointly perpetrated in the past. Sources in four very popular new generation banks revealed that, at the moment, senior executives in their banks are engaging in random meetings within and outside the boardroom to decide on how to dodge the ricocheting bullets of financial crisis and legal prosecution if found guilty of any wrongdoing.
Besides meeting with colleagues in the same establishment, many of the banks’ executives are also meeting with colleagues in rival banks who are in similar predicament. Given that some of the billionaire debtors owe more than one bank non-performing loans (NPLs), there is need for directors of affected banks to agree on the best explanation to give in order to save their hides if the situation ever gets out of control.
Who Is A Real Billionaire?
Truth to the Nigerian deep-pocket is relative; it is malleable into several shades and flexible forms; that is why characters as fragile as clay toys parade themselves as billionaires.
As you read, more people are parading themselves as billionaires. And how do they qualify as billionaires? Their claims to the esteemed status are wholly predicated on their acquisition of expensive homes, private jets and luxury cars. Flying chartered jets. The media celebrates them and extravagantly attach to them, the hackneyed appellations: “filthy rich,” “nouveau riche,” “Nigeria’s superrich and famous,” among others. But pray, these people are not real billionaires in the real sense of it.
They owe banks billions of naira often acquired in illicit deals and circumstances, and this is responsible for the high debt portfolio and financial crisis currently being experienced by First bank, Zenith bank, Polaris bank, FCMB, UBA, Access bank, Guaranty Trust bank to mention a few.
These self-acclaimed billionaires are actually nothing without bank loans. “Their day to day business activities depend on bank money. They are responsible for our banks’ severe financial crises yet they continue to enjoy access to outrageous loans because they are friends to major bank MDs,” disclosed a highly placed source in a first generation bank. The latter’s bank currently grapples with severe financial crisis and high debt portfolio that has been written off as bad debt as a result of the so-called billionaires’ inability to repay loans acquired through senior management executives of her bank.
Today the banking sector groaning under heavy debt portfolio of these fat cats and self-styled billionaires. While the middle class and real businessmen entrepreneurs suffer neglect from the banks and paucity of funds to finance their ailing enterprises, the contemporary billionaire enjoys interest-free loans acquired illegitimately. More often than not, these so-called billionaires lose their prestige and freedom while they get prosecuted for financial crimes.
More importantly, when any of these so-called billionaires die, four or five banks swing to action and engage in feverish hustle to take over the ill-gotten properties of the deceased in desperate bid to recoup non-performing loans given to the deceased in his or her lifetime.
Some they recover, some they simply write off a ‘bad debt’ – which raises the bothersome rhetoric about who actually is a billionaire. What makes a real billionaire?
Breaking: Fear of Losing Depositors’ Money …Who Will Help Nigerian Bank MDs?
