Banking
Fitch Downgrades Diamond Bank over Solvency, Liquidity Risks
By Dipo Olowookere
Fitch Ratings has announced downgrading the Long-Term Issuer Default Rating (IDR) of Nigeria’s Diamond Bank Plc to ‘CCC’ from ‘B-‘.
In a statement on Friday, Fitch said it has also lowered the bank’s Short-Term IDR to ‘C’ from ‘B’ as well as the National Long-Term Rating, which was dropped to ‘B(nga)’ from ‘BB+(nga)’.
The rating agency said the two-notch downgrade of Diamond Bank’s Long-Term IDR reflects uncertainty over its solvency and liquidity in view of very weak asset quality, highly vulnerable capital position as well as tight foreign currency (FC) liquidity ahead of an upcoming maturing $200 million Eurobond in May 2019.
The bank has some contingency plans, such as the sale of its UK subsidiary, but execution may be challenging, especially considering the recent resignation of four board members, it said.
In a statement, Fitch said Diamond Bank’s IDRs are driven by its standalone credit profile, as defined by its Viability Rating (VR).
It noted that the lender’s VR is highly influenced by very weak asset quality, which renders its capital position highly vulnerable to any further deterioration, with the VR also reflecting limited FC liquidity.
In the statement, Fitch said Stage 3 loans under IFRS 9, including past due not impaired, which better captures asset quality in our view, accounted for a very large of 37 percent of gross loans at end-1H18, compared with a reported impaired loans ratio (under IAS39) of 13 percent for the same period.
Diamond Bank’s stage 2 loans were a further 23 percent of gross loans, mostly comprising restructured loans. Diamond Bank has the highest share of problem loans (total stage 2 and stage 3 loans as a proportion of gross loans) among Nigerian rated banks, it said, adding that loan loss allowance cover is very low at 19 percent of stage 3 loans.
“We view Diamond Bank’s capital buffers as limited, given very weak asset quality, despite a relatively high Fitch Core Capital (FCC) ratio of 17.5 percent at end-1H18.
“In our view capital remains highly vulnerable given the bank’s low loan loss allowances. Higher reserve coverage would erode considerably the bank’s capital base. Unreserved stage 3 loans were 110 percent of FCC at end-1H18,” the statement said.
Diamond Bank has a small buffer over its 15 percent regulatory total capital adequacy ratio requirement (Total CAR at 16.3 percent at end-9M18).
Fitch said it understands that Diamond Bank has received the approval from the Central Bank of Nigeria (CBN) to obtain a national banking licence, and therefore lower its minimum total capital requirements to 10 percent. However, it stressed that this is subject to the completion of the sale of the UK subsidiary.
Diamond Bank’s FC liquidity improved in 2017, in line with easing FC liquidity conditions in Nigeria. However, FC liquidity remains tight, as Diamond Bank’s FC loans/customer deposits ratio reached 180 percent at end-1H18.
The bank has a number of large bullet repayments due in the short term, including its $200 million Eurobond maturing in May 2019, $100 million from Afrexim due in March 2019, and $70 million from the International Finance Corporation due in July 2019. The bank had about $300 million of liquid assets held as unrestricted cash and cash equivalents and loans to foreign banks at end-1H18.
“We understand that the bank aims to negotiate the refinancing of international financial institution funding, while the improved cash flows from the oil loan book and the disposal of its subsidiary in the UK will be the main contributors to redeeming the Eurobond.
“However, the refinancing has not yet been agreed, while subsidiary disposal has yet to be approved by the Prudential Regulation Authority in the UK and cash flows from the troubled oil sector are uncertain.
“Therefore we see significant execution risk with this plan. Although FC supply has improved, we do not expect Diamond Bank to be able to swap significant volumes of local currency to repay foreign currency obligations,” Fitch said.
Fitch also noted that Diamond Bank’s Long-Term IDR also considers governance shortfalls following the resignation of four members of the board in October 2018, including the chairman (only appointed in 2018) and three non-executive directors, raising questions around effective oversight and ongoing operational capability of the bank. It may also create difficulties in refinancing its obligations with existing lenders.
It said Diamond Bank’s National Ratings reflect its creditworthiness relative to the country’s best credit and relative to peers operating in Nigeria. The Long-term National Rating has been downgraded by several notches due to its weaker credit profile.
“Diamond Bank’s senior unsecured debt has been downgraded to ‘CCC’/’RR4’, reflecting our assessment that average recoveries are a plausible outcome for senior bondholders in the event of a default, albeit this is sensitive to changes in assumptions,” the statement said.
Furthermore, it said Diamond Bank’s Support Rating (SR) and Support Rating Floor (SRF) reflect uncertainty over the ability of the authorities to support banks, particularly in FC.
In addition, there are no clear messages from the authorities regarding their willingness to support the banking system.
“Our view is that senior creditors cannot rely on receiving full and timely extraordinary support from the authorities should a bank become non-viable. Therefore, the SRF of all Nigerian banks is ‘No Floor’ and all Support Ratings are ‘5’,” the statement added.
Diamond Bank’s IDRs are sensitive to any change in its VR. The VR is sensitive to further weakening of precarious asset quality, including a migration of Stage 2 loans to Stage 3 and from further reserving shortfalls of Stage 3 loans, eroding capital.
The VR is also sensitive to any increase in the probability for being able to meet FC obligations. The VR is also sensitive to continuing governance weaknesses stemming from the resignation of four directors, it stated. Fitch said rating upside is unlikely in the short term given the bank’s very fragile financial position. An upgrade of the bank’s VR may result from reduced execution risk in meeting FC obligations or a structural shift in capitalisation, increasing Diamond’s ability to build loan loss allowances, adding that the bank’s National Ratings are sensitive to a change in its creditworthiness relative to other Nigerian issuers.
By Adedapo Adesanya
Nigerian tier-1 lender, First Bank, has announced the introduction of its Naira Visa Debit Card in partnership with the global payments giant to extend accessible, reliable electronic payment capabilities to a broader segment of the Nigerian population.
The card is targeted at everyday consumers who require a dependable payment instrument for routine domestic and international transactions. Accepted across POS terminals, ATMs, and online platforms through Visa’s payments network, the Naira Visa Debit Card is designed to reduce friction for customers transitioning from cash to electronic payments across retail, utilities, and digital commerce.
According to the bank, the partnership aligns with Nigeria’s ongoing drive toward a cashless economy, a policy direction that has gained significant momentum following successive Central Bank of Nigeria directives encouraging the adoption of electronic payment channels, adding that the card is intended to serve customers across the country’s diverse economic segments.
The Naira Visa Debit Card is available to all eligible FirstBank account holders through any of the bank’s branches nationwide.
Speaking on the launch, Mr Chuma Ezirim, Group Executive, eBusiness & Retail Products, FirstBank, said: “Everyday transactions should be simple, secure, and rewarding. The Naira Visa Debit Card is designed to make life easier for our customers, whether they are paying for groceries, settling utility bills, or shopping online.
“By extending reliable electronic payment access across Nigeria, we are helping more people transition confidently from cash to digital payments, supporting the nation’s cashless policy and empowering communities with greater financial inclusion.”
Commenting on the strategic importance of the partnership, Mr Andrew Uaboi, Vice President and Cluster Head, West Africa, Visa, noted: “A strong payments ecosystem works for everyone. The Naira Visa Debit Card extends reliable electronic payment access to everyday Nigerian consumers, and this in addition to the cards in our portfolio, continues to demonstrate what a truly comprehensive card portfolio looks like for the Nigerian market. Visa is proud to power this offering with FirstBank.”
The launch of the Naira Visa Debit Card broadens Visa’s card portfolio at FirstBank, which already includes products spanning credit cards and High-end premium lifestyle spending cards. The addition completes its offering across customer segments, ensuring that cardholders at every income level have access to a product suited to their needs.
By Adedapo Adesanya
The Central Bank of Nigeria (CBN) has unveiled the fourth edition of its Foreign Exchange Manual as part of efforts to deepen liquidity, improve transparency and strengthen confidence in the country’s foreign exchange market.
Speaking at the launch of the revised manual in Abuja on Friday, the Governor of the apex bank, Mr Yemi Cardoso, said the document will take effect from June 1, 2026.
He said it was developed after extensive consultations with banks, exporters, importers, corporates, regulators and development partners.
He said the new framework reflects the apex bank’s commitment to modernising the country’s foreign exchange administration in line with international best practices.
Mr Cardoso described the foreign exchange market as a critical pillar of any open economy, noting that effective governance of the sector is essential for sustaining macroeconomic stability and investor confidence.
“Foreign exchange is more than a financial instrument. It anchors price stability, facilitates the flow of goods and capital, and shapes investor sentiment,” he said.
The CBN governor stressed that the revised manual became necessary due to changing global economic realities, domestic reforms and the need for a more coherent and forward-looking regulatory framework.
According to him, the last edition of the FX manual was issued in 2018, making the latest review both timely and necessary.
Mr Cardoso disclosed that Nigeria’s foreign exchange market has witnessed significant improvement in liquidity since the current administration began reforms in the sector.
He added that daily turnover in the FX market increased from an average of about $100 million in the early days of the administration to between $400 million and $600 million daily.
The CBN Governor added that the market had also recorded transactions of up to $1 billion per day on several occasions in recent months.
“We have gone from a situation where it was more or less a one-way market, where the central bank came in, intervened and went away, to a much more dynamic market,” he stated.
The apex bank boss noted that the reforms were gradually restoring confidence among investors and market participants, encouraging freer entry and exit in the market without unnecessary restrictions.
He also maintained that the nation’s foreign reserves should not be used as the primary tool for funding the foreign exchange market.
“Reserves are reserves. They are not what you look to fund a market,” he said.
The CBN Governor assured stakeholders that the revised manual would be distributed free of charge to authorised dealers while the bank strengthens monitoring mechanisms to ensure compliance, fairness and accountability across the foreign exchange market.
On his part, the Deputy Governor for Economic Policy, Mr Muhammad Abdullahi, said the review formed part of broader reforms initiated by Mr Cardoso to restore confidence, improve transparency and deepen liquidity in the foreign exchange market.
Mr Abdullahi explained that the revised manual introduces several changes aimed at improving ease of doing business and reducing transaction bottlenecks.
Among the notable changes, he noted, are provisions allowing unfettered access to export proceeds, the introduction of non-resident investment accounts and operational guidelines for Pan-African Payment and Settlement System (PAPSS) transactions to support regional trade.
Mr Abdullahi added that the manual also contains new provisions on service exports, revised documentation requirements and updated operational procedures designed to align Nigeria’s FX market with global standards.
He said the apex bank deliberately adopted an ease of doing business approach during the review process to eliminate inefficiencies and ambiguities identified by stakeholders.
“The revised manual is not a stand-alone exercise but part of a broader institutional reform effort designed to strengthen the integrity, credibility and effectiveness of Nigeria’s foreign exchange system,” he said.
By Aduragbemi Omiyale
The Central Bank of Nigeria (CBN) has approved the appointment of Mr Julius Omodayo-Owotuga to the board of First Bank of Nigeria Limited as an executive director.
A statement from the company said the appointment of Mr Omodayo-Owotuga became effective on Wednesday, May 13, 2026.
He was appointed to the board of the subsidiary of First Holdco Plc to further strengthen its leadership capacity across strategic finance, governance, risk management, and institutional transformation.
Before now, he served on the board of First Holdco as a non-executive director between 2021 and 2026.
The appointee brings to the board 24 years of experience spanning banking and financial services, infrastructure finance, power, oil & gas, and audit and consulting.
His appointment, according to the notice to the Nigerian Exchange (NGX) Limited, reflects the Bank’s continued commitment to strong governance, disciplined execution, financial resilience, and sustainable long-term growth.
He most recently served as deputy chief executive of Geregu Power Plc, Nigeria’s first listed power generation company, where he played a pivotal role in institutional transformation, governance strengthening, capital market positioning, operational optimisation, and major financing initiatives, including the company’s landmark listing on NGX.
Mr Omodayo-Owotuga previously served as group executive director, Finance & Risk Management at Forte Oil Plc (now Ardova Plc), where he was instrumental in the company’s financial and operational transformation, leading strategic restructuring, capital raising, treasury optimisation, enterprise risk management, and governance improvement initiatives that strengthened long-term shareholder value.
His professional career also includes roles at Africa Finance Corporation, Standard Chartered Bank, KPMG Professional Services and MBC International Bank (Now First Bank Nigeria Limited), providing him with deep experience in institutional finance, treasury management, financial controls, regulatory engagement, and corporate advisory.
Mr Omodayo-Owotuga is a CFA Charter Holder, KPMG-trained Accountant, and a Fellow of the Institute of Chartered Accountants of Nigeria (ICAN), the Chartered Institute of Taxation of Nigeria (CITN), and the Institute of Credit Administration. He is also a member of the Institute of Directors (IoD) Nigeria and a Certified Management Accountant.
He holds a Doctorate in Business Administration, a Master’s in Business Administration and a Bachelor’s degree in Accounting. He is an alumnus of Saïd Business School, University of Oxford, IE Business School, Geneva Business School, and the University of Lagos.
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