Economy
Banks Erase $1.2b 9Mobile Debt From Books
By The Nation
The 12 banks involved in the $1.2 billion 9Mobile loan are setting aside a large part of the debt from their books ahead of the December 31 end-date for the fiscal year.
The mobile company took the loan four years ago from a consortium of banks. It failed to repay the loan due to a currency crisis and the economic recession.
In the deal are: Zenith Bank, GTBank, First Bank, United Bank for Africa, Fidelity Bank, Access Bank, Ecobank, First City Monument Bank, Stanbic IBTC and Union Bank.
Zenith Bank yesterday announced that it had made a provision on 30 per cent of its loan to 9Mobile, the country’s fourth largest telecoms group formerly known as Etisalat Nigeria.
The bank’s Chief Executive Officer, Peter Amangbo, said: “We have taken about 30 per cent … as a provision, which we believe is very prudent as the company is undergoing restructuring … to prepare for a new investor.”
Zenith Bank is the largest lender to 9Mobile, one source familiar with the matter disclosed. The bank has declined to disclose its exposure to the telecoms group. The Tier-1 lender had last week reported a pre-tax profit of N92.18 billion for its half year against N53.91 billion a year ago.
The Central Bank of Nigeria (CBN) and the Nigerian Communication Commission (NCC) in July saved Etisalat Nigeria from collapse, stopping the company from going into receivership. But the telecom giant witnessed a board, management and name change.
Former Keystone Bank Executive Director Richard Obire said many other banks were likely to provide for certain percentage of the loans, depending on their profitability positions.
He said Zenith Bank, being a highly profitable bank, was thinking that it might not be able to recover the full money. “Zenith may be considering that when it gets down to negotiation with 9Mobile, it may end up giving about 30 per cent of the debt. The debtor may ask for more restructuring and loan forgiveness,” Obire said.
According to him, some banks are conservative and may want to stay within the five per cent regulatory non-performing loan threshold while some may want to exceed the limit. “Banks that are making more money are more likely to provide for their loans than those with less profitability,” he said.
Obire said by exceeding the 10 per cent peg for sub-standard loans to go for 30 per cent provision, Zenith Bank was indirectly saying that although the loan was not doubtful, but it was more than sub-standard. “If the bank does 30 per cent provision on the loan in 2017, it may do 50 per cent in 2018 while considering the variables surrounding the loans,” he said.
Head Treasuries at Ecobank Nigeria Olakunle Ezun said it is expected that the banks will provide for the loan, which he described as a bad debt. “For now, 9Mobile loan is like a non-performing loan for the banks. I understand that the banks are trying to restructure the loan. If they succeed, it will become a performing loan; otherwise it will have to be provided for in their books,” he said.
He said more banks may provide for the loan by year-end, but such a decision will be determined by the boards and their interpretation of the future of 9Mobile.
According to CBN Prudential Guidelines, banks are expected to review their credit portfolio continuously (at least once in a quarter) with a view to recognising any deterioration in credit quality. Such reviews should systematically and realistically classify banks’ credit exposures based on the perceived risks of default.
To facilitate comparability of banks’ classification of their credit portfolios, the guidelines said assessment of risk of default should be based on criteria, which should include, but are not limited to, repayment performance, borrower’s repayment capacity on the basis of current financial condition and net realisable value of collateral.
The CBN prudential guidelines stipulate that a credit facility should be deemed as non-performing when interest or principal is due and unpaid for 90 days or more; interest payments equal to 90 days interest or more have been capitalized, rescheduled or rolled over into a new loan.
The guideline said a loan can be substandard, doubtful or lost. A loan is subs-standard when unpaid principal and/or interest remain outstanding for more than 90 days but less than 180 days. Credit facilities which display well defined weaknesses which could affect the ability of borrowers to repay, such as inadequate cash flow to service debt, undercapitalisation or insufficient working capital, absence of adequate financial information or collateral documentation, among others, are said to be sub-standard.
According to the CBN guidelines, a loan is classified as doubtful when unpaid principal and/or interest remain outstanding for at least 180 days but less than 360 days and in addition to the weaknesses associated with sub-standard credit facilities reflect that full repayment of the debt is not certain or that realisable collateral values will be insufficient to cover bank’s exposure.
A loan is classified as lost when unpaid principal and/or interest remain outstanding for 360 days or more and in addition to the weaknesses associated with doubtful credit facilities, are considered uncollectible and are of such little value that continuation as a bankable asset is unrealistic.
By Adedapo Adesanya
The duo of Afriland Properties Plc and Geo-Fluids Plc crashed the NASD Over-the-Counter (OTC) Securities Exchange by a marginal 0.06 per cent on Wednesday, December 11 due to profit-taking activities.
The OTC securities exchange experienced a downfall at midweek despite UBN Property Plc posting a price appreciation of 17 Kobo to close at N1.96 per share, in contrast to Tuesday’s closing price of N1.79.
Business Post reports that Afriland Properties Plc slid by N1.14 to finish at N15.80 per unit versus the preceding day’s N16.94 per unit, and Geo-Fluids Plc declined by 1 Kobo to trade at N3.92 per share compared with the N3.93 it ended a day earlier.
At the close of transactions, the market capitalisation of the bourse, which measures the total value of securities on the platform, shrank by N650 million to finish at N1.055 trillion compared with the previous day’s N1.056 trillion and the NASD Unlisted Security Index (NSI) went down by 1.86 points to wrap the session at 3,012.50 points compared with 3,014.36 points recorded in the previous session.
The alternative stock market was busy yesterday as the volume of securities traded by investors soared by 146.9 per cent to 5.9 million units from 2.4 million units, as the value of shares transacted by the market participants jumped by 360.9 per cent to N22.5 million from N4.9 million, and the number of deals increased by 50 per cent to 21 deals from 14 deals.
When the bourse closed for the day, Geo-Fluids Plc remained the most active stock by volume (year-to-date) with 1.7 billion units valued at N3.9 billion, followed by Okitipupa Plc with 752.2 million units worth N7.8 billion, and Afriland Properties Plc 297.5 million units sold for N5.3 million.
Also, Aradel Holdings Plc, which is now listed on the Nigerian Exchange (NGX) Limited after its exit from NASD, remained the most active stock by value (year-to-date) with 108.7 million units sold for N89.2 billion, trailed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.5 million units worth N5.3 billion.
By Adedapo Adesanya
The euphoria around the recent appreciation of the Naira eased on Wednesday, December 11 after its value shrank against the US Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) by N5.23 or 0.3 per cent to N1,547.50/$1 from the N1,542.27/$1 it was valued on Tuesday.
It was observed that spectators’ activities may have triggered the weakening of the local currency in the official market at midweek as they tried to fight back and ensure the value of funds in foreign currencies strengthened.
The domestic currency was regaining its footing after the Central Bank of Nigeria (CBN) launched an Electronic Foreign Exchange Matching System (EFEMS) platform to tackle speculation and improve transparency in Nigeria’s FX market.
At midweek, the Nigerian currency depreciated against the Pound Sterling by N3.56 to close at N1,958.68/£1 compared with the preceding day’s N1,955.12/£1 and against the Euro, it slumped by 34 Kobo to trade at N1,612.66/€1, in contrast to the previous session’s N1,613.00/€1.
As for the black market segment, the Naira lost N45 against the American currency during the session to quote at N1,670/$1 compared with the N1,625/$1 it was traded a day earlier.
A look at the cryptocurrency market showed a recovery following profit-taking as the US Consumer Price Index report matched economist forecasts.
The news was enough to convince traders that the Federal Reserve is certain to trim its benchmark fed funds rate another 25 basis points at its meeting next week.
The move also saw Bitcoin (BTC), the most valued coin, return to the $100,000 mark as it added a 2.9 per cent gain and sold for $100,566.12.
The biggest gainer was Cardano (ADA), which jumped by 15.00 per cent to trade at $1.16, as Litecoin (LTC) appreciated by 10.4 per cent to sell for $121.76, and Ethereum (ETH) surged by 7.0 per cent to $3,929.30, while Dogecoin (DOGE) recorded a 6.7 per cent growth to finish at $0.4181.
Further, Binance Coin (BNB) went up by 5.2 per cent to $716.72, Solana (SOL) expanded by 4.6 per cent to $229.77, and Ripple (XRP) increased by 4.2 per cent to $2.43, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) closed flat at $1.00 apiece.
By Aduragbemi Omiyale
The Dangote Refinery located in the Lekki area of Lagos State has made its first export of premium motor spirit (PMS) just three months after it commenced the production of petrol.
In September 2024, the refinery produced its first petrol and began loading to the Nigerian National Petroleum Company (NNPC) on September 15.
However, due to some issues, the facility has not been able to flood the local market with its product, forcing it to look elsewhere.
In a landmark move for regional energy integration, Dangote Refinery has partnered with Neptune Oil to take its petrol to neighbouring Cameroon.
Neptune Oil is a leading energy company in Cameroon which provides reliable and sustainable energy solutions.
Dangote Refinery said this development showcases its ability to meet domestic needs and position itself as a key player in the regional energy market, adding that it represents a significant step forward in accessing high-quality and locally sourced petroleum products for Cameroon.
“This first export of PMS to Cameroon is a tangible demonstration of our vision for a united and energy-independent Africa.
“With this development, we are laying the foundation for a future where African resources are refined and exchanged within the continent for the benefit of our people,” the owner of Dangote Refinery, Mr Aliko Dangote, said.
His counterpart at Neptune Oil, Mr Antoine Ndzengue, said, “This partnership with Dangote Refinery marks a turning point for Cameroon.
“By becoming the first importer of petroleum products from this world-class refinery, we are bolstering our country’s energy security and supporting local economic development.
“This initial supply, executed without international intermediaries, reflects our commitment to serving our markets independently and efficiently.”
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