Economy
Nigerian Banks In Credit Crisis—Report
Says, Unity Bank, Skye Bank “Close to Being Insolvent”
By Modupe Gbadeyanka
A report by Bloomberg on Monday has raised an alarm that some Nigerian banks may be fighting undercapitalisation crisis at the moment. Seven banks were said to be in this mess.
Two of the banks, Skye Bank and Unity Bank, are close to being insolvent, Bloomberg quoted Arqaam Capital as saying in the report.
It was said that the credit crunch is being caused by failed fiscal and monetary policies.
FBN Holdings Plc and Sterling Bank Plc “will need a dilutive capital hike,” Jaap Meijer and Tarek Sleiman, analysts at the Dubai-based investment bank and brokerage, said in an e-mailed note on Monday.
“Our acid test reveals seven under-capitalized banks” with a deficit of as much as N1 trillion ($3.2 billion) in the financial system, Meijer and Sleiman said.
A stress test identified FBN as the most under-capitalized lender with Unity, Diamond Bank Plc, Skye, FCMB Group Plc, Sterling and Fidelity Bank Plc also showing deficits if they were to fully provide for non-performing loans, according to Arqaam.
But spokesman for Diamond Bank, Mr Ikechukwu Mike Omeife, told Bloomberg that, “Our bank is strong,” adding that “Our capital-adequacy ratio and non-performing loans are within the statutory requirements.”
In July 2016, the Central Bank of Nigeria (CBN) changed the management of Skye Bank after the lender breached liquidity thresholds, spurring concerns about the health of small- and medium-sized lenders, and reviving memories of bank rescues by the government after the financial crisis in 2009.
At the moment, banks in Nigeria are grappling with a devaluation of the Naira, rising bad loans and an oil-dependent economy that’s set to record its first annual contraction in more than two decades.
Moody’s Investors Service said on Monday that Nigeria’s five biggest banks share common credit challenges related to the economic slowdown. Moody’s expects non-performing loans to increase to about 12 percent over the next 12 months.
The ratio of non-performing loans to total credit rose to 11.7 percent at the end of June from 5.3 percent at the end of 2015, the Abuja-based Central Bank of Nigeria, which requires banks keep the measure below 5 percent, said in a report on its website.
The five largest lenders, which together hold 57 percent of the country’s banking assets, “are able to absorb all losses under our severe stress scenario,” Moody’s said.
Guaranty Trust Bank Plc showed “the greatest resilience” and the other four banks were Zenith Bank Plc, Access Bank Plc, United Bank for Africa Plc and First Bank of Nigeria Ltd., the ratings company said.
To create a capital buffer, Sterling Bank is planning to issue a 27 billion-naira bond and “if the interest rate looks better, we will do it this year,” Abubakar Suleiman, the lender’s chief financial officer, said by phone. “We will do it if the rate goes down to around 15 percent or 16 percent. We don’t want to raise it at a very high rate. If we do it, it will take our capital adequacy ratio to over 15 percent.”
Arqaam rates FBN, Skye, Sterling, Stanbic IBTC Holdings Plc, Unity and Ecobank Transnational Inc. as sell, according to the analysts’ report. Zenith, Access and United Bank are rated buy.
Central Bank of Nigeria’s spokesman Isaac Okorafor didn’t immediately answer his phone or respond to text messages. Diamond, Unity and Fidelity didn’t answer calls. Moses Obajemu, a Lagos-based spokesman for Skye, didn’t immediately reply to questions sent to him by text message, as per his request.
Diamond, Fidelity, Wema Bank Plc, FCMB Group Plc, United Bank and Skye recorded declines in Lagos, with Zenith ranking as the most traded stock among the 171 securities on the Nigerian Stock Exchange All Share Index. Diamond Bank fell 5.5 percent, Fidelity dropped 4.3 percent, Skye Bank slid 4.6 percent and Unity slipped 4.1 percent. Union Bank Nigeria Plc, which is part owned by London-based Atlas Mara Ltd., was the second-biggest gainer, rising 5 percent.
Additional information from http://www.bloomberg.com/news/articles/2016-10-10/nigerian-banking-industry-seen-in-full-blown-financial-crisis
By Dipo Olowookere
The bulls regained control of the Nigerian Exchange (NGX) Limited on Friday after surrendering power to the bears a day earlier as a result of mild selling pressure.
Yesterday, the Nigerian bourse rebounded by 0.54 per cent, mainly due to the gains recorded by First Holdco and others.
Data harvested by Business Post indicated that the industrial goods and energy sectors were flat, while the banking index chalked up 3.13 per cent. The insurance space expanded by 1.08 per cent, and the consumer goods counter rose by 0.21 per cent.
Consequently, the All-Share Index (ASI) went up by 1,316.52 points to 243,462.13 points from 242,145.61 points, and the market capitalisation grew by N850 billion to N157.057 trillion from N156.207 trillion.
The market breadth index was bullish during the last trading session of this week, printing 31 appreciating stocks and 23 depreciating stocks, representing strong investor sentiment.
First Holdco led the advancers’ log after it climbed 9.97 per cent to N95.95, Haldane McCall appreciated by 9.94 per cent to N3.65, LivingTrust Mortgage Bank soared by 9.73 per cent to N3.72, LASACO Assurance jumped by 5.26 per cent to N2.00, and Thomas Wyatt gained 5.10 per cent to quote at N3.09.
On the flip side, Red Star Express declined by 9.50 per cent to N20.00, Omatek slipped by 6.08 per cent to N1.70, C&I Leasing shrank by 5.93 per cent to N5.55, Jaiz Bank crashed by 5.03 per cent to N8.50, and Livestock Feed fell by 3.89 per cent to N8.65.
As for the activity chart, market participants bought and sold 685.9 million equities for N42.7 billion in 44,134 deals on Friday versus the 498.5 million equities worth N34.9 billion traded in 39,484 deals on Thursday, implying a rise in the trading volume, value, and number of deals by 37.59 per cent, 22.35 per cent, and 11.78 per cent, respectively.
Investors’ darling for the day was First Holdco, with a turnover of 225.9 billion units valued at N21.0 billion, Guinea Insurance sold 53.4 million units for N45.2 million, Zenith Bank traded 41.5 million units worth N4.7 billion, Access Holdings exchanged 29.1 million units valued at N720.6 million, and UBA exchanged 27.5 million units for N1.2 billion.
By Modupe Gbadeyanka
The Africa Association of Professional Freight Forwarders and Logistics of Nigeria (APFFLON) has appealed to the Nigeria Customs Service (NCS) to deepen its sensitisation on the newly introduced Green Tax Surcharge Policy.
The chairman of APFFLON, Mr Akeem Ayobiojo, made this plea on behalf of his colleagues on Tuesday, July 14, 2026, at the Customs House in Abuja, during a stakeholders’ engagement with the agency.
He also called for improvements in the administration of Pre-Arrival Assessment Reports and Post Clearance Audit and the African Continental Free Trade Area (AfCFTA).
Mr Ayobiojo stated that freight forwarders were happy to work with the customs, commending the organisation for implementing Chapter 99, describing it as a major relief for manufacturers.
He, however, emphasised that a deeper understanding of the new tax was necessary for his members, saying more predictable procedures would reduce delays and unexpected costs for importers and freight forwarders.
In his remarks, the Comptroller-General of Customs, Mr Adewale Adeniyi, assured manufacturers, freight forwarders and other players in the nation’s trade sector that the NCS would continue to engage them on fiscal policies affecting their businesses, saying sustained dialogue remains key to resolving implementation challenges and improving the country’s trading environment.
He also promised them the service’s resolve to enhance and facilitate trade, acknowledging that, “Your feedback is important because it helps us understand what is happening in the field, and where necessary, we will take your concerns to the Federal Ministry of Finance and other relevant government institutions.”
Speaking about Authorised Economic Operator (AEO), Mr Adeniyi further explained that Nigeria would not lower the standards required under the Authorised Economic Operator Programme as the initiative is guided by global benchmarks established by the World Customs Organisation (WCO).
On her part, the Deputy Comptroller-General of Customs for Tariff and Trade, Ms Caroline Niagwan, clarified that electric vehicles can be imported without payment of duty only by holders of Import Duty Exemption Certificate (IDEC) issued by the Federal Ministry of Finance.
She also urged importers facing classification disputes to take advantage of the Advance Ruling system, noting, “Once an Advance Ruling is issued based on genuine documentation, importers have certainty on classification, valuation or origin before the goods arrive, thereby reducing unnecessary disputes during clearance.”
By Adedapo Adesanya
The Naira appreciated against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday, July 17, by N1.35 or 0.07 per cent to N1,380.18/$1 from N1,381.53/$1.
It also improved its value against the Pound Sterling in the same market segment during the session by N11.75 to trade at N1,854.42/£1 compared with the previous day’s N1,866.17/£1, and gained N5.69 against the Euro to sell at N1,576.99/€1 versus Thursday’s closing price of N1,582.68/€1.
In the same vein, the Naira chalked up N1 against the United States currency yesterday at the GTBank forex desk to quote at N1,388/$1, in contrast to the preceding day’s N1,389/$1, but closed flat at the black market at N1,405/$1.
The appreciation of the Nigerian currency on Friday came amid fresh signals that Nigeria is building its external reserves for protection against shocks and excessive currency volatility.
The Governor of the Central Bank of Nigeria (CBN), Mr Yemi Cardoso, said the country’s gross reserves had risen above approximately $52 billion by 15 July, while net reserves had increased from about $3 billion when the current CBN leadership took office to more than $40 billion.
Mr Cardoso linked the increase in reserves to reforms that had restored greater confidence in the foreign exchange system. He also pointed to efforts to diversify foreign currency inflows, including policies designed to increase remittances through official channels.
He noted that monthly diaspora remittances had risen above $600 million and the CBN expected them to reach approximately $1 billion by the end of 2026. The target is part of a broader effort to grow reserves through recurring inflows rather than temporary measures.
The improvement, he argued, had strengthened Nigeria’s capacity to respond when unexpected events threatened market stability.
The apex bank has also launched a new digital platform that will track every foreign exchange transaction involving Bureau De Change (BDC) operators, marking a major step in its efforts to improve transparency and strengthen oversight of Nigeria’s retail forex market.
As for the crypto market, prices were up as markets overlooked geopolitical developments and macro forces weighing on the whole market ecosystem rather than anything crypto-specific, with Cardano (ADA) up by 4.6 per cent to $0.1661.
Bitcoin (BTC) jumped by 1.8 per cent to $63,968.32, Ethereum (ETH) improved by 0.9 per cent to $1,843.88, Dogecoin (DOGE) also rose by 0.9 per cent to $0.0723, Solana (SOL) soared by 0.6 per cent to $74.90, Ripple (XRP) also appreciated by 0.6 per cent to $1.08, and Binance Coin (BNB) advanced by 0.1 per cent to $567.32.
However, TRON (TRX) depreciated by 0.2 per cent to close at $0.3218, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
