BAD LOANS: Banks in Oil & Gas industry trap —NDIC

The level of non-performing loans (NPLs) in Nigeria’s financial industry rose to a new high as three commercial banks recorded 60 percent of the N700 billion insider-related bad loans, Nigeria Deposit Insurance Corporation (NDIC) has said.

The corporation said lending banks, who were supposed to get experts to handle the loans, ran helter-skelter as they were not knowledgable of the Oil & Gas industry, telecom and power sectors.

Umaru Ibrahim, NDIC Managing Director, while speaking on Thursday at the Financial Institutions Training Centre (FITC) Thought Leadership Discussion Series in Lagos, said a large part of the NPLs came from Oil & Gas sector.

Speaking on the theme: “Strengthening the Banking System and Facilitating Sustained Economic Growth: Roles of the Regulators, Operators and the Banking Public,” Umaru, who was represented by Executive Director of NDIC, Operations, Prince Aghatise, said banks were not well armed with right industry knowledge.

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“The bad loans we see today in banks are mainky due to large exposure to Oil & Gas sector. They expose themselves to the sector without the right industry knowledge. The banks go with the bandwagon effect, as once there is loan syndication, every leader will want to be part of it without understanding what is involved,” he said.

He added that the level of NPLs could be lower if the banks were to adhere more to sound corporate governance.

On his part, Segun Ajibola, the immediate past President, Chartered Institute of Bankers of Nigeria, attributed the challenge to lack of corporate governance. He therefore called for quality regulations and examination of banks to achieve desired results.

By Oluwasegun Olakoyenikan…

 

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