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N649bn Bad Loans: Banks To Sell Over 1,000 Debtors’ Properties

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Ecobank

Deposit Money Banks have put up for sale over 1,000 properties belonging to several customers, who were unable to service their loans.

This came about eight months after the amount of bad loans in the banking industry rose sharply by 78.8 per cent to N649.63bn at the end of 2015.

Impeccable industry sources revealed that most of the 19 commercial banks in the country had engaged the services of estate surveyors, prominent realtors and lawyers to help them to sell the properties.

The move, according to the sources, was part of efforts by some banks to recover bad loans and shore up their capital base in the face of current economic crisis.

The properties had been used as collateral in obtaining loans by the banks’ customers.

Some of the realtors and lawyers, who spooke on condition of anonymity, confirmed that they had been contacted by the banks to market the properties.

According to documents obtained exclusively by our correspondents, the over 1,000 properties include, multimillion and multibillion-naira mansions, luxury hotels and petroleum tank farms, located in highbrow areas of Lagos, namely Ikoyi, Lekki, Ajah, Ikeja and Apapa.

They also include parcels of lands, detached houses, high rise commercial buildings, terrace houses and warehouses.

Other properties are scattered across the country in states like Enugu, Abia, Kano, Kaduna and Ogun.

Some of the banks include Guaranty Trust Bank Plc, Skye Bank Plc, First City Monument Bank Limited, Zenith Bank Plc, United Bank for Africa Plc, First Bank of Nigeria Limited, Stanbic IBTC and Fidelity Bank Plc.

While some of the properties are being offered for sale at their open market value, many others were offered at their forced sale value, which is the value the properties would sell for when a seller is under duress, and it is usually the two-third of the open market value.

In a bid to avoid litigation that could be instituted by some of the debtors, the banks, had notified the owners before putting them up for sale, making many of the properties to be under consent sale.

One of our correspondents, who visited some of the properties, confirmed that the properties were up for sale while some were still being occupied by their owners.

A comprehensive document released by one of the banks, listed 97 properties, which included a building on one acre of land on a popular street off Adeola Odeku, Victoria Island, Lagos, offered for N2bn.

Another property is a block of flats comprising two and three bedrooms on 1,895square metres on Admiralty Way, Lekki Phase I, offered for N650m; and an industrial complex on 11,000sqm at Mobolaji Johnson Avenue, Oregun/Alausa offered for N4bn asking price.

The list include a tank farm comprising eight storage tanks for petrol totalling 50 million litres capacity and two tanks for kerosene on 11,830sqm offered for N15bn; six blocks of two and three-bedroomed luxury flats on 1,895sqm at a popular street off Admiralty Way, Lekki Phase I, offered for N700m; and plots of land with Certificate of Occupancy on 19,400sqm in Banana Island, Ikoyi, Lagos offered for N6.5bn.

Also, there is a luxury hotel on 3,286.161 square metres of land in Ikoyi, offered for N2.5bn; a purpose-built office complex on four floors, occupying 760sqm in Ikeja, offered for N250m; another luxury hotel comprising 84 rooms with a swimming pool, gym, elevator, hall and other top-notch facilities on 1,664.68sqm in Ikeja, offered for N1.6bn.

A tank farm with storage capacity of 21.5 million litres on 4,203.48sqm at Apapa Port, was offered for sale at N6bn.

Also, on the list are a filling station on one acre of land in Sango Ota, Ogun State, offered for N90m; a purpose-built property on three floors comprising of four numbers of two-bedroomed service flats, with a four-roomed service quarters, a gym and a swimming pool on 1,294 sqm in Osborne, Ikoyi, Lagos, offered for N700m.

There are blocks of office, warehouse and other ancillary blocks on 1623.36sqm in Apapa, Lagos, offered for N500m; a detached house on about 1,000sqm on Glover Road, Ikoyi, offered for N850m; and a guest house with 17 standard rooms on four floors in Lagos Island.

In another list, obtained from a source in one of the banks, there were about 39 properties, including a property on Ahmadu Bello Way, Kaduna and a building on 2,947sqm offered for N250m; a storeyed building on 833.4sqm in Kano State, offered for N150m; a bungalow with some stores on 500sqm in Aba, offered for N8m; and a plot of land in Enugu, with a Deed of Assignment, offered for N50m.

Two wings of five-bedroomed semi-detached houses with boys’ quarters and gate house, all sitting on 3,430sqm in Ikoyi, offered for N1bn and a purpose-built banking and commercial structure on 862.80sqm in Victoria Island, Lagos, offered for N450m were also in the list.

On another list from one of the banks, some of the properties up for sale include a 14-floor building in Victoria Island offered for N13bn; a three-bedroomed semi-detached house in an estate in Abuja, offered for N48m and four-bedroomed terrace mid unit in an estate off the Lekki-Epe Expressway, Lagos, offered for N27m.

The prices placed on the properties, according to the documents, are subject to negotiations, all in a bid to dispose of the properties.

At the 326th meeting of the Bankers’ Committee held recently in Lagos, the Director of Banking Supervision, Central Bank of Nigeria, Mrs. Tokunbo Martins, had shed light on the incidence of the non-performing loans in recent times.

Giving reasons for the NPLs, Martins attributed it to the economic downturn.

But the CBN spokesperson, Mr. Isaac Okoroafor, while commenting on the incidence of NPLs in banks, said loans were parts of business, adding that they should not be seen as a sign of weakness in the banking sector.

Commenting on the development, industry analyst and Chief Executive Officer, Cowry Asset Management Limited, Mr. Johnson Chukwu, attributed increased cases of NPLs to the current economic recession.

He said, “Increased level of loan default is one of the many negative fallouts of economic depression, which in some instances affect the health of banks.”

Spokespersons for UBA, GTBank and FCMB, could not be reached for comments but the spokesman for First Bank, Mr. Babatunde Lasaki, said the lender might not comment on the matter due to bank-customer confidentiality agreement.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Markets

Markets Today – Inflation, Jobless Claims, Boris Blunder, Oil, Gold, Bitcoin

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outlook

By Craig Erlam, Senior Market Analyst, UK & EMEA, OANDA

It’s been a rollercoaster start to the year and as we head into earnings season, it’s hard to say exactly where investors stand.

Blocking out the January noise is one thing but it’s made far more complicated by omicron, inflation, and the rapid evolution of monetary policy. Yesterday’s reaction to the inflation data was a case in point. The data mostly exceeded expectations, albeit marginally, while headline inflation was a near 40-year high of 7%. And yet the response was broadly positive.

I get that traders were perhaps fearing the worst and, as I’ve referenced before, it does feel like markets are at peak fear on US monetary policy which could make relief rallies more likely. But there is also underlying anxiety in the markets that could make for some volatile price action for the foreseeable future.

Perhaps earnings season will bring some welcome normality to the markets after a period of fear, relief, and speculation. The fourth quarter is expected to have been another strong quarter, although the emergence of omicron will likely have had an impact during the critical holiday period for many companies. Of course, as we’ve seen throughout the pandemic, that will likely have been to the benefit of others.

And while earnings season will provide a distraction, it is happening against an uncertain backdrop for interest rates and inflation which will keep investors on their toes. It does seem that investors are on the edge of what they will tolerate and it won’t take much to push them over the edge. Which will be fine if we are near the peak of inflation, as many expect.

The data today looks a mixed bag on the face of it, with jobless claims coming in a little higher than expected, which may be down to seasonal adjustments. The overall trend remains positive and continues to point to a tight labor market. The PPI data on the other hand will be welcomed, with the headline number slipping to 0.2% month on month. Perhaps a sign of supply-side pressures finally starting to abate which will come as a relief after inflation hit a near-40 year high last month.

Sterling solid as pressure mounts on Boris

It seems impossible to ignore the political soap opera currently taking place in the UK, with Prime Minister Boris Johnson once again in the public firing line after finally admitting to attending an office party in May 2020.

In other circumstances, uncertainty around the top job in the country could bring pressure in the markets but the pound is performing very well. Perhaps that’s a reflection of the controversy that forever surrounds Boris, and we’re all therefore numb to it, or a sign of the environment we’re in that the PM being a resignation risk is further down the list when compared with inflation, interest rates, omicron, energy prices etc.

Oil remains bullish near highs

Oil prices are easing again today after moving back towards seven-year highs in recent weeks. It was given an additional bump yesterday following the release of the EIA data which showed a larger draw than expected. But with crude already trading near its peak, it maybe didn’t carry the same momentum it otherwise would.

The fundamentals continue to look bullish for gold. Temporary disruptions in Kazakhstan and Libya are close to being resolved, with the latter taking a little longer to get fully back online. But OPEC being unable to hit output targets at a time when demand remains strong is ultimately keeping prices elevated and will continue to do so.

A big test for gold

Gold is off a little today but the price remains elevated with key resistance in sight. The yellow metal has remained well supported in recent weeks even as yields around the world continue to rise in anticipation of aggressive tightening from central banks.

It could be argued that the bullish case for gold is its reputation as an inflation hedge, especially given central banks’ recent record for recognizing how severe the situation is. But with inflation likely nearing its peak, that may not last. That said, fear around Fed tightening may also be peaking which could support gold in the short-term and a break through $1,833 could signal further upside to come.

Can bitcoin break key resistance?

Bitcoin is enjoying some relief along with other risk assets and has recaptured $44,000, only a few days after briefly dipping below $40,000. That swift 10% rebound is nothing by bitcoin standards and if it can break $45,500, we could see another sharp move higher as belief starts to grow that the worst of the rout is behind it. It looks like a fragile rebound at the moment but a break of that resistance could change that.

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Crude Oil

Brent Crude Oil Trading at $84.53 a Barrel

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Crude Oil - Investors King

The increase in Omicron variant cases has cast doubt on demand for crude oil in the near-term and trimmed gains recorded earlier in the week on Thursday during the Asian trading session.

The brent crude oil, against which Nigerian oil is priced, pulled back from $85.16 per barrel on Wednesday to $84.53 per barrel at 9:50 am Nigerian time on Thursday.

The uncertainty surrounding the highly contagious Omicron variant and its impact on fuel demand has shown by the U.S Energy Information Administration on Wednesday dragged on the global crude oil outlook.

The data released on Wednesday revealed that gasoline stockpiles rose by 8 million barrels last week, way higher than the 2.4 million barrel increase projected by experts. Suggesting that demand for the commodity is gradually waning in response to omicron.

“Gasoline demand was weaker-than-expected and still below pre-pandemic levels, and if this becomes a trend, oil won’t be able to continue to push higher,” OANDA analyst Edward Moya stated.

However, in a note to Investors King, Craig Erlam, a senior market analyst, UK & EMEA, OANDA, expected the impact of omicron to be short-lived. Libya’s inability to ramp up production after outage and OPEC plus continuous failure to meet production target are expected to support crude oil in the main term even with Kazakhstan expected to get back to pre-disruption levels in a few days.

“With omicron seen being less of a drag on growth and demand than feared. Combine this with short supply and there may be some room to run in the rally as restrictions are removed. Of course, Covid brings unpredictability and zero-covid policies of China and some others bring plenty of downside risk for prices,” he said.

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Commodities

Soybean Oil Prices to Rise by 4% in 2022 Over Increase in Demand for Biofuels

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Soybean Oil

In 2022, global soybean oil prices, driven by an increase in the demand for biofuels, have been projected to rise by about 4 percent, to $1,425 per tonne; a market report from IndexBox reveals.

According to the IndexBox report, the growing demand for biofuels, especially in Asia, will increase the prices of soybean oil globally.

The platform put it that in 2021, the average annual soybean oil price rose by 65 percent year-on-year to $1,385 per tonne, from $838 per tonne. Strong demand and high freight rates in China, which is the world’s second-largest importer of soybean oil, resulted in the most rapid price growth of the commodity in the third quarter (Q3) of the same year. Weather-related disruptions to production in South America also caused soybean oil prices to rise fast.

In 2020, IndexBox estimates that soybean oil purchases in the foreign markets rose by 7.5% to 13 million tonnes, increasing for the second year in a row after three years of decline. In value terms, soybean oil imports have grown notably to $10.3 billion.

India was the highest importing country with a purchase volume of around 3.7 million tonnes, accounting for 28% of global supplies. China ranked second with a purchase volume of 963 thousand tonnes.  Algeria (670 thousand tonnes) and Bangladesh (666 thousand tonnes) were ranked as the third and fourth major importing country.

The four countries altogether accounted for about 17% of total soybean oil imports. Coming behind as the fifth-highest importer is Morocco (547 thousand tonnes), followed by Mauritania (537 thousand tonnes), Peru (521 thousand tonnes), South Korea (390 thousand tonnes), Colombia (378 thousand tonnes), Venezuela (373 thousand tonnes), Egypt (243 thousand tonnes), Poland (229 thousand tonnes) and Nepal (215 thousand tonnes).

India in value terms ($3 billion) being the largest market for soybean oil imports in the world, accounted for 29 percent of global imports. The second position in the ranking was taken by China ($725 million) with a 7 percent share. North African country, Algeria came third with a share of 4.6 percent of the total value.

Top Soybean oil exporters

In 2020, Argentina was the major exporter of soybean oil (5.3 million tonnes), constituting 42% of total exports. The United States (1238 thousand tonnes), Brazil (1110 thousand tonnes), Paraguay (631 thousand tonnes), the Netherlands (615 thousand tonnes) and Russia (611 thousand tonnes) follow, altogether accounting for 33% of global supplies. Meanwhile, Spain (387 thousand tonnes), Bolivia (377 thousand tonnes), Ukraine (302 thousand tonnes), Turkey (208 thousand tonnes) and Germany (192 thousand tonnes) had relatively small shares in the total volume.

In value terms, Argentina remains the largest supplier of soybean oil in the world ($ 3.7 billion), which accounts for 39% of global exports. The United States ($ 979 million), with a share of 10% of the total supply is ranked second. Both countries are followed by Brazil with an 8% share.

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