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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.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Markets

A Nervy Start to the Week

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Traders Wall Street

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

What could have been a really positive week for equity markets is off to a much more nervy start, with stocks in Europe treading water and US futures slightly lower.

The inflation report on Friday was red hot once more, extinguishing any hope that investors could hop aboard the Fed pivot train and ride stock markets higher into year-end. Perhaps it’s not quite so dramatic but it was a real setback, something we should be used to by now.

The wages component was the killer blow. That was not just a beat, it obliterated expectations and came in double the forecasted number. It may be a blip, but it’s a huge one and it will almost certainly take more than one much cooler report in January to comfort those that still fear inflation becoming entrenched.

That’s ultimately where we’re now up to in the inflation story. Many accept that base effects and lower energy prices will drive the headline inflation figure much lower next year, among other things, while a slower economy – maybe recession – will eventually hit demand and contribute to the decline. But what the Fed fears now is fighting entrenched inflation and these wage numbers won’t make for comfortable reading.

An economic victory for China amid gloomy PMIs

Chinese stocks were the clear outperformer overnight as authorities continued to work towards a softening of the country’s zero-Covid stance with the end goal seemingly being the end of it altogether. It’s thought that it will be downgraded to category B management as early as next month with officials claiming it’s less threatening than previous strains, a huge move away from the rhetoric and approach of the last few years.

This came as the Caixin services PMI slipped to 46.7, much lower than anticipated. That said, I’m not sure anyone will be shocked given the record Covid surge, but the more targeted – albeit seemingly confused – approach being taken has ensured less disruption, as evidenced by how much better the PMI has performed compared with earlier this year.

And it’s not just China that’s seeing surveys underperforming and, in many cases, putting in sub-50 readings. Europe is either already in recession or heading for it and the surveys highlight just how pessimistic firms are despite the winter getting off to a warmer start.

Japan is among the few recording a growth reading, although having slipped from 53.2 in October to 50.3 last month, you have to wonder for how long. Input prices are punishing firms, with some now raising prices in order to pass those higher costs on. That won’t help activity or convince the BoJ to declare victory, as higher energy and food costs are also hitting domestic demand. The one major outlier is India where the services PMI accelerated higher to 56.4 buoyed by domestic and external demand. An impressive feat in this global environment.

Oil higher as China looks to ease Covid restrictions

Oil prices are higher on Monday, rallying 2%, after the G7 imposed a $60 price cap on Russian oil and OPEC+ announced no new output cuts. Both bring a degree of uncertainty, with the details of the cap and the impact on Russian sales still unclear.

From the OPEC+ perspective, it can’t be easy to make reliable forecasts against that backdrop and the constantly evolving Covid situation in China, which currently looks far more promising from a demand perspective. The decision to leave output unchanged was probably the right one for now and there’s nothing to stop the group from coming together again before the next scheduled meeting should the situation warrant it.

A major setback

It goes without saying that the jobs report on Friday was a big setback for gold as it leaves huge uncertainty around where the terminal rate will land. Of course, we should be used to bumps in the road by now, having experienced many already this year. There’s no reason why the path back to 2% should be any smoother.

But the yellow metal did recover those jobs report losses and even hit a new four-month high today. Perhaps the big difference now is momentum. It’s run into strong resistance around those August highs around $1,810 and simply doesn’t have the momentum it would have had the report been cooler. We’re now more than four weeks into the recovery rally in gold and a corrective move of some kind may be on the cards.

Silence is bliss

Bitcoin continues to enjoy a mild relief rally and has even moved above $17,000 to trade at its highest level in almost a month. It’s probably too early to celebrate yet though as these are very cautious gains that could be quickly and easily wiped out by more negative headlines related to FTX. Silence is currently bliss for the crypto community.

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Crude Oil

Nine Oil Producing States Pocket N625bn in 2 Years

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Oil - Investors King

The federal government has revealed that Nine oil-producing states pocket N625.43 billion as 13 percent oil derivation, subsidy, and SURE-P refunds in just two years.

This was made known in a statement released on Friday by the Senior Special Assistant to the President on Media and Publicity, Garba Shehu.

According to the statement, the states that benefited from the refunds include Abia, Akwa-Ibom, Bayelsa, Cross River, Delta, Edo, Imo, Ondo, and Rivers States. Garba Shehu, however, added that the states still have about N1.1 billion as outstanding benefits due to them. He added that the refund has been accumulated since 1999.

Making reference to the comments made by the Governor of Rivers State, the Presidency noted that the Buhari-led regime will continue to render equal service to all the states regardless of affiliation, Investors King learnt. 

Between October 2, 2021, and January 11, 2022, the presidential spokesman disclosed that the states were paid in eight instalments, while the ninth to 12th instalments are still outstanding. 

Meanwhile, Garba recalled that data obtained from the Federation Account Department, Office of the Accountant General of the Federation,  showed that a total of N477.2 billion was released to the nine states as a refund of the 13 percent derivation fund on withdrawal from Excess Crude Account (ECA), without deducting derivation from 2004 to 2019, leaving an outstanding balance of N287.04 billion.

“Abia State received N4.8 billion with an outstanding sum of N2.8 billion, Akwa-Ibom received N128 billion with an outstanding sum of N77 billion, Bayelsa with N92.2bn, leaving an outstanding of N55 billion”.

“Cross River got a refund N1.3 billion with a balance N792 million, Delta State received N110 billion, leaving a balance of N66.2 billion, Edo State received N11.3 billion, with a balance of N6.8 billion, Imo State, N5.5 billion, with an outstanding sum of N3.3 billion, Ondo State, N19.4 billion with an outstanding sum of N11.7bn while Rivers State was paid 103.6 billion, with an outstanding balance of N62.3 billion” the statement read. 

According to the presidential spokesperson, states also got N64.8 billion as a refund of the 13 percent derivation fund on deductions made by Nigeria National Petroleum Company Limited without payment of derivation to Oil Producing states from 1999 to December.

Garba concluded that the president has approved the outstanding payment of N860.59 billion from the refunds which will soon be released to the benefiting states. 

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Markets

Flashing Green

Oil prices have rebounded strongly over the last few days – up around 10% from the lows – buoyed by the prospect of a lower price cap on Russian crude

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Traders Wall Street

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

We’re seeing green flashing across the board on Thursday, with sentiment buoyed by positive signals on Fed rate hikes and China’s Covid response.

While it could be argued that Jerome Powell’s comments on Wednesday were relatively balanced – slower tightening now but rates high for longer – the last year has proven that anticipating the path of inflation even a short period ahead is incredibly difficult. Knowing what the Fed intends to do next is far more valuable than what it thinks it may do 6-12 months down the line.

And anything that is perceived to reduce to possibility of an interest rate recession is going to be a positive for equity markets. The Fed has every opportunity to tighten more in the months ahead if the data doesn’t play ball. What’s far more difficult is undoing the damage caused by moving too fast now with little to no visibility on how impactful past tightening has been.

Positive signals

The signals coming from China also look very positive. While we shouldn’t expect a dramatic shift in policy from the leadership, particularly before the March Congress, any modest softening in its Covid-zero policy will and should be welcomed. The approach has been extremely damaging to growth and confidence and the protests highlight how public opinion towards it is changing.

We shouldn’t be naive to the fact that a move away from the policy won’t be easy and there’ll be plenty of setbacks. But it’s certainly a step in the right direction that, along with the measures announced to revive the property market, could put the economy on a much better path.

A huge few days for oil markets

Oil prices have rebounded strongly over the last few days – up around 10% from the lows – buoyed by the prospect of a lower price cap on Russian crude, another large production cut from OPEC+ this weekend, and China’s evolving Covid stance. There remains considerable uncertainty surrounding all of the above though which will likely ensure prices remain volatile going into the weekend. That could carry more risk than normal if the OPEC+ meeting does go ahead as planned on Sunday and the EU hasn’t agreed to the price cap level by the close of play Friday. The range of possibilities on these two things alone is huge which will make rumours and speculation over the coming day or two all the more impactful.

Gold testing range highs

Gold bulls were particularly happy with Powell’s comments on Wednesday with the yellow metal rallying strongly to trade at the upper end of its recent range. It faces strong resistance around $1,780 though which was a significant level of support in the first half of the year. With so much data to come over the next day or so, it may not prove particularly resilient if traders are given further hope that rates will rise more slowly and peak lower.

Some relief for cryptos

The risk relief rally is coming at just the right time for bitcoin, helping it to recover from the lows to trade around $17,000. This is around the highs of the last few weeks since it settled after its latest plunge. Whether it will be enough to revive interest in the cryptocurrency, I’m not sure. The FTX fallout is continuing to weigh heavily on the space and the prospect of more contagion or scandals is hard to ignore.

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