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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

Markets Today – Under Pressure, US Data, Oil, Gold, Bitcoin

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

Stock markets have fallen heavily in June so it seems only fitting that they’re ending the month with big losses as reality continues to bite.

There’s no getting away from recession chat and while the heads of the Fed, ECB and BoE didn’t exactly fuel that during their panel discussion on Wednesday, they didn’t do anything to dispel it either. They all know that there’s a strong likelihood of recession this year or next and investors are increasingly accepting that fate as well.

There’s been a plethora of economic data from across Europe this morning, mostly tier two and three, and it was a bit of a mixed bag. The labour market figures, for example, remain strong with the anomaly being Germany but this was heavily distorted by the integration of Ukrainian refugees into the labour market. Underlying numbers remain in good shape even if across the bloc, employment growth is expected to slow.

It’s impossible to ignore the fact that households are being squeezed and we’re seeing that appear in the data, particularly in the UK which will probably fall into recession later this year. But it is unlikely to be alone in that which is why bear-market rallies are proving to be so short-lived.

US inflation boost but spending slips

US inflation data was unusually encouraging ahead of the open. Perhaps that’s getting a little carried away but it didn’t deliver another crushing below so maybe this feeling is actually relief rather than joy. The core reading was a little better than expected at 0.3%, in line with April, while the headline also fell a little short of expectations at 0.6%.

The income and spending data were arguably less encouraging. Earnings rose 0.5% as expected, a slight acceleration from April, while spending rose only 0.2%, a big drop from 0.9% a month earlier and half the forecast. Another sign of the squeeze taking a toll on households? The US economy is among the best positioned to fend off a recession but it’s not completely immune to the cost-of-living crisis. It may be catching up.

Oil lower as OPEC+ sticks to August target

Oil prices are modestly lower on Thursday, further paring recent gains following yesterday’s reversal. As expected, OPEC+ stuck to its planned 648,000 barrel increase in August and refrained from any decision beyond then which could add an element of uncertainty to future targets, particularly given recent reports that even Saudi Arabia and UAE are running near capacity.

The global economic uncertainty doesn’t make planning ahead any easier, either. The prospect of a recession has created more two-way price action in recent weeks, preventing any unsustainable surges in the price of crude as China reopened and the OPEC+ deficit increased. ​

Gold slightly buoyed by inflation data

Gold has been trending lower over the last couple of weeks but remains in its early summer range between $1,800 and $1,870. It’s really struggled for direction over the last couple of months despite the volatility in the broader financial markets. It has been like a deer in the headlights, unable to process and respond to the wicked combination of higher inflation, faster monetary tightening and recession fears.

It received a boost from the slightly softer PCE reading from the US, a rare bit of good news when it comes to inflation data. It’s not exactly a massive win, especially when paired with weak spending but it could be worse. Yields fell a little after the data, enabling gold to get back into positive territory for a while.

Bitcoin crumbling

Bitcoin has been hanging on in there around $20,000 but its resilience may finally be crumbling under pressure, with the cryptocurrency sliding more than 5% today to trade at around $19,000. This could be really bad news for the crypto space and may even trigger much more severe declines in the coming weeks.

The forced liquidation of Three Arrows Capital may have contributed to the latest decline as traders are left to wonder what other leveraged firms will follow in its footsteps. The fear alone could deliver another hammer blow to crypto valuations before the dust settles.

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Crude Oil

Oil Prices Sustain Bullish Run for Fourth Consecutive Session

Global oil prices appreciated for a fourth consecutive session after it became clear OPEC and allies can not meet their production targets any time soon.

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Crude Oil - Investors King

Global oil prices appreciated for a fourth consecutive session after it became clear OPEC and allies can not meet their production targets any time soon.

Brent crude oil, against which Nigerian oil is priced, appreciated to $120 a barrel as of 3:20 pm Nigerian time on Wednesday. Representing an increase of $12 from $108 a barrel traded a week ago.

The U.S. West Texas Intermediate (WTI) rose to $112.37 per barrel, up from $99.33 per barrel a week ago.

The increase in prices was a result of sanctions imposed on about 1/5 of global supply by western nations. Russia, one of the world’s largest crude oil producers, was sanctioned for waging war against Ukraine, and eventually, disrupting the global economy.

“Given that almost 1/5 of global oil producing capacity today is under some form of sanctions (Iran, Venezuela, Russia), we believed there is no practical way to keep these barrels out of a market that was already exceptionally tight,” JP Morgan said in a research note.

This concern over global supply outweighed worries about a weaker global economy ahead of the projected economic recession in developed nations, especially with developed economies raising interest rates to curb escalating inflation numbers.

“Investors made position adjustments, but remained bullish on expectations that Saudi Arabia and the United Arab Emirates would not be able to raise output significantly to meet recovering demand, driven by a pick-up in jet fuels,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.

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Crude Oil

Oil Price Rally as Major Producers Flag Capacity Limits

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Oil

Oil prices rallied for a third day on Tuesday as major producers Saudi Arabia and the United Arab Emirates looked unlikely to be able to boost output significantly, while political unrest in Libya and Ecuador added to supply concerns.

U.S. West Texas Intermediate (WTI) crude futures rose $1.8, or 1.6%, to $111.36 a barrel by 0644 GMT, extending a 1.8% gain in the previous session.

Brent crude futures climbed $1.9, or 1.7%, to $116.99, adding to a 1.7% rise in the previous session.

The UAE and Saudi Arabia have been seen as the only two countries in the Organization of the Petroleum Exporting Countries (OPEC) with spare capacity available to make up for lost Russian supply and weak output from other member nations.

“A seam of tight supply news bolstered the market. Two major producers, Saudi Arabia and the UAE, are said to be at, or very close to, near‑term capacity limits,” Commonwealth Bank commodities analyst Tobin Gorey said in a note.

UAE Energy Minister Suhail al-Mazrouei said on Monday UAE was producing near maximum capacity based on its quota of 3.168 million barrels per day (bpd) under the agreement with OPEC and its allies, together called OPEC+.

His comments confirmed remarks by French President Emmanuel Macron who told U.S. President Joe Biden on the sidelines of the Group of Seven nations meeting that the UAE was producing at maximum capacity and that Saudi Arabia could increase output by only 150,000 bpd, well below its nameplate spare capacity of around 2 million bpd.

Analysts also warned political unrest in Ecuador and Libya could tighten supply further.

Libya’s National Oil Corp said on Monday it might have to declare force majeure in the Gulf of Sirte area within the next three days unless production and shipping resume at oil terminals there.

Ecuador’s Energy Ministry said the country could suspend oil output completely within the next two days amid anti-government protests. The former OPEC country was pumping around 520,000 barrels per day before the protests.

Those factors underscore shortages in the market, which have led to a rebound this week, countering recession jitters that weighed on prices over the previous two weeks.

But analysts from Haitong Futures said market sentiment remains fragile with people waiting for clearer guidance for the next move and geopolitical factors in focus.

Leaders of the G7 are discussing a potential price cap on Russian oil that would hit President Vladimir Putin’s war chest while also lowering energy prices.

A French presidential official also called on global powers to explore all options to alleviate a Russian squeeze on energy supplies that has spiked prices, including talks with producing nations like Iran and Venezuela.

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