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Bank CEOs to go Tougher on Bad Debtors

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5 years ago

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Bank - Investors King
  • Bank CEOs to go Tougher on Bad Debtors

The Committee of Banks’ Chief Executive Officers in Nigeria has said that there is an urgent need for all banks to cooperate and collaborate to identify and go tougher on chronic debt defaulters.

The committee said this would go beyond publishing names of such defaulters in national media (which is inevitable), but involved all banks speaking with one voice, sharing information about those entities, and refusing to do further business with them until they settled their obligations.

The bank CEOs condemned the actions of bad debtors who now resorted to smear campaigns against banks and their chief executives in order to either delay repaying loans or avoid meeting their debt obligations completely.

During a meeting in Lagos to review what it called the “harassment and criminalisation of banks’ CEOs by law enforcement agencies,” the body noted that chronic bank debtors were now in the habit of enlisting law enforcement agencies including police, judiciary and state securities to harass and criminalise banks’ CEO, which was unacceptable.

The committee noted that the loan defaulters were known to have abused court processes as well as using social media to propagate their smear campaign against the banks.

A communiqué issued after the meeting noted that the activities by the law enforcement agencies and the bank debt defaulters were capable of adversely affecting the banking system through the CEOs’ reputation among international banks as well as destroy the economy.

They, therefore, called for the issue to be checked and managed.

In order to tackle what the body saw as an emerging threat to the banking business in Nigeria, the Committee of Banks’ CEOs outlined a five-step resolution of actions that banks would need to take.

The resolutions and planned actions were arrived at after members discussed and considered different options for dealing with the issue.

To avoid the kind of crisis that rocked the banking sector 10 years ago, the CEOs urged all agencies and stakeholders to step up and help fight the inherent menace of chronic loan defaulters.

According to the CEOs, the banking industry is the backbone of the Nigerian economy; therefore, it was the responsibility of all stakeholders, regulators, police, judiciary, corporate organisations and media to help save it from activities of delinquent debtors.

The group resolved that all cases of defaults would be presented and passed through the Bankers’ Committee Ethics Committee just as it intended to work with legal councils and come up with ways and strategies to manage related cases effectively without disrupting businesses and the system.

Nigerian bank’s non-performing loans stood at N2.245tn as of the end of September 2018, according to the National Bureau of Statistics.

The NBS revealed that in the period under review, the country’s gross loans stood at N15.861tn, while loans (after specific provisions) stood at N13.332tn.

According to the NBS, as of the end of June, non-performing loans stood at N1.939tn while gross loans and loans (after specific provisions) were N15.50tn and N13.587tn respectively.

The Asset Management Corporation had recently published a list of defaulters that it termed as delinquent debtors. They allegedly owed about N906.1bn.

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Insurance

Senate Passes Bill to Bolster Nigeria Deposit Insurance, Protect Depositors’ Funds

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2 hours ago

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October 30, 2024

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Insurance - Investors King

The Nigerian Senate has taken a significant step to safeguard depositors and promote trust in the country’s banking system by passing a bill to enhance the Nigeria Deposit Insurance Corporation (NDIC).

The Senate passed the bill on Tuesday, October 29, during its plenary.

Senator Adetokunbo Abiru (APC-Lagos), who sponsored the bill titled “The Nigeria Deposit Insurance Corporation Act 2023” said the bill aims to strengthen the country’s financial system.

According to him, the amendment of the NDIC bill will not only ensure the safety of depositors’ funds but also the stability of financial institutions and promote trust in the banking sector.

Abiru said, “The Nigerian Deposit Insurance Corporation (Amendment) Bill, 2024, is a critical piece of legislation aimed at strengthening the Nigerian financial system.

“The proposed amendments will enhance the NDIC’s capacity to safeguard depositors, ensure the stability of financial institutions, and promote trust in the banking system.

“Given the rapidly evolving nature of the financial sector, this Bill represents a timely response to the challenges and opportunities that lie ahead.”

He added that the bill seeks to empower the corporation by guaranteeing its independence in performing its statutory functions per Section 1 (3) of the principal Act.

“The principal (2023) Act restricts the President’s power to appoint the Managing Director and Executive Directors, requiring recommendations from the Central Bank of Nigeria Governor.

“The 2024 bill now seeks to align this provision with the President’s appointment powers as enshrined in the Constitution of the Federal Republic of Nigeria 1999 as amended.

“The Act’s provision that makes the Permanent Secretary, Ministry of Finance, the Chairman of the Board is also under review due to the demands on that office.

“Furthermore, the bill introduces a requirement for the Minister of Finance to constitute an Interim Management Committee for the Corporation within 30 days after the Board’s term expires or is terminated.

“This is to prevent challenges in the Corporation’s operations caused by the absence of a board.”

The bill, which received the support of all members, was approved following the Senate Committee on Banking, Insurance, and Other Financial Institutions’ report review.

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Banking Sector

No System Upgrade Currently Underway, First Bank Tells Customers 

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5 days ago

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October 25, 2024

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FirstBank Headquarter - Investors King

One of the leading first generational banks in Nigeria, First Bank has clarified that it is not embarking on any system upgrade as erroneously reported in the social media.

Many of the commercial bank’s customers have expressed concerns over possible disruptions in banking transactions as fake report filtered that First Bank was upgrading its services.

Some had said there might be difficulties in withdrawing money or using the applications of the bank for their transactions.

Meanwhile, clarifying the misleading reports, First Bank assured its customers of seamless banking operations.

Maintaining that there is no system upgrade underway, a statement issued by the management and obtained by Investors King on Friday explained that the misrepresented statement was intended to its vendors only.

It said the step was focused on transitioning from its current I-Supplier Platform to a new Cloud-Based Supplier for improved benefits for its vendors.

“We wish to address a misleading report circulating in the media regarding a system upgrade at FirstBank.

“The message which was incorrectly interpreted and reported was sent to, and intended for our vendors only and focused on transitioning from our current I-Supplier Platform (our automated platform that connects us to suppliers) to a new Cloud-based Supplier Platform (worldclass platform for managing suppliers), to enable additional capabilities and benefits for our vendors.

“Please be informed that no system upgrade is currently underway, and all our customer applications are fully operational. We are not experiencing disruption to our services, and our banking systems, customer transactions, channels, etc, will not be affected by the enhanced supplier platform.

“Rest assured that our commitment to seamless service delivery remains unwavering as you continue to enjoy uninterrupted access to our services,” the statement reads.

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Loans

NNPC Has Started Settling $6bn Debt to Foreign Suppliers— Wale Edun

Published

6 days ago

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October 24, 2024

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NNPC - Investors King

The Minister of Finance and Coordinating Minister of the Economy, Wale Edun has said the Nigerian National Petroleum Company (NNPC) Limited has commenced the repayment of $6 billion debt owed to suppliers.

Edun made this announcement during a meeting with investors in the U.S. capital on the sidelines of the 2024 annual meetings of the International Monetary Fund (IMF) and the World Bank.

The revelation came amidst growing concerns about the NNPC’s financial stability and its capacity to sustain petrol supply to the domestic market.

The company had previously acknowledged owing suppliers of premium motor spirit (PMS).

Addressing the issue of ongoing foreign exchange subsidies, Minister Edun clarified that “In terms of NNPC and their situation, the reality is that, although the subsidy on May 29, 2023, was removed and was no longer on the balance sheet of the government, it did rear its head, not in terms of petrol subsidy, but foreign exchange subsidy, which was borne elsewhere, and borne mainly by NNPC,” the minister said.

Mr Edun also expressed optimism about the company’s future.

“I think what I can say about their own situation is with where they are now, they have a route to paying down their payables and I’m sure that in no time at all, they will start.

“From what I understand, they have even commenced the process of paying down their payables,”he said.

The NNPC had some months ago acknowledged that it was owing the money, but admitted it was remitting money into the purse of the country.

“But NNPC Ltd., through its subsidiary, NNPC Trading, has many open trade credit lines from several traders.

“The company is paying its obligations of related invoices on a first-in-first-out (FIFO) basis,” he said.

“It is not correct to say that NNPC Ltd. has not remitted any money to the Federation Account since January. NNPC Ltd. and all its subsidiaries remit their taxes to the Federal Inland Revenue Service (FIRS) regularly.

“This is in addition to payments of CIT to road contractors under the Road Investment Tax Credit Scheme. In all, NNPC Ltd. is the largest contributor to the tax revenue shared every month at the Federation Account Allocation Committee (FAAC),” the NNPC had said in a statement in August.

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