Insider Loans Soar to N112.77 Billion: Union Bank, Stanbic IBTC, Sterling Bank, and Access Holdings Under Scrutiny

Top executives in Union Bank of Nigeria, Stanbic IBTC Holdings, Sterling Bank, and Access Holdings bank were granted a combined N112.77 billion in insider loans in 2022, according to the analysis of the banks’ financial statements.

Leading the pack were Stanbic IBTC Holdings and Union Bank of Nigeria, with the highest insider-related loans among the four banks.

Stanbic IBTC granted its top executives and associates a total of N56.5 billion in insider-related loans, a 4.02% increase from N54.32 billion reported in the previous year while Union Bank of Nigeria declared N53.4 billion in outstanding insider-related loans in 2022, surpassing the N52.8 billion reported in the preceding year.

Further breakdown of the banks’ financial statements for the year ending December 31, 2022 showed insider-related loans approved by Sterling Bank stood at N2.4 billion. Access Holdings on the other hand announced N469.01 million in insider-related credits in 2022, representing an increase from the N268.21 million reported in the previous year.

The rise in insider-related loans has raised concerns among shareholders and regulatory bodies alike. The Central Bank of Nigeria Circular BSD/1/2004 dated February 18, 2004, outlines the provisions for disclosure of insider-related credits in the financial statements of banks.

The BOFIA Act 2020 further imposes restrictions that disallow banks from lending more than five percent of their paid-up share capital to any single director or significant shareholder. Also, a bank’s total exposure in lending to its directors and significant shareholders must not exceed 10 percent of its paid-up share capital.

Experts and shareholder associations have expressed their reservations about these loans and emphasized the need for greater transparency and adherence to market-determined rates.

Boniface Okezie, the National Coordinator of Progressive Shareholders Association, pointed out that while directors have the right to apply for loans like any other customer, they should be subject to the same conditions as others.

He said, “Every director is just like a customer. There is nothing stopping them from applying for loans. But the ratio that applies to other customers should also apply to them. They could be given other incentives bordering on the period of repayment as directors of the bank who are working for the growth of the bank.

“But, as directors of a bank, there is a trust that has been reposed on them, and you can’t abuse that privilege. You must show leadership by example. A rate applies generally to every customer seeking to borrow from the bank. It should also apply to the directors because they are customers of the bank.”