The 12 banks involved in the $1.2 billion 9Mobile loan are setting aside a large part of the debt from their books ahead of the December 31 end-date for the fiscal year.
The mobile company took the loan four years ago from a consortium of banks. It failed to repay the loan due to a currency crisis and the economic recession.


In the deal are: Zenith Bank, GTBank, First Bank, United Bank for Africa, Fidelity Bank, Access Bank, Ecobank, First City Monument Bank, Stanbic IBTC and Union Bank.

Zenith Bank yesterday announced that it had made a provision on 30 per cent of its loan to 9Mobile, the country’s fourth largest telecoms group formerly known as Etisalat Nigeria.

The bank’s Chief Executive Officer, Peter Amangbo, said: “We have taken about 30 per cent … as a provision, which we believe is very prudent as the company is undergoing restructuring … to prepare for a new investor.”

Zenith Bank is the largest lender to 9Mobile, one source familiar with the matter disclosed. The bank has declined to disclose its exposure to the telecoms group. The Tier-1 lender had last week reported a pre-tax profit of N92.18 billion for its half year against N53.91 billion a year ago.

The Central Bank of Nigeria (CBN) and the Nigerian Communication Commission (NCC) in July saved Etisalat Nigeria from collapse, stopping the company from going into receivership. But the telecom giant witnessed a board, management and name change.

Former Keystone Bank Executive Director Richard Obire said many other banks were likely to provide for certain percentage of the loans, depending on their profitability positions.

He said Zenith Bank, being a highly profitable bank, was thinking that it might not be able to recover the full money. “Zenith may be considering that when it gets down to negotiation with 9Mobile, it may end up giving about 30 per cent of the debt. The debtor may ask for more restructuring and loan forgiveness,” Obire said.

According to him, some banks are conservative and may want to stay within the five per cent regulatory non-performing loan threshold while some may want to exceed the limit. “Banks that are making more money are more likely to provide for their loans than those with less profitability,” he said.

Obire said by exceeding the 10 per cent peg for sub-standard loans to go for 30 per cent provision, Zenith Bank was indirectly saying that although the loan was not doubtful, but it was more than sub-standard. “If the bank does 30 per cent provision on the loan in 2017, it may do 50 per cent in 2018 while considering the variables surrounding the loans,” he said.

Head Treasuries at Ecobank Nigeria Olakunle Ezun said it is expected that the banks will provide for the loan, which he described as a bad debt. “For now, 9Mobile loan is like a non-performing loan for the banks. I understand that the banks are trying to restructure the loan. If they succeed, it will become a performing loan; otherwise it will have to be provided for in their books,” he said.

He said more banks may provide for the loan by year-end, but such a decision will be determined by the boards and their interpretation of the future of 9Mobile.

According to CBN Prudential Guidelines, banks are expected to review their credit portfolio continuously (at least once in a quarter) with a view to recognising any deterioration in credit quality. Such reviews should systematically and realistically classify banks’ credit exposures based on the perceived risks of default.

To facilitate comparability of banks’ classification of their credit portfolios, the guidelines said assessment of risk of default should be based on criteria, which should include, but are not limited to, repayment performance, borrower’s repayment capacity on the basis of current financial condition and net realisable value of collateral.

The CBN prudential guidelines stipulate that a credit facility should be deemed as non-performing when interest or principal is due and unpaid for 90 days or more; interest payments equal to 90 days interest or more have been capitalized, rescheduled or rolled over into a new loan.

The guideline said a loan can be substandard, doubtful or lost. A loan is subs-standard when unpaid principal and/or interest remain outstanding for more than 90 days but less than 180 days. Credit facilities which display well defined weaknesses which could affect the ability of borrowers to repay, such as inadequate cash flow to service debt, undercapitalisation or insufficient working capital, absence of adequate financial information or collateral documentation, among others, are said to be sub-standard.

According to the CBN guidelines, a loan is classified as doubtful when unpaid principal and/or interest remain outstanding for at least 180 days but less than 360 days and in addition to the weaknesses associated with sub-standard credit facilities reflect that full repayment of the debt is not certain or that realisable collateral values will be insufficient to cover bank’s exposure.

A loan is classified as lost when unpaid principal and/or interest remain outstanding for 360 days or more and in addition to the weaknesses associated with doubtful credit facilities, are considered uncollectible and are of such little value that continuation as a bankable asset is unrealistic.

SOURCE: https://brandspurng.com/banks-remove-1-2b-9mobile-debt-from-books/

They can focus better and meet standards.

Hmm

All Nigerians want is a more affordable price for faster internet. Giving 1gb for #1000 is simply stuuuuupid.

them don use style drive etisalat
now they know how to remove bad debt

etisalat sef dey do like ajebo
how did they think mtn survived this long

I knew this was a scam to get rid of the Abu Dhabi partners all along.

There is no better deal you can get from what the original partners were proposing.

Its a good one

Best way to go.

is Now I believe the rich take from the poor

I do hope their subscribers can enjoy quality service delivery from them, since their debt has been written off. Anyway, all the best to them.

Provision for bad debt it was..

Do you know that if Glo sponsored NYSC..there won't be service?

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These same banks will not let you owe them a dime on top small loan.
Why are the rules always different for the elite?

He

BabaAlabi:
All Nigerians want is a more affordable price for faster internet. Giving 1gb for #1000 is simply stuuuuupid.

Stuuuuupid is when Glo and others sell cheap data to you but you can't use it cos there's poor service.

9mobile is still the best data provider among the big 4 telcos

BabaAlabi:
All Nigerians want is a more affordable price for faster internet. Giving 1gb for #1000 is simply stuuuuupid.

Stuuuuupid is when Glo and others sell cheap data to you but you can't use it cos there's poor service.

9mobile is still the best data provider among the big 4 telcos

And you can't do that for ordinary citizen if they owed you and can't be able to repay it


Nigeria!!!!!!

These banks though.

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The banks b many ooo

Boldstar:



Stuuuuupid is when Glo and others sell cheap data to you but you can't use it cos there's poor service.

9mobile is still the best data provider among the big 4 telcos

You must also be stuuuuupid....What good is 1gb in this modern internet age? That's nothing compared to what some data consumers use daily. Is it a crime to request for more affordable data, that is also fast and reliable? Must Nigerians pay through the nose for basic services readily available in other countries?

Please who are they deceiving? Nigerian banks are known for supporting big nonperforming businesses over small performing ones.

BabaAlabi:

You must also be stuuuuupid....What good is 1gb in this modern internet age? That's nothing compared to what some data consumers use daily. Is it a crime to request for more affordable data, that is also fast and reliable? Must Nigerians pay through the nose for basic services readily available in other countries?

Mobile data prices in Nigeria are comparable with those in UK or US.

Nice

BabaAlabi:

You must also be stuuuuupid....What good is 1gb in this modern internet age? That's nothing compared to what some data consumers use daily. Is it a crime to request for more affordable data, that is also fast and reliable? Must Nigerians pay through the nose for basic services readily available in other countries?

You see, it's no use arguing with you cos stupidity is written all over what you're saying. First, tell your glo and others who sell cheap data to you to make it fast and reliable. When it's as fast and reliable as that of 9mobile, come back to ask the questions and I'll answer you.

Mumu, you're not using 9mobile but dumping complaints of glo's network ineptitude here

pallybrown:
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What has this mumu video got to do with what is been discussed here. My brothers it is time you people should get life.

Boldstar:


You see, it's no use arguing with you cos stupidity is written all over what you're saying. First, tell your glo and others who sell cheap data to you to make it fast and reliable. When it's as fast and reliable as that of 9mobile, come back to ask the questions and I'll answer you.

Mumu, you're not using 9mobile but dumping complaints of glo's network ineptitude here

First...sorry for calling you stuuuupid. I apologize for directing my anger at telcom companies towards you. Next, I am not supporting glo. I am a firm believer in the japanese theory of 'kaizen', which inherently means continuous improvement. Applying it here means FAST INTERNET + AFFORDABILITY. Glo fails in the former while Etisalat clearly fails in the latter. MTN + Airtel gives out 1.5gb for 1k and #25 for 500mb at night. While this is not the greatest deal ever, it clearly strikes the balance in stark contrast to Glo and Etisalat.

COMPAQ:


Mobile data prices in Nigeria are comparable with those in UK or US.

Maybe before. But with the low standard of living and low purchasing power of the Naira compared to dollars, I believe Nigerians are being fleeced by the telcoms.

alt3r3g0:
I knew this was a scam to get rid of the Abu Dhabi partners all along.

There is no better deal you can get from what the original partners were proposing.

masada:

them don use style drive etisalat
now they know how to remove bad debt

etisalat sef dey do like ajebo
how did they think mtn survived this long

I hope you understand that making a provision for a loan is a loss to the banks? If all the concerned banks make at least 30% provision, that is N131 billion loss on just one loan in one year.

How is this beneficial to the banks and its shareholders for them to be accused of scamming?

2n2k:




I hope you understand that making a provision for a loan is a loss to the banks? If all the concerned banks make at least 30% provision, that is N131 billion loss on just one loan in one year.

How is this beneficial to the banks and its shareholders for them to be accused of scamming?

The best offer they will take now will definitely be less than the least Etisalat was offering by a long shot.

Unless i am mistaken, the only thing wrong with the Etisalat terms was a review on the initial agreement based on the fall of naira. I hear the banks refused to shift ground and said Etisalat must find dollars from anywhere and pay back in dollars.

If Etisalat were to stick with the first agreement they would still go burst. Imagine having to pay twice what you borrowed and you have not even touched interest rate.

At least at this rate a live dog is better than a dead lion.

Someone once said that a person that owes a lot of people does not need to pray for life. Because all the people he/she is owing are fervently praying they live long to repay their debts.