[b][/b].....LAGOS (Reuters) - Nigeria's central bank has banned loans to 113 firms, including the country's two major airlines, which have failed to repay debts after a 2009 financial crisis that nearly brought down the banking system, an internal document obtained by Reuters on Sunday said.

The ban covers firms whose bad debts were absorbed by state-backed "bad bank" AMCON as part of efforts to draw a line under a credit crisis that nearly sank nine lenders. The companies have yet to make good on those loans, the memo said.

Nigeria's central bank injected $4 billion in 2009 to support nine lenders it judged to be so weakly capitalized they posed a threat to the whole economy. Since then, a number of banks have been restructured, and AMCON, the Asset Management Company of Nigeria, absorbed their toxic assets.

"As part of the Central Bank of Nigeria (CBN)'s efforts at strengthening financial stability, it has become necessary to stop debtors who failed to repay their loans to banks and had those loans transferred to AMCON from further enjoying credit facilities ... until they fully repay," the memo said.

"Banks are prohibited from approving or disbursing any new credit facilities to all persons and organizations on this list," it said, adding that any breach would be punished by a fine equal to the value loan and possibly additional penalties.

Names on the list included: Zenon Petroleum, privately owned by billionaire oil tycoon Femi Otedola, the majority shareholder in listed petrol firm Forte Oil ; and MRS Holdings , which holds former Chevron downstream assets and is owned by Sayyu Dantata, brother of Africa's richest man Aliko Dangote.

They owe 192.4 billion naira ($1.22 billion) and 120 billion naira respectively, the document said. The list also included Nigeria's biggest national air carrier, Arik Air, with 85 billion in debts.

Neither Otedola nor Dantata were available for comment. A spokesman for Arik Air, Ola Adebanji, said the company had not been informed.

"There is a relationship between Arik and AMCON ... We have not received any document from CBN concerning that," he said.

Arik suspended its operations last week over a spat with unions, the airport authorities and the aviation ministry, partly over alleged unpaid dues, leaving thousands of passengers stranded. The airline resumed flights on Sunday.

Nigeria's only other functioning major airline, Aero Contractors, was also on the list but was not immediately reachable for comment.

AMCON nationalized three failing banks last year. It plans to refinance its 1.7 trillion naira ($10.80 billion) in repackaged bad loans into bonds when the debt expires next year. The banking crisis underscored structural flaws in Nigeria's economy, where powerful oligarchs are often accused of acting above the law, diverting company funds to personal interests and failing to honor huge debts.

http://af.reuters.com/article/investingNews/idAFJOE88N00I20120924?feedType=RSS&feedName=investingNews

These hard measures are neccessary but I am not sure that Sanusi is going about it the right way. These govt made billionires will just close shops, lay off workers and worsen already precarious economic conditions.

It no longer news...

Not that it matter anyway, but this is the ONLY time I'll support SLS...

Measures that support financial stability and sustainably is imperative. I wonder at all, if these banks CEO's can't say NO when all the big debtors come asking for loans.

Two Comapnies Men owing that much. No Collateral? Seriously?

On a small overdraft one will apply for, see Questions.

na today.jst to loan me ten k,dem say make i bring my grand dad death certificate.dem no well

Remii: These hard measures are neccessary but I am not sure that Sanusi is going about it the right way. These govt made billionires will just close shops, lay off workers and worsen already precarious economic conditions.

The loans did not fall from the sky. Credit is from aggregate savings in the economy and if these debtors are not able to repay these loans, it means aggregate savings will possibly be eroded. You are talking of far more social consequences than these debtors laying off their workers.

It is about time I must say. How do you give more credit to high risk entities that seem unable to service existing loans? How do you give out loans running into billions to a company controlled by Otedola where ethics and corporate governance is next to zero? The loans have been rescheduled time and time again by AMCON yet these guys seem unable to service these debts.

We go kill ourselves for them?

Remii: These hard measures are neccessary but I am not sure that Sanusi is going about it the right way. These govt made billionires will just close shops, lay off workers and worsen already precarious economic conditions.

What do you expect? Lay off na sure banker nah whether sanusi ban them or not. If sanusi know act,people stiill go suffer am because na people money na him dem te do biz nah. Don't you know that all these govt made billionaires knows nothing about biz but dirty politics. They are all behind nigeria downfall.

Whatever needs to be done needs to be done fast. First,who is at fault, the bank or the debtor? I thought before a bank lend money out to companies they will need to appraise the companies to determine their creditworthiness. Beside,if there is any default in payment of the loan,the agreement should stipulate how bank can recover its loan. Abi which kin wuruwuru mago mago business transaction be this?

Are the banks not usin rules any more? If a man want to lend 10k dey wil ask for land document for collateral. Dey can only lend debtors money seein dem as an affleunce person, not knwin philantropist ONI GBESE.

Our banks r so stupid dat dey kip giving loans to debtors continously tinkn d more d loans d more interest dey ll b makin, these companies are into flourish bizness n still can't service deir loans n dey r buying jets from dis same loans,if u come 2 our markt u ll see banks staying in peoples shop stranding dem all to collect money if dats why dey treat dis peeps also why shuld deir debtS b so alarming poor man dey suffer ooo

most of those loans are not made in terms of immediate finacial gain or CBA analysis, but more like inroads into the obligor's financial empire...

ogaibe1: [b][/b].....LAGOS (Reuters) - Nigeria's central bank has banned loans to 113 firms, including the country's two major airlines, which have failed to repay debts after a 2009 financial crisis that nearly brought down the banking system, an internal document obtained by Reuters on Sunday said.

The ban covers firms whose bad debts were absorbed by state-backed "bad bank" AMCON as part of efforts to draw a line under a credit crisis that nearly sank nine lenders. The companies have yet to make good on those loans, the memo said.

Nigeria's central bank injected $4 billion in 2009 to support nine lenders it judged to be so weakly capitalized they posed a threat to the whole economy. Since then, a number of banks have been restructured, and AMCON, the Asset Management Company of Nigeria, absorbed their toxic assets.

"As part of the Central Bank of Nigeria (CBN)'s efforts at strengthening financial stability, it has become necessary to stop debtors who failed to repay their loans to banks and had those loans transferred to AMCON from further enjoying credit facilities ... until they fully repay," the memo said.

"Banks are prohibited from approving or disbursing any new credit facilities to all persons and organizations on this list," it said, adding that any breach would be punished by a fine equal to the value loan and possibly additional penalties.

Names on the list included: Zenon Petroleum, privately owned by billionaire oil tycoon Femi Otedola, the majority shareholder in listed petrol firm Forte Oil ; and MRS Holdings , which holds former Chevron downstream assets and is owned by Sayyu Dantata, brother of Africa's richest man Aliko Dangote.

They owe 192.4 billion naira ($1.22 billion) and 120 billion naira respectively, the document said. The list also included Nigeria's biggest national air carrier, Arik Air, with 85 billion in debts.

Neither Otedola nor Dantata were available for comment. A spokesman for Arik Air, Ola Adebanji, said the company had not been informed.

"There is a relationship between Arik and AMCON ... We have not received any document from CBN concerning that," he said.

Arik suspended its operations last week over a spat with unions, the airport authorities and the aviation ministry, partly over alleged unpaid dues, leaving thousands of passengers stranded. The airline resumed flights on Sunday.

Nigeria's only other functioning major airline, Aero Contractors, was also on the list but was not immediately reachable for comment.

AMCON nationalized three failing banks last year. It plans to refinance its 1.7 trillion naira ($10.80 billion) in repackaged bad loans into bonds when the debt expires next year. The banking crisis underscored structural flaws in Nigeria's economy, where powerful oligarchs are often accused of acting above the law, diverting company funds to personal interests and failing to honor huge debts.

http://af.reuters.com/article/investingNews/idAFJOE88N00I20120924?feedType=RSS&feedName=investingNews

In whichever fraudulent financial issues in this country, Otedola's name must be mentioned. That bloke is just a big time criminal and nothing more. Yet he’s free enjoying good relationships with powers that be.

Sanusi seem to always prefer to cure headaches by cutting off heads. Something do need to be done about serial debtors but cutting off leverage financing will damage both the businesses in question and the banks! Deposit money banks cannot survive without lending, and lending to the big players! It is not true that these debts are not collateralized as the banks usually hold Fixed & Floating Debentures on the obligor's total assets. Let me assure you that Arik Air, for instance, operating airplanes that are often jointly owned by them and their bankers. Nigerian banks are not that stupid.

The real problem is that many Nigerian businesses have also become so politically connected that they have overgrown the law. My 2-dollar advice is that the CBN put more pressure on the banks by increasing bad debt provision rates to such points that many of these "doubtful" debts will quickly be re-classified as "non-performing" or "bad"! This way, the banks will be forced to call in their collaterals or they themselves will die! This option is useless thou without the sincere backing of the Federal Government.

Sanusi seem to always prefer to cure headaches by cutting off heads. Something do need to be done about serial debtors but cutting off leverage financing will damage both the businesses in question and the banks! Deposit money banks cannot survive without lending, and lending to the big players! It is not true that these debts are not collateralized as the banks usually hold Fixed & Floating Debentures on the obligor's total assets. Let me assure you that Arik Air, for instance, operating airplanes that are often jointly owned by them and their bankers. Nigerian banks are not that stupid.

The real problem is that many Nigerian businesses have also become so politically connected that they have overgrown the law. My 2-dollar advice is that the CBN put more pressure on the banks by increasing bad debt provision rates to such points that many of these "doubtful" debts will quickly be re-classified as "non-performing" or "bad"! This way, the banks will be forced to call in their collaterals or they themselves will die! This option is useless thou without the sincere backing of the Federal Government.

kj_hova: Sanusi seem to always prefer to cure headaches by cutting off heads. Something do need to be done about serial debtors but cutting off leverage financing will damage both the businesses in question and the banks! Deposit money banks cannot survive without lending, and lending to the big players! It is not true that these debts are not collateralized as the banks usually hold Fixed & Floating Debentures on the obligor's total assets. Let me assure you that Arik Air, for instance, operating airplanes that are often jointly owned by them and their bankers. Nigerian banks are not that stupid.

The real problem is that many Nigerian businesses have also become so politically connected that they have overgrown the law. My 2-dollar advice is that the CBN put more pressure on the banks by increasing bad debt provision rates to such points that many of these "doubtful" debts will quickly be re-classified as "non-performing" or "bad"! This way, the banks will be forced to call in their collaterals or they themselves will die! This option is useless thou without the sincere backing of the Federal Government.

You have said it all. I wonder why Sanusi always want to kill straight. The man has no business sense. I will not blame him because he is a risk professional. Our economy is not expanding but revolves around these debtors, if they cannot finance their business of what use do we have an economy especially when we cannot expand by supporting SMEs/Start-ups. Sanusi is stiffening our economy, these debtors will begin to cut operating expenses in other to survive (I give them few years to wind up) thereby pushing more employees to the street and increasing the number of unemployed people in our society. The same society Jonathan, Ngozi and Sanusi vowed to provide JOBS. This stupid directive has a triple effect, Government Tax Revenue will go down (Tax from Employment Income and Corporate Income) thereby infrastructures that should be provided will no longer be available (well they are even yet to implement 2012 budget). Is it because the Government depends largely on Oil as source of Revenue that they are so blind to see that Sanusi wants to kill everybody. At the same time, these debtors should try and service their debts. I do not know if they don't have sound financial management where they should critically analyse their borrowing cost. THIS IS BAD FOR THE NIGERIAN ECONOMY. SANUSI MUST GO.

Where can i get the complete list of all companies involved?
Pls help

This is rather coming too late

omosexy1:

You have said it all. I wonder why Sanusi always want to kill straight. The man has no business sense. I will not blame him because he is a risk professional. Our economy is not expanding but revolves around these debtors, if they cannot finance their business of what use do we have an economy especially when we cannot expand by supporting SMEs/Start-ups. Sanusi is stiffening our economy, these debtors will begin to cut operating expenses in other to survive (I give them few years to wind up) thereby pushing more employees to the street and increasing the number of unemployed people in our society. The same society Jonathan, Ngozi and Sanusi vowed to provide JOBS. This stupid directive has a triple effect, Government Tax Revenue will go down (Tax from Employment Income and Corporate Income) thereby infrastructures that should be provided will no longer be available (well they are even yet to implement 2012 budget). Is it because the Government depends largely on Oil as source of Revenue that they are so blind to see that Sanusi wants to kill everybody. At the same time, these debtors should try and service their debts. I do not know if they don't have sound financial management where they should critically analyse their borrowing cost. THIS IS BAD FOR THE NIGERIAN ECONOMY. SANUSI MUST GO.

Nice piece.
When a sound economists talks, he xrays the impact of economic policies on all spheres of human endeavor both the micro and the macro (ECO 111)
However, with a bit of fundamentalism, an "economist" with an Islamic background would always clamor for the annihilation of anything infidel be they religious infidels or financial infidels.

Sanusi ought to have done this a long, long time ago if he were competent and honest.

I remember vividly the case of Rahamaniyya. The guy collected money from Intercontinental Bank and used his tank farm as collateral plus some of the petroleum product he was importing. However, he diverted funds into real estate in Europe and UAE. When Intercontinental went after the man for diversion etc, Yar'adua took it personal because Rahamaniyya is a son-in-law. Sanusi also turned a blind eye as that was an avenue for him to achieve his vendetta.

Unfortunately, Akingbola the proverbial hated man, whose enemies planned to incinerate, rubbed himself all over with oil and perched on the verge of a furnace...Fatality!

Sanusi is talking about these debtors now and people are talking. You see we live in a deceptive country where lies rule the airwaves. Most of our leaders are people who take loan without the intent of paying back. Aig Imokhuede through his company United Alliance took a loan of N10b from Intercontinental bank to buy Access Bank in 2002 and till date that loan has gone to voicemail. Nobody is talking about that. So how will Aig now ask a debtor owing the bank N1b to pay back when he himself has refused to pay his loan till date. And the same bank was sold to the same man. What goes around comes around.

We need to be objective in analysing these issues rather than be emotional about it. A lotof things are not just right about us here and the earlier we start doing things the better for our collective will. We cannot continue like this.

Whenever this issue of bank loans comes up, I get very disgusted and angry. I wonder if the useless banks in Nigeria actually needed to wait for Sanusi before taking action on this chronic debtors. This is way too belated and I can only weep for a nation where the likes of Otedola, Ifeanyi Ubah etc are parading the streets as rich men whereas in saner countries, they would have since being declared bankrupt. Why should a bank like Union Bank have a total of over 300 Billion Naira as non-performing unsecured loans. Abeg how won't the bank crash? Time to give out N500,000 loan to young promising entrepreneurs na lie!. If you go through the records, you go vex tire. A man gets a facility,he is not servicing it, the time frame has lapsed and he asks for 5 times the initial loan and the bank obliges him, restructures the loan and the cycle continues.

The worst part of it all is these men actually employ the services of the best lawyers, SANS who they pay heavily for that matter and who go all out using every technical method in the books in court to frustrate the abilities of recovery agents and lawyers to recover the funds not to talk about the protections they enjoy from the powers that be. No thanks to our legal system which leans towards the side of technical rather than substantial justice too. These men never have the intention of paying their debts and they rather move from bank to bank to collect more.

They shouldn't stop them, they should continue doling out more billions so that the system would one day crash on everybody including the shameless lawyers and those criticising Sanusi would rest.

@hyelhira, Rahamaniyya didnt only collect from Intercontinetal Bank sef, he also took funds from Fidelity Bank, and Oceanic Bank which he later paid when Olisa Agbakoba, SAN went personally to threaten him. 90% of the funds are always diverted that I can say for sure. The best of them enjoy so much protection and if we begin to talk of facts within our knowledge eh!. God go help us sha

I don't know if people truly understand that this is a serious issue for our country. It is true that many of these debtors shy away from paying their debt. I remember Otedola vividly and how he swore he will never pay Access Bank because of foreign exchange movement. The issue was a very serious one that both Aigboje and Otedola were threatening each other and they had to go get personal security escorts. It also amazes me when someone would take an overdraft (a short-term loan) to finance a real estate project (a capital intensive project). How do you expect such person to pay back the loan. However, we should not forget that the cost of doing business in this country is very high. Our cost of borrowing (interest rate) is one of the highest in the world. We borrow at 24 - 37%, while in the UK it is just 4%. Yet, Jonathan, his finance minister, CBN governor and the economic team are telling Nigerians that they will create jobs. Well I laughed when I initially read their write-ups and I ask myself how? With over 92% of the imported products in this country, poor power supply, nepotism and corruption, high interest rate, negligence from banks to borrow. How do these MAD MEN intend to turn Nigeria (A highly consumption economy) to a productive economy. We are never going to get out of this incessant recession if the same set of people continue to be at the helm of affairs. I pray Sanusi still looks at the overall effect of what this directive will cause to the Nigerian economy. A move like this might send us straight to depression. We have a government that is grossly ineffective and wasteful with resources, driven by people who lack initiatives and innovations. Sanusi should be chasing microfinance banks to live up to expectations and start lending, the main objective they were established in the first place. We need a true economist as CBN governor not a Risk Professional. Ngozi should start thinking or hire people to start thinking for her rather than being a medium of payment because that is what she does. She is just so ineffective that at the last quarter of the year she is yet to implement capital expenditure in the budget. So why do we have a budget?

Friends, its high time we are empowered to determine who we lend our money to to ensure honorable people and businesses with genuine financial needs get loans. It is cos of this that Fondospace Ltd was set up. Fondospace enbales directly lending among individuals and businesses in a secure environment. Loans are secured by guaranty or collateral or unsecured, you the lender decides which loan you want to fund. Interest rates are lower than obtainanle in banks while returns to lenders is higher than FGN bonds (active investors can make up to 20% annual interest). This is not a fraudulent scheme, all loans requests listed on our site are from genuine people and businesses and the interest rate is benchmarked against the market rate. Check www.fondospace.com.ng for more information.

Friends, its high time we are empowered to determine who we lend our money to to ensure honorable people and genuine businesses with genuine financial needs get loans. It is cos of this that Fondospace Ltd was set up. Fondospace enables direct lending among individuals and businesses in a secure environment. Loans are secured by guaranty or collateral or unsecured, you the lender decides which loan you want to fund. Interest rates are lower than obtainable in banks while returns to lenders is higher than FGN bonds (active investors can make up to 20% annual interest). This is not a fraudulent scheme, all loans requests listed on our site are from genuine people and businesses and the interest rate is benchmarked against the market rate. Check www.fondospace.com.ng for more information.