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| CBN Governor, Sanusi Lamido Sanusi |
The noose tightened on a category of bank debtors are
already yielding dividend as some of them are beginning to fall heads over heel
to redeem their obligation but banking industry watchers insist on full
disclosure of the deal between the Central Bank of Nigeria (which takes the
credit for the repayment) and the debtors, reports Festus Akanbi
From all indications, the name-and-shame tactics employed by
the Central Bank of Nigeria to rattle some delinquent bank debtors appear to be
paying off. This is because after the initial criticisms which greeted the
failure of the CBN and the Assets Management Corporation of Nigeria (AMCON) to
reconcile bank debtors’ list, some of the debtors are said to be responding to
the crackdown initiated by the CBN although some members of the banking
community are raising eyebrows over the nature of the settlement arrangements
between the debtors and AMCON.
The debtors list released to banks last month had sparked
off a raft of denials and counter claims by some of the companies and
individuals whose names featured prominently on the list of those to be axed
for their failure to redeem their indebtedness to banks. However, the apex bank
and AMCON were said to have since
reconciled their lists, paving the way for the recent moves by some of the
debtors to clear their debts.
Banking industry analysts, who responded to the sudden
desperation of a number of debtors to redeem their image by paying up in the
past few weeks, said despite the initial dust raised by the restriction placed
on this category of businessmen and firms, some of the debtors have realised
there was no other way of staying in business other than to meet their
obligations to the banks. They contended that credit for the renewed
negotiations between some of the debtors and AMCON on how to repudiate the
debts should go to the CBN for tightening the noose on bank debtors.
AMCON Recoups N800 billion
One cheering news last week was the disclosure by the AMCON
that to date, the corporation has recovered or restructured over N800 billion.
A report quoting AMCON MD Mustapha Chike-Obi disclosed that to further
demonstrate the success of its recovery efforts, Net Oil and Cross River State
Government are out of the debtors’ list, having redeemed their debt obligation
to AMCON. “Net Oil and Cross River State Government are no longer direct
obligor to AMCON,” Chike-Obi said. By the end of 2011, AMCON had acquired over
N3 trillion non-performing loans and recapitalised all the banks in grave
situation, to the point where they have enough capital to fund their vital role
of providing credit to the economy.
Big Relief
According to banking sector analysts who are optimistic
about the success of the current debt recovery exercise, the recent liquidation
of the N141 billion debt owed AMCON by the Chairman of Zenon Petroleum and Gas
Limited and Forte Oil Plc, Mr. Femi Otedola, would go a long way to guarantee
stability to the banking industry because it has opened the floodgate of
similar repudiation of old debts by some of those firms whose names appeared on
the list.
They explained that although AMCON had bought the toxic
debts from the respective banks, the repayment of the total amount of money has
vindicated CBN on its name-and-shame tactic even as there were reports last
week that other sundry debtors are holding talks with AMCON on how to repudiate
their debts. Some of those in crucial talks with AMCON on how to exit the
debtors list, according to sources, included firms in the oil marketing sector.
However, AMCON is said to be keeping the list of debtors currently negotiating
with it secret until the conclusion of such negotiations.
The CBN had, in a move aimed at strengthening financial
stability and instilling discipline in the banking sector, blacklisted 113
companies as well as their principal shareholders and directors, where the
outstanding value of the loans purchased by AMCON amounted to N5 billion or
more, from taking further credit from banks until the full liquidation of the
agreed indebtedness.
Eyebrows Over Negotiation
AMCON had recently confirmed it has approved the transfer of
Otedola’s assets as well as an undisclosed sum of cash to the corporation as
full and final settlement for his liabilities although details of the deal are
still being kept under wraps.
Meanwhile, some critics of the ongoing deal over the debts,
especially the deal with Zenon Petroleum debt, said AMCON owes the banking
community a detailed explanation over the arrangement it entered into with
Otedola. This they, argued will give both the Corporation and the Zenon boss, a
clean bill of health considering the worry over the true values of assets
forfeited in the deal. Similar worry was contained in the position of the House
of Representatives, which insisted that the negotiation over the Zenon’s debt
should be made public. The House of Representatives said in a statement that it
will probe the payment of N140.9billion to AMCON by the Zenom chairman.
However, industry sources said apart from Otedola, other debtors are already
reacting to the CBN hammer by surrendering their assets to meet their
obligations to AMCON.
According to a source, some of the debtors who could not
raise the needed cash are already following the footsteps of Otedola by
surrendering their assets which include property scattered all over the
country. Some are even said to have expressed their readiness to trade off
their luxury items including private aircraft and yachts in order to clear
their names. On why AMCON is silent on
the identities of the affected companies since they have shown readiness to
pay, the source said the corporation was just being careful until the deals are
finalised before it gives them a clean bill of health. The source disclosed
that because of the heat brought to bear on them by the publication of the list
and the realisation that access to new facility had been effectively blocked by
the CBN memo, some of the debtors have gone as far as withdrawing some of the
cases they instituted against CBN and AMCON from court.
In the opinion of a Lagos-based financial analyst, Mr. Bode
Olatunde, CBN should be commended for its courage to publish the debtors’ list,
which also contains names of powerful persons that were perceived to be close
to the corridor of power including some state governments.
No Free Loans
“The truth is that the CBN’s list has shown that we are all
equal before the law. Nobody had thought the apex bank could crack down on some
of those businessmen whose names featured on the list. I believe that for once,
the culture of impunity is destroyed in the business circle and this will go a
long way in reminding prospective borrowers from the banks that they must
certainly account for whatever facility they draw from the banks.
“I also believe that this development will impact positively
on banks’ finances now that everybody knows that the days of free loans are
over.
“This shows that the CBN does not have any sacred cow and
all it is saying is that people should honour their obligations,” Olatunde
said.
He explained that the debtors’ list was released to enable
banks know those who they should not lend to because the banks will only know
those they are exposed to. It is also to prevent predator borrowers who move
from one bank to another using the same collateral to borrow from different
banks.
He added that the CBN’s action clearly showed the regulators
meant well since the money used by AMCON to buy off these debts from banks are
tax payers’ funds
A leading member of the Financial Market Dealers Association
of Nigeria, who would not want to be quoted, said the policy of naming and
shaming will sanitise the industry: banks would no longer give out credits
without securing it and debtors would also be willing to honour their
obligations. And, according to him, given the fact that some of these debtors
have gone to court to technically delay payments, this is a clarion call to the
judiciary to speedily facilitate the cases so that tax payers’ money will not
go down the drain.
Similarly, some bank shareholders have expressed support for
the decision to blacklist those that are indebted to AMCON to the tune of N5
billion and above.
President Renaissance Shareholders Association, Mr. Olufemi
Timothy, said: “It is a very good development. A situation where someone is
owing and you give that person some concession and still he is not willing to
pay, I think the best thing to do is to stop that person from getting further
credit.
“The decision by the central bank is commendable and we must
all support the CBN. The policy should be fully implemented and should not be
politicised.”
President, Nigeria Shareholders Solidarity Association
(NSSA), Chief Timothy Adesiyan, described the latest move by the central bank
as a major antidote to banking failure and further step in the protection of
their investments. According to him, blacklisting the debtors would make them
to pay up.
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