As banks continue
with the publication of names of non-performing debtors, indications
have emerged that lenders were aware of the poor credit history of the
debtors and yet went ahead to advance loans to them, BusinessDay
interactions with industry operators’ show.
The development may have put the
operations of the banks under scrutiny as some industry operators call
for strengthening of corporate governance to forestall further insider
abuses.
This is even as the Credit Bureau
operators, custodians of the credit history of potential borrowers, from
which banks were supposed to clear before advancing facilities, have
absolved themselves of any blame.
Analysts say the trend suggests that
deposit money banks will eclipse the Central Bank of Nigeria (CBN)’s
minimum non-performing loan ratio target of 5 percent limit, in their
2015 year-end financials.
The analysts further argue that the
deteriorating macro – environment could mean that some loans may go sour
for lenders, especially in the oil and gas space, where some of the
companies, especially in macro small and medium scale enterprises
(MSMEs), are believed to be moribund.
“It is not true that credit bureaus were
not effective. Credit bureaus have encouraged information sharing in
the lending industry.
“Credit bureaus would have failed if
lenders were not aware that these borrowers were already exposed to
other institutions when they were granting their own loans to them. All
the published lists are information in the credit bureaus.
“We have discharged this duty very well.
The decision to lend is in the hands of the lenders who have to take a
final decision, within the context of the information they obtain from
credit bureaux on the potential borrower and considering other vital
factors, especially capacity to repay.
“Credit bureaus help lenders in
dimensioning the willingness of borrowers to pay, by providing the
credit history, and the capacity to pay by giving information on
existing exposures..” says Tunde Popoola, managing director, CRC Credit
Bureau limited.
But some analysts said last night, that
the current development calls for more vigilance on the part of the
Central Bank of Nigeria, (CBN) to avoid a reoccurrence of the sector crisis of six years ago, when some banks were taken over by the CBN while others were forced to merge.
They wonder for instance, why facilities
of higher volume would be advanced to some individuals who are believed
to have interest in the same institutions or organisations, whose board
of directors are virtually family members.
Friday Ameh, an energy analyst, told
BusinessDay last night that the nature and caliber of directors on the
boards of the debtor companies and the individual borrowers showed that
the CBN needs to strengthen its corporate governance principles.
“CBN should be on the lookout, as
publishing names of debtors alone is not an end in itself, as the
emerging claims and counter claims mean that more work needs to be done
by both parties, (banks and their debtor customers,” Ameh said
Bolade Agboola, executive director
Cashcraft Asset Management, said, “We must be careful in publishing the
names of debtors .Its not a novel strategy to recover debts, as the
euphoria will fade out the next day.We must avoid criminalising
borrowing .Did it work in 2009.CBN needs to do research on efficacy of
the name and strategy.”
Popoola further said, “But the
publication is to achieve name and shame, which is not the objective of
having the information in the credit bureaus. Our responsibility is to
promote informed decision making through responsible information sharing
among creditors.”
Nigerian banks are currently grappling
with the biggest surge in bad loans since at least 2011 after half –
year results showed weak profit growth, amid a struggling economy.
John Omachonu
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