E-Financial
Report Raises Concerns over Health of Nigerian Banks
A number of banks in Nigeria are living on borrowed time as they struggle to recover sticky assets and pare down their loan loss provisions, according to Business Hallmark.
The report said that the banks are buried in a heap of poor quality loan assets in the guise of high none performing loans (NPL’s) and that all may not be as well with the banks as the domestic regulator, Central Bank of Nigeria (CBN), would have many believe.
Indeed, recently the international credit rating agency, Fitch, marked a down grade in the credit ratings of virtually all Nigerian banks as the agency pointed to the worsening condition of their credits.
Within the year Fitch’s analysts downgraded the outlook for four Nigerian banks from stable to negative; the banks were Zenith Bank, GT Bank, First Bank and Diamond Bank.
The problems with the banks downgraded were attributed to, ‘heightened vulnerability of capital due to downside asset quality risks’ which in simpler terms meant that these banks were finding it increasingly difficult to get back the monies that they lent to customers.
Third quarter 2017 results for nearly all the banks have been dyed in rose colour. Nine months’ results for the banks have shown profit figures glide up as the economy edges out of recession. But how real are the numbers?
Truth be told with discussions with a fair number of bankers who did not want their names put in print, the profit tally for most of the banks, ‘where beautiful Picasso replicas, as brilliant as they were; they were all fake’ said a senior manager of one of the banks with headquarters in Victoria Island, Lagos.
The banker insisted that, ‘you cannot make omelets without breaking eggs, with interest rates at double digits and manufacturers rolling in escalating debt as retailers groan in agony, how the heck does a bank make money with customers hung over a barrel?’, he asked pensively.
When it was pointed out that banks had stopped granting credit and had actually become more comfortable simply buying treasury instruments at double digit yields he agreed but noted that, ‘banks may have been able to turn a trick or two by buying treasuries over the last two years, but that is not core retail banking; it is more of an investment banking function and it still does not address the problem of proper loan loss charges against risk assets that have already been created.’
In other words most banks have made inadequate provisions for loan impairments or bad credits and have simply engaged in a number of clever accounting rouses to restructure bad loans to make them appear hale and perhaps hearty.
It is obviously difficult to establish how bad Nigerian commercial bank loan portfolios precisely are, especially as even the Central Bank of Nigeria (CBN), the sector’s chief regulator, and the Nigerian Deposit Insurance Company (NDIC) often get caught on the wrong foot as bank examiners serially underestimate impairment charges required by banks to cover their deteriorating loan assets.
This has led to independent observers classifying bank loans as a mixture of financial fact, fiction and something one analyst recently called ‘faction’, a grey area between reality and outright falsehood.
Peering through reams of recently published financial data is not likely to shed very much light on the warm matter of bank assets and capital adequacy.
The problem of poor bank loan books is not just that of the smart reclassification of bank loans by managers form non-performing to performing but also the accounting convention of using historical valuation of bank assets rather than adjustment of the assets on the books by marking to market which means that if interest rates go up the value of banks assets simultaneously go down and vice versa.
It would also mean that the increasing riskiness of bank loans when interest rates rise would be better captured on bank books when loan quality is measured as weaker when rates go up; in other words as interest rates go up bank loan quality comes down.
As lending rates have hovered between 25 and 28 per cent over the last two years, bank asset quality has taken a turn for the worse.
The CBN estimates that delinquent loans as a proportion of loans outstanding on average industry wide is about 12 per cent as against the regulatory rate of 5 per cent. But even the twelve per cent claim is disputable.
Investigations suggest a more accurate rate of double that number putting real average loan impairment ratio closer to 25 per cent or a quarter of all loans outstanding. This clearly indicates that banks would have to recapitalize operations to reduce leverage (debt to equity ratio) and build greater strength in balance sheets.
In a telephone conversion with Business Hallmark, Chidi Ajaegbu, former President Institute of Chartered Accountants of Nigeria (ICAN), noted that the challenge of bank credit assets and their current levels of equity was not dire enough to cause major worry, ‘I don’t think we have an immediate systemic problem but something must be done to ensure that we do not slide into systemic distress’. He was of the opinion that banks may need to raise their capital base in 2018 by either rights issue or Initial Public Offers (IPO’s).
Also commenting on the issue, Dr. Afolabi Olowokere of Financial Derivatives Company Limited (FDC) said it is a known fact that the relatively low capital base of banks could constitute a serious problem for such institutions anywhere in the world. ‘It is normal that the capitalisation of banks will be eroded at a time like this if you consider the huge non-performing loans which they have to provide for. I hope the banks do not suffer any shocks because they have links with one another, poor management of one could set off a contagion that hurts all’’, he said.
In his own observations Dr. Adi Bongo, economist and faculty member, Lagos Business School was of the view that the recent Fitch downgrades of local bank was a fallout of the poor macroeconomic management that started last year, adding that the banking industry suffered huge capital flight as portfolio investments that were plugged into banks during the consolidation period, began to pull out on concerns over macroeconomic direction.
He further explained that, ‘Nigeria has been performing poorly in capital importation. As money began to leave the system, banks where many portfolio investors had plunked capital, started having liquidity challenges.’ Noting that, ‘…because of the state of the economy, non-performing loans in banks have increased geometrically. The combination of these two issues has caused banks to face serious challenges, except those that have strong equity bases.’
With calls for bank assets to be marked to market or at least made compliant with International Accounting Standards Board’s (IASB’s) IFRS 9 rules, the days of bankers running rings around regulators in regards to the quality of their balance sheets is slowly fading into distant memory or at least that is the hope
A Federal High Court in Abuja has affirmed the Central Bank of Nigeria’s (CBN) exclusive ownership of the “eNaira” digital currency platform and trademark.
eNaira
Justice James Omotosho, in a judgment delivered on Friday, restrained eNaira Payment Solutions Limited from presenting itself as the owner of the “eNaira” trademark.
The court also ordered the company to immediately adopt a new name that does not contain the word “Naira”.
The suit, marked FHC/ABJ/CS/113/2021, was dismissed, while the court awarded N10 million costs in favour of the CBN following its successful counterclaim.
Justice Omotosho held that although the company had been registered with the Corporate Affairs Commission (CAC) since 2004, its name was misleading because of its close association with Nigeria’s sovereign currency.
“The name chosen by the plaintiff on its incorporation is in the circumstances unregistrable due to the misleading nature of the name, which suggests government patronage,” the judge ruled.
The court further noted that the Trademark Registry had, through a letter dated Nov. 15, 2021, withdrawn approvals earlier granted to the company for applications related to the “eNaira” trademark under classes 36 and 42.
According to the judgment, the company was informed that “eNaira is a national intellectual property and constitutes a symbol and national asset of Nigeria.”
Justice Omotosho ruled that the plaintiff had no superior legal claim to the trademark and therefore could not seek injunctive relief against the CBN.
“A party that has no legal right cannot be entitled to an injunction. The purport of this is that, prima facie, the plaintiff has no valid trademark to the exclusive use of the eNaira trademark,” he held.
The judge also emphasised that under Section 852(2) of the Companies and Allied Matters Act, the CAC has powers to reject or direct changes to company names that suggest government affiliation.
“The ‘eNaira’ name is so closely linked to the legal tender of Nigeria, which is exclusively controlled by the CBN.
“An average person on the street is most likely to think that the plaintiff is an agent of the Federal Government or the CBN,” the court stated.
Justice Omotosho added that the company’s proposed activities involving digital currency operations created the impression that it had official authority to issue or manage a digital version of the naira.
“The proposed business of the plaintiff… no doubt creates the impression that the plaintiff has the authority of the Federal Government of Nigeria to issue and control a digital form of the Naira,” he said.
The judge warned that allowing a private entity to control the “eNaira” name could undermine public confidence and create confusion within the country’s financial system.
“Any digital currency with the name ‘eNaira’ will no doubt create the impression that it is an official digital form of the Naira.
“This would be disastrous for the Nigerian economy and will create skepticism among users, as it is not guaranteed by the Central Bank of Nigeria,” he added.
The court also observed that the CAC had lawfully directed the company to change its name within six weeks of its Dec. 9, 2021 directive, but the company failed to comply.
During proceedings, counsel to the plaintiff, Mr David Ityonyman, argued that the word “Naira” was not exclusive to Nigeria and should not be monopolised.
“Nothing stops India from having a Naira. Also, countries like the U.S. and Canada make use of dollars. None of them has laid claim to the name,” he submitted.
He further argued that the company had used the “Naira” branding internationally for more than two decades before the CBN launched the eNaira platform in 2021.
Central Bank of Nigeria (CBN) and commercial banks are reviewing the large number of transaction alerts sent to customers and the complaints about bank charges.
So called bank alert refers to real-time SMS or email notifications from your financial institution about transactions, balances, or security updates.
Olayemi Cardoso, governor, CBN, said this in Abuja after the 305th Monetary Policy Committee meeting.
He explained that many bank customers are confused because they receive too many debit alerts for a single transaction.
To address this, the CBN has created a quarterly meeting system involving its consumer protection team, commercial banks, and the top 10 microfinance banks. The goal is to resolve customer complaints faster and improve banking services.
Cardoso said one major issue being studied is how banks send multiple notifications for one transaction.African Politics Analysis
He said this often confuses customers and suggested that alerts should be simplified and combined so people can clearly understand what each debit is for.
He added that the issue is still being worked on and solutions will be proposed soon.
On the N50 stamp duty charge, the CBN governor explained that it is not a bank charge.
He said the charge comes from tax authorities, while banks only collect it and send it to the government.
He advised customers who notice wrong charges to first complain to their bank. If the issue is not resolved, they can escalate it to the CBN’s consumer protection department.
Cardoso also said the CBN has strengthened its monitoring system to ensure banks handle complaints properly, compensate customers when needed, and improve customer service.
The CBN is also reviewing how banks apply rules on charges and customer complaints, with the aim of improving transparency and reducing repeated issues in the banking system.
E-Financial
Griffin Capital Group Launches Integrated Financial Services Group Positioned to Strengthen Capital Formation in Nigeria, Africa
Griffin Capital Group Limited has announced its official market entry as a fully integrated financial services group, bringing together investment banking, asset management, trusteeship, lending, and insurance capabilities under a unified institutional platform.
The launch reflects a deliberate response to the evolving demands of Nigeria’s financial ecosystem, where the need for disciplined capital deployment, stronger Corporate Governance frameworks, and deeper market liquidity continues to shape the next phase of growth.
Structured as a multi-business financial services group, Griffin Capital is designed to operate across the full spectrum of capital formation, from origination through innovatively structuring complex financial transactions in a simplified manner; to execution, distribution, and investment management. This enables us to both advise on and actively participate in transactions.
The Group enters the market with a leadership team whose experience spans investment banking, Insurance brokerage, capital markets, corporate finance, development finance, and investment management across Africa and global financial centers.
Griffin Capital’s operating model reflects a clear emphasis on institutional discipline, combining advisory expertise with balance sheet strength to support more efficient capital allocation and improved transaction quality.
As Nigeria’s economic reforms continue to unlock new opportunities across infrastructure and project finance, financial advisory, and private capital markets; the Group is positioned to support both issuers and investors through a structure designed for scale, transparency, and execution.
Commenting on the launch, the Group Chief Executive Officer, Babatunde Obaniyi said: “The opportunity in Nigeria’s financial markets is significant, but unlocking it requires more than capital. It requires structure, governance, and the ability to deploy capital with discipline. Griffin Capital Group has been built to address these fundamentals. Our model allows us to operate across the full lifecycle of transactions from advisory to execution, while maintaining a strong focus on risk management and long-term value creation.
“We are entering the market with a clear sense of responsibility, particularly in how capital is structured, deployed, and preserved. Our ambition is to build an institution that contributes meaningfully to market development while maintaining the highest standards of governance and execution.”
The Chairman of the Group, Musa Bello added: “Financial institutions play a critical role in shaping economic outcomes, particularly in emerging markets where capital must be deployed with both precision and purpose. Griffin Capital Group represents a long-term commitment to building an institution that combines local market understanding with global standards of governance and execution.
“As Nigeria continues to deepen its capital markets and expand private sector participation, institutions with the capacity to structure, mobilize, and manage capital effectively will be essential. Our focus is not only on participating in this evolution, but on contributing to it in a meaningful and sustainable way.”
With a medium-to-long-term strategy focused on growth in assets under management and expanded participation across key sectors, Griffin Capital Group intends to play an active role in facilitating capital flows within Nigeria and across the African continent.
The Group’s integrated platform is expected to support a broad range of clients, including retail, corporates, institutional investors, development finance institutions, government institutions, and high-net-worth individuals, through tailored financial solutions and disciplined execution.
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