E-Financial

Report Raises Concerns over Health of Nigerian Banks

Published

8 years ago

December 5, 2017

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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

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E-Financial

CBN to Simplify Bank Alerts over Rising Customer Complaints

Published

2 days ago

May 21, 2026

Ebere Melum-Nwogbo

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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.

CBN to Simplify Bank Alerts over Rising Customer Complaints

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.

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E-Financial

Griffin Capital Group Launches Integrated Financial Services Group Positioned to Strengthen Capital Formation in Nigeria, Africa

Published

2 days ago

May 21, 2026

Chike Onwuegbuchi

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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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E-Financial

Court Orders Globus Bank to Pay Firm N256m for Breach of Contract

Published

3 days ago

May 20, 2026

Ebere Melum-Nwogbo

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A High Court of the Federal Capital Territory, presided by Justice Christopher Oba, has ordered Globus Bank Ltd to pay a total of N256 million to an Abuja-based company, Haril Global Solutions Ltd, for breaching a contractual agreement.

Court Orders Globus Bank to Pay Firm N256m for Breach of Contract

In the suit marked; FCT/HC/CV/1456/2026, Haril Global Solution Ltd, Chinedu Mba, Idris Olayiwola and the Economic and Financial Crimes Commission (EFCC), were listed as Defendants to the counterclaim filed by the bank.

The Claimant filed the suit by way of Writ of Summons, wherein it complained of breach of contractual agreement and wrongful deductions running into millions of naira by the bank.

Delivering judgement on the matter, Justice Oba declared that there was a valid and subsisting contract between the Claimant and the Defendant, pursuant to the letter of offer of facility dated July 4, 2023, signed by both the Claimant and the Defendant and the Overdraft Facility Agreement executed between the Claimant and the Defendant dated July 4, 2023.

Subsequently, the Court made a declaration that the Claimant is entitled to the return of the Debt Service Reserve Fee Sum of One Hundred and Nine Million Naira (N109M) wrongfully withdrawn by the Defendant from the Claimant’s Debt Service Reserve Account with account number 4000006572 and transferred to the Claimant’s Overdraft with account number 1000085336 on December 29, 2023, contrary to the Overdraft facility Agreement executed between the Claimant and the Defendant dated July 4, 2023 and the letter of offer of facility dated July 4, 2023.

The Court also mandated the Defendant to return the sum of Twenty-Six Million, Seventy-Six Thousand, Three Hundred and Eighty-Eight Naira Thirty-Two, kobo (N26,076,388.32) wrongfully withdrawn on January 31, 2024, from the account of the Claimant with account number 1000085336 as interest despite the fact that a Post-No-Debit has been placed on the Claimant’s account as a result of which the Claimant could not carry out his business.

In addition, the Judge ordered Globus Bank to return the sum of Fifteen Million Naira (N15,000,000.00) wrongfully withdrawn from the account of the Claimant on February 6, 2024, with account number 1000085336, with interest despite the fact that a Post-No-debit has been placed on the Claimant as a result of which the Claimant could not carry out its business.

The Court equally ordered the Defendant to pay the Claimant Five Million Naira (N5M) as general damages for breach of contract, as well as pay the Claimant the sum of One Million Naira (N1m) as the cost of this suit.

According to the Court, the Defendant breached the accepted Letter of offer of facility dated July 4, 2023, overdraft facility agreement executed between the Claimant and the Defendant dated July 4, 2023.

“A declaration of this honourable court is hereby made that the contract between the Claimant and the Defendant pursuant to the Letter of offer of facility dated the 4th July, 2023, and the Overdraft Facility Agreement executed between the Claimant and the Defendant dated 4th day of July 2023, is discharged by the breach occasioned by the Defendant.

“A declaration of this Honourable Court is hereby made that the defendant is liable to the Claimant for breach of contract thus liable to pay the Claimant general damages for breach of contract.

However, the court dismissed the counterclaim by Globus Bank on the ground that it failed to adduce credible evidence to establish its claims for fraud or unlawful interference with the contract terms by Haril Global Solutions Ltd.

The Counter-Claimant had alleged that the Claimant manipulated the system by debiting other merchants to credit its own account.

“However, no evidence was led to show which specific merchants were debited or to provide testimony from such third parties, the court stated.

Regarding the Police investigation report (Ex Q1-2), the court stated that the report did not indict the Claimant for the alleged fraud, noting that the report mentioned a figure of N900 million, which was vastly different from the N2.5 billion sought in the Counter-Claim.

The Judge held that the Police Investigation Report was a mere report and not a judicial pronouncement that the court can use to determine the allegation of fraud against the Claimant.

“Consequently, the Counter-Claimant has failed to provide cogent, credible, and compelling evidence to establish its claims for fraud or unlawful interference with trade.

“The reliefs sought in the Counter-Claim are declaratory and monetary in nature, and such reliefs cannot be granted on the basis of unsupported allegations or documents that have been expunged by the Court.

“In the circumstances, I find that the Counter-Claimant has failed to discharge both the legal and evidential burden of proof required by law.

“I hereby dismiss the counter-claim in its entirety for lack of merit. On the whole, the case of the Claimant succeeds” Justice Oba said.

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