Banks move against stock market, oil marketers over debts

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Banks move against stock market, oil marketers over debts

Written by Odidison Omankhanlen Monday, 25 April 2011

There are strong indications that the stock market will take a little longer to rebound as the banks are not yet favourably disposed toward lending to capital market operators.

Nigerian Tribune investigations showed that apart from the stock market, the banks are also withholding their facilities from the oil and gas marketers. This is largely attributed to the huge funds lost during the recent stock market burst and changes in some policies concerning oil importation.

A top bank executive, who spoke with the Nigerian Tribune on telephone but craved anonymity, said the way some of the debtors went about the debts owed the banks aftermath of the market crash and lull in the oil business were not encouraging, adding that it was on that basis that the banks decided not to lend to the operators.

The bank chief noted that some of the debtors who were believably rich started employing various tricks to evade repayment, stressing that efforts made by the various banks to get their money back proved abortive.

“Under the present circumstance, it will be difficult for banks to be exposed to the stock market and oil product importers. We have learnt our lessons from the recent happenings. Some of our debtors were simply recalcitrant in order not to pay back their debts. They started deploying various tricks such as the courts, to at best delay payment or not to pay back,” he said.

Speaking to newsmen in Lagos last week, the Managing Director, Ecobank Nigeria confirmed that the capital market and oil and gas marketers might not be able to attract much investment in view of the events of the recent past and the current policies surrounding oil product importation.

He however noted that the oil marketers suffered genuine loss and had no enough capital to pay for the loss, stating that no businessman will his destroy access to credit.

It would be recalled that there have been complaints that some of the bad debtors have been employing various antics to evade repayment.

As a result of the development, bank’s lending to the private sector is now on the decline. A look at the financials so far published by various banks reveaedl their reluctance to grant new credits, a fundamental element of the business. While Skye Bank has so far reported the highest growth of 20 per cent in loans and advances in 2010, compared to previous year, Ecobank Nigeria followed with 18 per cent; Access Bank 12 per cent, followed by First Bank with 5.5 per cent; Zenith, 2.0 per cent; and UBA, 1.3 per cent.