Billionaire debtors whose firms, directors and shareholders were barred from securing further loans from local banks are in for bigger troubles.
The Central Bank of Nigeria (CBN) at the weekend, said the debtors, amongst whom are Femi Otedola, Alhaji Sayyu Dantata, Sir Johnson Arumemi-Ikhide, former Power Minister, Prof. Barth Nnaji, Mrs Elizabeth Ebi and Dr. Wale Babalakin, including their firms would be handed over to law enforcement agents, should they fail to repay their loans.
A total of 113 companies and 419 directors/shareholders, were affected based on report published in one of the national dailies last week.
CBN Spokesman, Ugochukwu Okoroafor, told The Nation that should they fail to repay their loans, the apex bank will involve the law enforcement agents to achieve full recovery, to ensure financial stability, and instil discipline in the banking sector. “We are a bank, not law enforcement agent. Should these debtors fail to repay their loans, law enforcement agents will take care of it for us,” he said.
A top CBN official, who pleaded anonymity, also explained that the regulator had to bar the debtors from further credit, to enable them honour their obligations, adding that the apex bank decided to use ‘naming and shaming’ because according to him, that’s the only way the debtors will be compelled to honour their obligations.
Managing Director, Asset Management Corporation of Nigeria (AMCON), Mustafa Chike-Obi, declined to comment on the matter further, saying it was a CBN affair.
The CBN had last week, barred banks from extending further credit to the affected persons and their companies. This became exigent due to difficulties the AMCON is having with the debtors, after it took over bad loans worth over N3.4 trillion from the banks.
The apex bank, in a circular dated September 17, confirmed that the restriction would apply to individuals, organisations, companies, as well as principal shareholders and directors of companies where the outstanding value of loans purchased by AMCON amounted to N5 billion or above as at the day of purchase, without regard to the actual amount paid by AMCON.
The circular, signed by CBN’s Director, Banking Supervision, Mrs. A. O. Martins,said: “It has become necessary to stop debtors who failed to repay their loans to banks and had these loans subsequently transferred to AMCON, from further enjoying credit facilities from Deposit Money Banks (DMBs), until they fully repay agreed outstanding to AMCON.”
The CBN also stated that any bank that flouts the guidelines would be made to make an immediate provision of 100 per cent of total principal and interest outstanding in the account of the customer and related parties, in addition to whatever regulatory penalties the CBN may decide to impose.
According to the report, the list of debtors showed that Zenon Petroleum, owned by Otedola, is indebted to banks to the tune of N192.4 billion; MRS Holdings Limited, which belongs to Dantata, owed N119.98 billion; Seawolf Limited – N98.32 billion; Arik Air Limited, belonging to Arumemi-Ikhide – N85.481 billion; NITEL Plc/M-Tel – N71.547 billion; and Capital Oil and Gas Limited, which belongs to Ifeanyi Ubah – N48.014 billion.
The banking watchdog equally directed banks to shun further credit to Cross River and Zamfara States because of the failure of the Tinapa Business Resort and Accountant General, Ministry of Finance, Zamfara to pay back loans collected respectively.