A report by respected international financial publication, Bloomberg has mentioned some Nigerian financial institutions as being undercapitalized and of being close to insolvency.
The Bloomberg report was based on a research report carried out by UAE based investment bank, Arqaam Capital.
According to the Dubai based firm, the Nigerian banking sector is facing a full blown credit crisis.
Unity Bank Plc and Skye Bank Plc are close to being insolvent, while lenders FBN Holdings Plc and Sterling Bank Plc “will need a dilutive capital hike,” Jaap Meijer and Tarek Sleiman, analysts at the Dubai-based investment bank and brokerage, said in an e-mailed note on Monday.
“Our acid test reveals seven under-capitalized banks” with a deficit of as much as 1 trillion naira ($3.2 billion) in the financial system, Meijer and Sleiman said. A stress test identified FBN as the most under capitalized lender with Unity, Diamond Bank Plc, Skye, FCMB Group Plc, Sterling and Fidelity Bank Plc also showing deficits if they were to fully provide for non-performing loans, according to Arqaam.
Mr. Babatunde Lasaki, Head of External Communications for First Bank said, “First Bank is not undercapitalized. We are still within the industry regulatory threshold. This is their opinion. Our position has been published in our half-year report; it is not the one from an investment bank or a speculative report. Our Q3 report will soon be published.”
“Our bank is strong,” Ikechukwu Mike Omeife, a spokesman for Diamond Bank, said by phone from Lagos. “Our capital-adequacy ratio and non-performing loans are within the statutory requirements.”
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