Nine banks provide N226 billion in insider-related loans in 2021

INDICATIONS revealed that nine Nigerian banks approved and extended N226.12 billion in loans and advances to entities controlled by key management and related parties in 2021.

This is according to the analysis of the 2021 Financial Accounts of Banks published on the Nigerian Stock Exchange

As administrators, in particular, privileges that include reduced interest rates, longer loan terms are granted to key executives, including their immediate family members.

The banks are Unity Bank Plc, Wema Bank Plc, Access Holdings Plc, United Bank for Africa (UBA) Plc, Zenith Bank Plc, Guaranty Trust Holdiñgs Plc (GTCO), FCMB Group Plc, Fidelity Bank Plc and Sterling Bank Plc.

Bankers describe key management as members of the bank’s board of directors, including close family members and any entities over which they have control.

Close family members are those who are likely to influence or be influenced by this person in his dealings with the bank.

Details of Sterling Banks financial statements for the year 2021 show that loan and advance transactions with key executives amounted to N600 million, an increase of 60.4% from N374 million in 2021.

The bank also released a full list of directors and some employees, related entity loans worth over N2.4 billion.

According to Fidelity Bank’s financial statements, the bank provided more than N194.33 billion in loans and advances to related parties at the end of 2021, up 20.7% from N194.33 billion. recorded in 2020.

Loans to entities controlled by key management increased by 20.7% to N96.6 billion in 2021 from N80.02 billion in 2020, according to the breakdown, while loans to related parties increased by 20.6% to reach N97.73 billion in 2021. from N81.01 billion in the previous financial year.

Zenith Bank reported loans and advances of 1.69 billion naira on insider-related transactions, an increase of 3.5% from 1.63 billion naira in 2020.

The others are: Unity Bank – 5.35 billion naira in 2021, Access Bank – 268.2 million naira in 2021 out of 2.23 trillion naira reported in 2020, Wema Bank – 589 million naira related loans and advances to insiders in 2021 on 2.02 billion naira reported in 2020. Stanbic IBTC Holdings – 39.86 billion naira, FCMB Group – 1.15 billion naira in 2021.

Meanwhile, analysts fear that with the rate of insider-linked lending increasing, most lenders are violating Article 20 of the Banks and Other Financial Institutions Act (BOFIA).

According to the law, a bank is not allowed to grant more than 20% of its shareholders’ funds to a single person (natural or legal person), including subsidiaries, associates and related parties of such a person.

“A bank is also not authorized to grant loans: on the guarantee of its own shares; or permitted to be outstanding, unsecured advances in excess of N50,000.00 to its directors or to any firm or company in which the bank itself, or any of its directors, is a director or guarantor or in which he or they maintain at least more than five percent of the shareholding; or let be due to its employees, unsecured advances which exceed one year of emoluments.

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