Nigerian banks are battling an imminent liquidity crisis over huge exposure and non-performing loans to the oil and gas and power sectors, which are presently in excess of N4 trillion, The Nation reports. Head, Energy Research, Ecobank Group, Mr. Dolapo Oni said the banks could not release funds to the oil and gas industries because there were no funds to release except they raise money in the capital market.
Oni said: “Banks don’t have funds to release unless they go the capital market to raise capital. If they don’t raise capital, there is nothing to lend. A lot of banks are exposed to 30-40% of their loan books to oil and gas. The implication of this is that if the oil price continues to remain low, most of those banks will start recording losses on those particular assets.”
“Currently, we have about 12.8% of all loans that are non-performing in the banking industry, and the bulk of that is from the power, oil and gas sectors. So, it is pushing the banking industry into a region that they are approaching a crisis in terms of non-performing loans. Also, the banks have an issue of foreign exchange (forex) on their hands. Most of the loans are in dollars and these companies that took loans are not getting dollars,” he added.