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How banks’ removal of $1.2Bn 9Mobile debt from books’ll shape future

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Since the revelation that the 12 banks involved in the $1.2 billion 9Mobile loan are setting aside a large part of the debt from their books ahead of the December 31 end-date for the fiscal year, financial pundits have started weighing the development.

However, many of the experts who spoke to Business Hilights traced the new posture of banks to their observed declaration of profits at their half year results.

Another factor the banks are said to be considering is the credible transition structure handed down to the new management by the Central Bank of Nigeria (CBN) following the ouster of foundation shareholders of the embattled telecoms.

The CBN had given the Dr. Joseph Nnanna led board to work within a time frame of 90 to 180 days in either situating the company for sale or stability bearing in mind the settlement of the lingering debts.

Trouble started for formally Etisalat Nigeria, now 9Mobile four years ago when sourced $1.2bn loan from a consortium of banks and failed to repay the loan due to a currency crisis and the economic recession.

Affected by the syndicated loan default include Zenith Bank, GTBank, First Bank, United Bank for Africa, Fidelity Bank, Access Bank, Ecobank, First City Monument Bank, Stanbic IBTC and Union Bank.

But since Zenith Bank, said to be the most owed, announced that it had made a provision on 30 per cent of its loan to 9Mobile, indications emerged that others are likely to follow suit.

Chief Executive Officer of Zenith Bank, Peter Amangbo, had said earlier in the week that “We have taken about 30 per cent … as a provision, which we believe is very prudent as the company is undergoing restructuring … to prepare for a new investor.”

More signs of provisioning became clearing on Tuesday when Richard Obire, former Keystone Bank Executive Director said many other banks were likely to provide for certain percentage of the loans, depending on their profitability positions.

He was of the opinion that some other involved banks are conservative and may want to stay within the five per cent regulatory non-performing loan threshold while some may want to exceed the limit.

Obire added that “Banks that are making more money are more likely to provide for their loans than those with less profitability”.

Analysts are upbeat that the current steps taken by some of the banks will definitely push up appetite of serious investors in the telecoms in coming weeks.

However, a set of industry observers says, the Zenith Bank’s sudden decision may not be unconnected with the possibility of the either their chairman, Jim Ovia or somebody very close to the bank, planning to buy into 9Moblie after all.