Nigeria bars loans to big debtors
September 24 , 2012
Nigeria's central bank has banned loans to 113 firms that have failed to repay debts after a financial crisis brought the banking system to near collapse in 2009, according to an internal memo.
The ban covers firms whose bad debts were absorbed by state-backed "bad bank" AMCON.
The Central Bank of Nigeria (CBN) injected $4 billion in 2009 to support nine lenders it deemed as so weakly capitalized that they posed a threat to the entire economy.
Since then, a number of banks have been restructured, with AMCON, the Asset Management Company of Nigeria, absorbing their toxic assets.
"As part of the Central Bank of Nigeria's efforts at strengthening financial stability, it has become necessary to stop debtors who failed to repay their loans to banks and had those loans transferred to AMCON from further enjoying credit facilities ... until they fully repay," the memo said.
"Banks are prohibited from approving or disbursing any new credit facilities to all persons and organisations on this list," it said, adding that any violation would be punished by a fine and possibly additional penalties.
Names on the list include: Zenon Petroleum, privately owned by billionaire oil tycoon Femi Otedola, MRS Holdings, which holds former Chevron downstream assets and Nigeria's biggest national air carrier, Arik Air.