The Central Bank of Nigeria (CBN) has barred three major banks from paying dividends to shareholders for the 2025 financial year due to their heavy exposure to non-performing loans linked to the indigenous oil and gas company, Nestoil Limited.
Nestoil’s distressed debt, estimated at approximately $2 billion, or about ₦2.9 trillion, has forced significant impairment charges across several lenders, prompting the CBN to enforce strict provisioning rules.
The latest banks affected are United Bank for Africa (UBA) and Access Holdings, joining FirstHoldCo (First Bank) and others in skipping dividend payments.
UBA recorded loan loss provisions of ₦331 billion, while Access Holdings saw its impairment charges rise 209% to ₦287.3 billion.
Industry data indicate that combined impairment charges linked to these exposures totalled approximately ₦2.16 trillion across key banks, including FCMB and Ecobank.
The Nigerian banks’ total exposure to the oil and gas sector stood at ₦21 trillion at the end of 2024.
CBN’s Stance
Under Governor Olayemi Cardoso, the CBN has adopted a firm approach, requiring banks to fully provision for non-performing loans (NPLs) and reduce the ratio below 5% before declaring dividends.
This is different from previous CBN’s forbearance policies.
Background on Nestoil Debt
Nestoil secured loans during periods of higher oil production expectations but has faced challenges servicing the debt while blaming it on oil price volatility and operational issues.
Creditor banks have pursued legal actions, including asset freezes and receivership proceedings, which remain ongoing.
Major banks with reported exposure include UBA, Access Bank, First Bank, FCMB, Ecobank, and others.
Shareholders have expressed disappointment over the lack of dividends, but are hopeful that full recovery from the Nestoil assets may take time due to legal complexities.
The CBN has emphasised the need for capital preservation and sound risk management in the banking sector.
Administrator and Writer
