In April, the Central Bank of Nigeria ordered a crackdown on borrowers with non-performing loans in a bid to avoid a repeat of the 2009 banking crisis that cost the government $4 billion.
“The Central Bank of Nigeria has observed the rising trend of non-performing loans in the industry,” Tokunbo Martins, director of banking supervision, was reported as saying at the time.
“Banks and discount houses are required with effect from May 1 … to give delinquent debtors three months’ grace to turn their accounts from non-performing to performing status.”
If they failed to meet the deadline to get their accounts in order the banks were ordered to name and shame them by publishing their names in at least three national daily newspapers. The central bank said they would also be barred from participating in currency and government debt markets.
A sharp drop in the global price of oil, Nigeria’s main export, has triggered a series of crises in Africa’s largest economy. Memories of the 2009 crisis, when the central bank rescued several banks that had lent mainly to the oil and gas sector just before crude prices collapsed, are still fresh.
In the aftermath of that crisis the central bank set an upper limit for the industry of a ratio of 5 percent non-performing loans. Then, in April this year, came the order to crack down on individual delinquent debtors.
Top Nigerian commercial lenders including Stanbic IBTC , Diamond Bank, First Bank and Skye Bank, are all reported to have given notices to bad debtors after the central bank’s decree that they should pay up or face the consequences.
At least one bank, the Asset Management Corporation of Nigeria, the country’s “bad bank” which was set up in 2010 to absorb non-performing loans, is reported to have reminded debtors this week of the deadline and said it would publish names of those who had not squared their loans.