Austerity Measures: Nigerian Banks Cut Down On Syndicated Borrowing

As a result of the falling oil prices and a new regulation introduced by the Central Bank of Nigeria (CBN) in 2014, borrowing costs have increased, making Nigerian banks to cut down on internationally syndicated dollar loans.

In contrast, international lenders already experiencing excess liquidity and lack of deal flow elsewhere in the CEEMEA (Central & Eastern Europe, Middle East & Africa) region are still keen to lend to Nigerian banks, though on a more selective basis.

Late last year, the central bank imposed new regulations on Nigerian banks, requiring banks with exposure to the oil and gas sector in excess of 20 per cent of their total credit facilities to hold provisions of 125 per cent against these assets.

Beside the higher cost of provisioning, Nigerian bank borrowers also face the prospect of higher pricing for dollar loans from international lenders, which have become more cautious about lending into Nigeria.


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