Following the global drop in oil prices, there have been concerns over banks’ exposure to the oil and gas sector.
However, operators of deposit money banks (DMBs) have called for calm, assuring that Nigerian banks are adequately capitalised to withstand the situation.
Analysts had predicted that a drop in oil prices may open a new wave of consolidation in the Nigerian oil and gas sector, even as they estimated that some companies may not be able to repay their debts.
However, the Managing Director/Chief Executive Officer, Guaranty Trust Bank Plc (GTBank), Segun Agbaje explained that a stress-test that was done by the Central Bank of Nigeria (CBN), showed that banks operating in the country can withstand the shock.
“We must remember that it is not only Nigerian banks that finance oil. All over the world, people finance oil. Oil is not different from any other commodity. If you finance in the upstream for as long as you have reserves, you can always elongate the tenor of your loans if you find that it is not sufficient,” he said.
The GTBank boss argued that some of the concerns over the drop in oil prices were overblown, revealing that the stress-test that was done by the CBN was with crude price at about $50 to $55 per barrel respectively.