Loans: Banks put up chronic debtors’ properties for sale

cbn gov

Some of the Money Deposit Banks in the country have compiled for sale the lists of houses, hotels, filling stations, schools, among other property used as collateral by debtors in a bid to recover their capital.

The banks, in a name and shame manner, had earlier in the week published the lists of chronic debtors who were unable to meet up with the July 31 deadline given by the Central Bank of Nigeria to repay their loans.

So far, 17 banks had published the names of their delinquent debtors and of the N175.61bn being owed the banks, First Bank has N43.72bn non-performing loans; Unity Bank, 45.52bn; Access Bank, N3.4bn; Diamond Bank, N47.17bn; First City Monument Bank, N17.1bn; Ecobank, N5.4bn; UBA, N9.3bn; and Wema Bank, N1.26bn.

While the Assets Management Company of Nigeria, Standard Chartered Bank, Keystone Bank and others are waiting to publish their lists of debtors next week, the total number of debtors so far released by the banks, after removing some names due to litigation and last-minute renegotiation, is 606.

However, investigations by PUNCH revealed that apart from publishing the debtors’ names, some of the banks had concluded plans to sell real estate assets used as collateral by debtors and had already engaged the services of estate firms/agents to dispose them.

 Some estate surveyors and valuers also affirmed that they had received instructions from some of the banks to help them dispose the property which are spread across the country.

While some of the surveyors admitted that they had received the property lists directly or indirectly from the banks, some others said some of the banks had contacted them to do same even before the names of debtors were published, noting that the exercise started shortly after the three-month grace period given to the chronic debtors by the banks.

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one of the surveyors, Olu Adeyemi, explained that due to the desperation of the banks to recover their capital within the shortest possible time, they had given their lists of property to as many firms as they could trust to fast-track the sale.

A lawyer and rights activist, Mr. Liborous Oshoma, in a telephone interview with Saturday PUNCH, said, “It is not the first time that debtors’ property foreclosed by the banks are being put up for sale, but efforts have only been doubled in recent weeks because of the level of bad debts and the fact that there is no money in the system.”

A former CBN Deputy Governor, Mr. Tunde Lemo, averred that selling properties used as collateral by banks was in line with global practices as long as the action is within the confines of the terms of the loan.

He also explained that there should be a legal framework and infrastructure in place that would ensure that banks would be able to realise their security with relative ease.

He said even though the list would not be able to distinguish between those who were determined to default and those helpless, the intention of the CBN to publish the names of defaulters should not be misunderstood.

He said, “Selling properties used as collateral is allowed. If someone owes and he has violated the terms of the contract, banks should feel free to realise their security, but they should act within the terms of the agreement.

“The CBN should not be criticised at this point over the publishing of the names. Its intention is understood. It has become very important to deal with serial borrowers and do something to check irresponsibility on the part of borrowers, who just think banks’ money is for them to take. That is not good enough.

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“It is also important to note that perhaps there are better ways of dealing with those who don’t want to pay because some may be unable to pay due to the dire economic circumstances, which may be outside their control, while some may have fraudulent intention. Thus, a publication like this may not distinguish between the two.

“There may also be issues around clerical error and accuracy that could make someone’s name appears in the paper which ought not to be and there are also marginal customers who may be struggling to pay, but whose business would be affected by the publication. These are what we call unintended consequences.

“However, it is not about whether it is right or wrong, what we should look at is the legal framework and infrastructure as well as the official platform that will ensure enforcement of property rights and disposition of cases in court, such that banks are enabled, as it is in other climes, to realise their security with relative ease, then there may not be need for this.”

When contacted, spokespersons for Skye Bank, UBA, Zenith Bank, and First Bank, among others declined to comment on the issues. Calls, emails and text messages sent to them had yet to be answered as of the time of filing this report.

Source : Punch

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