Access Bank, UBA, Other Nigerian Banks Bleed, Incur N284 Billion Losses Over Ghanaian Bonds Default
- Top Nigerian banks, led by Access Bank, Zenith, GTCo, and others, are reeling from a debt default by Ghana.
- The banks invested heavily in Ghanaian bonds, which the country failed to honor
- The banks said they had voted billions of naira in impairment losses as a result of Ghana’s default
Several Nigerian banks recorded huge losses on their investments in Ghanaian Bonds, resulting in delays in releasing their financials.
Ghana is currently reeling from a debt crisis caused by the country’s fiscal revenue shortfalls.
Source: UGC
Ghana in a severe economic crisis
The current global crisis has mounted severe pressure on the country’s economy, resulting in a ballooning inflation rate, exchange rate devaluation, and escalating national debt.
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The country’s inflation rate is 54%, and its weak currency is hurting and driving investors away.
In December 2022, the Ghanaian government announced a Domestic Debt Exchange Programme to restore sound public finance, accounting, and sustainable debt levels.
Due to Ghana’s Bond default, several Nigerian banks which invested in the bonds have earmarked billions of naira for impairment losses.
Nairamentrics report that Ecobank, GTCO, UBA, and Zenith Bank have made provisions to account for their impairment losses.
Zenith Bank reported an N58.7 billion impairment from its Ghanaian operations for 2022.
UBA said it had lost about N17.2 billion from restructuring the Ghanaian bonds.
Ecobank International said it had losses of up to $162 million
GTCO said it had lost about N35.6 billion on Ghanaian Bonds. Reports say the casualties include exposure to Treasury Bills, Local bonds, and Eurobonds issued by Ghana.
Access Bank makes N103bn provision for Ghana bonds
BusinessDay reports that Access Bank, which released its results on the 20th of April, said an impairment loss of about N103 billion on Ghana-related bonds.
The bank’s losses are the highest losses reported by commercial banks from Nigeria on the Ghana Bonds
It stated that Ghana’s debts in its books are valued at N348.1bn as of December 2022.
Access Bank Ghana’s losses represent the single highest losses reported by any commercial bank of Nigerian origin.
Access Bank said:
“While the economic loss on Ghana’s Domestic debt has been determined via a Domestic Debt Exchange Programme (DDE) with definite terms, unlike the DDE, the Ghanaian government has not yet presented restructuring terms for the Eurobonds.
“Though restructuring parameters are subject to a lot of uncertainty, the possibility of further material impairment charge for this event is considered remote. The fair value for Ghana sovereign debts in the books of the Group amounts to N348.15bn.”
Ghana's bonds debt default causes widespread loss among Nigerian banks, as Zenith Bank, others Bleed
Legit.ng reported that according to a recent report, Nigerian banks recorded huge losses on their investments in Ghanaian bonds, which caused delays in releasing their financial statements and audited accounts.
Nairametrics reports that Access Bank, FBN Holdings, and Fidelity Bank have yet to release their financials.
Ghana is battling debilitating economic crises caused primarily by lower commodity prices that have reduced its fiscal revenue cushions.
Source: Legit.ng
