Ghana's Bonds Debt Default Causes Widespread Loss Among Nigerian Banks, as Zenith Bank, Others Bleed
- Nigerian banks have reported losses caused by Ghana's bond default
- The banks' delayed financial and audited reports reflect the impact of the bonds debt default
- Ecobank, Zenith Bank, GTCo, and UBA are among Nigerian banks that have suffered huge losses due to Ghanaian bonds
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.
Source: UGC
Ghana faces an unprecedented economic crisis
Ghana is battling debilitating economic crises caused primarily by lower commodity prices that have reduced its fiscal revenue cushions.
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The country's economic hardship has also caused inflation, increased discount rates, and hastened exchange rate devaluation.
The inflation rate in the West African country is currently above 50%, and Ghana's currency has weakened against the US dollar.
As a result, the Ghanaian government announced a debt exchange programme to restore public finance and sustainable debt levels.
The country has also suspended coupon payments for its loans, forcing bondholders to take a haircut, a term for loss of bond value.
The ex-Gold Coast undertook the bold step of buying oil with gold as it struggled to find forex to pay for essential imports.
Ghana is negotiating with the International Monetary Fund (IMF) to seek concessionary funding.
Suffice it to say, its debt restructuring moves added enormous pressure on some Nigerian banks, including the impact of the devaluation of the naira.
The debt crisis in Ghana resulted in Nigerian banks earmarking billions for impairment losses.
Nigerian banks affected by Ghana's debt default
Banks such as Ecobank, GTCo, UBA, and Zenith Bank have made provisions for impairment losses.
In their 2022 financials, four Nigerian banks revealed that they incurred an impairment loss of about N207 billion in 2022 due to Ghana's debt restructuring.
- Zenith Bank reported a net impairment loss of N58.7 billion from its Ghanaian operations for 2022.
- UBA Ghana specifically incurred about N14.2 billion of the losses.
- Ecobank International incurred losses of up to N69.2 billion.
- GTCO incurred a loss of about N35.6 billion on Ghanaian Bonds. The casualties include exposure to Treasury Bills, Local bonds, and Eurobonds issued by Ghana.
129-year-old First Bank announces corporate name change of subsidiaries across Africa, United Kingdom
Meanwhile, Legit.ng earlier reported that Nigeria’s oldest bank, First Bank Nigeria Limited, has announced a phased corporate name change for its subsidiaries in the United Kingdom and Sub-Saharan Africa.
The bank’s Group Head of Marketing and Corporate Communications, Folake Ani-Mumuney, announced the name change in a statement.
According to the statement, the name change aligns the subsidiaries with the parent brand and enjoys the strong heritage and brand equity built by FirstBank Nigeria in its 129 years of existence and industry leadership.
Source: Legit.ng
