Nigerian lenders to set aside extra provisions on dollars loans

The Central Bank of Nigeria has advised commercial lenders to set aside extra provisions against their dollar loans immediately following the sharp fall of the naira.

The naira has dropped 40 percent since June when the CBN ditched its 16-month-old peg of N197 to the dollar in a bid to lure back foreign investors who had fled after a plunge in the price of oil.

Commercial Banks

Nearly half of bank's loan books are denominated in dollars, and the central bank asked commercial banks after the naira float to ensure that portions of their loans that had become exposed due to the sharp falls in the naira were fully provided for on their income statements.

The banks have begun trying to restructure their loan books, but in a circular issued last week, the central bank instructed lenders to send evidence of the extra provision by this Wednesday.

The naira hit N324 to the dollar on Monday, near a record low of N334.50 touched last week. It later firmed to end at N315.50 after the central bank intervened with dollar sales.