Africa: Nigeria’s oil pumps banks

Local firms are making the most of the purge of bad debts from the system and the opportunities that efforts to indiginize the oil industry offer.

It was an unwelcome surprise for many last month when UBA, Nigeria’s third-biggest bank, said it would probably report a loss for 2011. The much-trumpeted theory had been that the worst was over for Nigeria’s banks, thanks to a clean-up of the 2009 margin-lending crisis.

UBA said the main problem was a write-down on the latest batch of debt sold at a discount to the state bad bank, Amcon. The biggest chunk was a 40% haircut of almost $100 million on a loan to Zenon, a downstream oil and gas company active in Nigeria’s multi-billion-dollar petroleum-imports business.

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