Nigerian Bank Shares Suffer Losses As Etisalat Woes Stoke Sell-off

Nigerian banking shares dropped 2.3 percent on Tuesday after regulators said they had intervened to save the country’s fourth largest telecoms firm from collapse as talks with local lenders to renegotiate a $1.2 billion loan failed.

Etisalat Nigeria had been negotiating with its lenders for more than five months to restructure a $1.2 billion loan it took out four years ago after missing several payments.

The news sent the banking index lower, which caused the main index to fall 1.1 percent as investors sold shares on worries that lenders may be forced to take a haircut on Etisalat’s loan.

The telecom industry regulator said Etisalat Nigeria and its creditors have reached a resolution on key issues on the indebtedness and that a transition process had been mutually agreed. Lenders have set up a new board for the company.

Half-year earnings season has started for companies listed on the Lagos bourse and lenders, under pressure to avoid loan-loss provisions, had been pushing to finalise restructuring talks before interim audits in June.

United Bank for Africa (UBA) topped the decliners with a fall of 5.75 percent. Pan-African lender Ecobank shed 4.94 percent, Diamond Bank and FCMB both lost 4.72 percent each.