Let us take a minute to applaud Ecobank.
Admittedly they are not wholly Nigerian (only 40% of their business is in Nigeria and one of the largest shareholders is South Africa’s Nedbank), but they appear to be the only bank connected with Nigeria telling something like the truth.
All accounting is creative. It is an art not a science.
However, Ecobank’s announcement of poor performance appears to have the ring of truth about it.
This rings out like a bell in the sea of other Nigerian Banking sector participants i.e. Zombie Banks, silently ignoring non-performing loans and performing conjuring tricks with their Profit and Loss Statements.
Ecobank have openly decided to take a Loan Impairment charge and establish their own bad bank to hold the non-performing loans.
No other bank has been so open as to declare a loss like Ecobank.
Instead they appear to cooking up financial magic to make a profit in a terrible economy where every loan is continuously restructured to avoid taking an impairment charge.
Of course, Nedbank are not sitting on a golden egg and have had the value of their investment in Ecobank halved since investing in 2012.
Having had their fingers burnt, there is an Ecobank rights issue announced in which Nedbank will not be participating.
Honesty is the best policy.
We can only hope other banks follow suit to try and restore credibility to the Nigerian banking sector.