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Nigeria Confronts a Major Banking Crisis

August 31st, 2009
The global financial and economic crisis and banking turmoil has come to the doorsteps of Africa’s second largest economy, Nigeria. The Economic and Financial Crimes Commission (EFCC) detained more than a score of bankers, as it investigates allegations of massive banking fraud and corruption. Among those taken into custody by the EFCC was Cecilia Ibru, former Managing Director and Chief Executive Officer of Oceanic Bank, one of Nigeria’s major financial institutions.

In the meantime, senior executives were removed from five of Nigeria’s largest banks. Amid the turmoil, the government was forced to provide $2.6 billion in emergency recapitalization to these same banks, whose balance sheets have been eroded by toxic loans. There are allegations that chicanery was involved in the non-payment of bank loans, prompting the government to issue a series of ultimatums to supposedly deadbeat  tycoons to pay up or face prosecution.

Undoubtedly, the Nigerian banking imbroglio is still to be sorted out. In the meantime, a major oil exporting economy is in the grips of a banking crisis that is as severe as it is murky.




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