Experts blame negligence, over-statement for Etisalat’s, banks’ debt saga

The $1.2 billion debt deal by the embattled Etisalat Nigeria and consequent foreclosure of its assets by the 13-bank syndication group has raised concerns over lack of uniformity in loan requirements.

While small businesses are almost stripped of their meager asset in the name of collateral, so-called big organisations are given huge loans based on recognition, which recent developments have proved such permutations wrong.

But like a planned action, some banks involved in the deal, at the weekend, chorused: “It is unethical to disclose banking relationship with a customer,” while many others refused to pick up calls.

This shows that the looming challenges posed by the failed negotiations between the telecommunications operator and the banks, particularly with the sector’s huge Non-Performing Loans (NPLs) exposure, the last may not have been heard.

Chief Executive Officer of Financial Derivatives Limited, Bismarck Rewane, said that from the mention of the United Arab Emirates-investment company- Mubadala Group and the viable product in the name of Etisalat, banks expectedly, would tumble over themselves to lend them money.

Although subject to suspicion, the way the foreign investor pulled away, according to Rewane, may have been a strategy to cut short its losses.

A director in one of the investment banks in the country, who has knowledge of the deal, said that there are obvious signs that the banks did not commit the foreign investor (with majority stakeholding) in whatever agreement, which is negligence.

Otherwise, Mubadala Group, he said, would have remained liable and the proceeds of the Etisalat towers sold to IHS Towers, would not have been repatriated wholly without offsetting debts in the banks.

A source, who hinted that Etisalat Nigeria might have secured the loan with its cash flow and assets, especially, its towers, said both organizations, saw the Abu Dhabi action as amounting to abandoning the company’s monumental obligation in Nigeria.

A telecoms expert, Kehinde Aluko, told The Guardian, that the action of Abu Dhabi parent company was tantamount to ignoring and disregarding the commercial contract of Nigeria.

He advised other companies to learn from the Etisalat imbroglio.