Non performing loans reported by banks have increased due to the falling oil price.The oil price plunge on the international markets has caused Nigerian banks to come face to face with the worst cash crunch in decades. This is mainly due to the fact that the banks’ biggest borrowers, which are oil producers are in serious financial straits. Most oil producers have been forced to declare force majeure on financing oil projects thus failing to pay their debts.Oil producers, make up more than 28 percent of commercial banks loan portfolios, so a failure to pay on their side means that there will be a sharp increase in the non performing loans.Ronke Jibodu, vice president at First City Monument Bank Plc said that in their projections, the worst target for oil was set at $35 a barrel but as of today it is $35 per barrel.
Nigerian bank executives are reported to be putting together a proposal to the Federal government for a bailout that will guarantee loan worth almost $25 billion extended to the petroleum industry. This comes amid fears over the liquidity of some Nigerian banks.
 

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