‘Our loans are secured’ — BoI denies lending without collateral

The Bank of Industry (BoI) has dismissed media reports that it undertakes unsecured lending, describing them as untrue and misleading.

In a statement on Wednesday, the management said BoI offers credit with collateral security.

BoI said it deemed it necessary to set the record straight for the sake of its numerous stakeholders.

“As a matter of strict credit policy, BOI does not lend money without collateral security,” the statement reads.

“Over 93 percent of BOI loans are secured with bank guarantees of commercial and merchant banks and federal government bonds/treasury bills.

“Foreign and local lenders to BoI require the bank to utilise these collaterals for lending as a condition for their lines of credit; so all the monies we borrow overseas are safely sterilised with the Central Bank of Nigeria (CBN). Also, all on-endings from the foreign loans are first verified by CBN before subsequent release of funds is made.

“The remaining 7% of the loan portfolio are secured with legal mortgages and/or debentures as well as guarantees.

“BOI runs a world-class transparent credit process that is extremely robust with strong internal control systems that is supervised and reviewed extensively by the bank’s board of directors on a consistent and regular basis.”

The statement added that BoI is audited by KPMG, whose yearly audit reports are reviewed by the board of directors and submitted to the CBN for approval before publishing.

BoI advised the public to ignore the false reports as they are entirely untrue and without substance.

It further explained that the CBN requires banks to maintain a non-performing loan (NPL) ratio of 5 percent or less and “BoI’s NPL as at December 31st 2020 was less than 3 percent”.

“Also, the CBN annually conducts extensive onsite examination of the books of BOI. The Management has consistently responded satisfactorily to any issues raised by their examinations,” it added.

“The auditor general of the federation also conducts yearly examination of the books of BoI, and the management has consistently responded satisfactorily to issues raised by their audits.

“For the avoidance of doubt, in the example cited by the reports, the bank approved a total of N4.6bn in credit facilities to two of its customers, with both facilities secured by bank guarantees contrary to what was reported.

“Both the senate and house of representative committees also perform yearly oversight review of the bank’s operations. Both arms of the national assembly have access to all audit reports and examinations of the bank and have consistently expressed satisfaction with the bank’s operations.

“The management of the bank remains focused on delivering on our mandate to support industries by catalysing the expansion of local industries and reactivation of ailing ones while supporting green fields.”