Zenith Bank provides for 30% of 9mobile’s loan

Zenith Bank says it has made a provision on 30 percent of its loan to 9mobile, telecommunications company formerly known as Etisalat.

According to Reuters, Peter Amangbo, chief executive officer of the bank, made this known in a conference call on Monday.

“We have taken about 30 percent as a provision which we believe is very prudent as the company is undergoing restructuring to prepare for a new investor.”

A lender makes provision for a loan if it perceives that the debtor will default on the loan.

A provision is an allowance set aside to cover loan losses.

The company, which is Nigeria’s fourth largest telecommunications company, had been in the news for its inability to repay a $1.2 billion loan it took from a consortium of 13 banks.

First Bank of Nigeria (FBN), one of its lenders, had said it would keep the stability of the company before looking for new investors.

Another lender, FCMB, said lenders had agreed to extend the loan which the mobile operator took out four years ago but struggled to repay due to a currency crisis and a recession in Nigeria.

The Nigerian Communication Commission (NCC) and the Central Bank of Nigeria (CBN) had intervened in the debt crisis to ensure that the company which employs over 4,000 Nigerians survived but their efforts did not yield the desired result.