What is the Credit Risk with Nigerian Banks?
Some Banks in Nigeria can be a credit risk for big foreign companies that deal with them. Perhaps the obvious credit risk is that if a bank were to go into liquidation, big time corporate depositors or business partners would lose their money or business reputation. In the extreme, if a bank goes into liquidation, the borrowing company or business partner could face a call from the liquidator for the immediate repayment of a loan. The need to find an alternative source of funds at very short notice would almost certainly force the borrowing company to pay more. Also, the sudden closure of a bank and the threat of lost deposits might still seem a remote and unlikely event. However, the closure of the Bank of Credit and Commerce International (BCCI) in July 1991 should still send a warning to many big time corporate depositors as well as other business partners with the bank. A more dangerous credit risk for a borrower is when a bank, perhaps because it is making losses and suffering fro
