Annual Report & Accounts 2010 – Transformation
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Notes to the Financial Statements

For the year ended 31 December 2010

 
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35 Related party transactions

A number of banking transactions were entered into with related parties in the normal course of business. These include loans, deposits and foreign currency transactions. The volumes of related party transactions, outstanding balances at the period end, and related expense and income for the period are as follows:

(a) Risk assets outstanding as at 31 December 2010

Direct credit assets

Included in loans and advances is an amount of N169.386 billion (December 2009: N117.2 billion) representing credit facilities to companies in which certain directors and shareholders have interests. The balances as at 31 December 2010 are as follows:

Name of company/individual Relationship Facility type N million Status Security status
Honeywell Group Limited Chairman Loan 16,909 Performing Legal mortgage on property, cross guarantee, lien on assets
Honeywell Flour Mill Ltd (B&G) Chairman, Non-Executive Director Loan 643 Performing Cross guarantee, lien on assets
Pivot Engineering Ltd Chairman Loan 2,676 Performing Cross guarantee, debenture
Pivot Engineering Ltd (B&G) Chairman Loan 3,634 Performing Cross guarantee, debenture
Broadview Engineering Ltd (B&G) Chairman Loan 7 Performing Cross guarantee, counter indemnity
Airtel Networks Ltd Chairman Loan 18,391 Performing Trust deed managed by First Trustees Ltd
Airtel Networks Ltd (B&G) Chairman Loan 6,455 Performing Trust deed managed by First Trustees Ltd
Anchorage Leisures Ltd Chairman, Non-Executive Director Loan 3,223 Performing Debenture on fixed and floating assets
Fan Milk Plc Chairman Loan 316 Performing Mortgage debenture
Khalil & Dibbo Transport Ltd Chairman Loan 231 Performing Mortgage debenture
P.W. Nigeria Limited Non-Executive Director Loan 605 Performing All assets debenture
P.W. Nigeria Limited (B&G) Non-Executive Director Loan 10,536 Performing All assets debenture
Dangote Flour Mills Non-Executive Director Loan 819 Performing All assets debenture
Leadway Capital and Trusts Ltd Non-Executive Director Loan 175 Performing Lien on shares, personal guarantee
SeaWolf Oilfield Services Non-Executive Director Loan 95,280 Performing Charge over asset financed
SeaWolf Oilfield Services (B&G) Non-Executive Director Loan 9,300 Performing Charge over asset financed
Remi Odunlami Executive Director Loan 21 Performing Legal mortgage on property, domiciliation of salary
Kehinde Lawanson Executive Director Loan 132 Performing Legal mortgage on property, domiciliation of salary
Otti, Alex Executive Director Loan 6 Performing Legal mortgage on property, domiciliation of salary
Ngama, Yerima Executive Director Loan 3 Performing Lien on assets
Rasheed, Mahey Non-Executive Director Loan 24 Performing Deposit of C of O on property
      169,386    

35.1 Project finance - SeaWolf Oilfield Services Limited

The Bank, in July 2007, committed to jointly (with other financial institutions and investors) finance construction of oil rigs through SeaWolf Oilfield Services Limited for servicing oil companies based in Nigeria.

The Bank initially disbursed the sum of USD260 million to the company, and in view of the project’s potential, continued to fund the project when the other parties could not meet the funding agreement due to the economic meltdown and cash constraints.

The project is now operational and has commenced repayment of the finance facilities granted. The Bank has put in place adequate safeguards to ensure full repayment of the facilities as and when due.

All relevant regulators have also been notified of this transaction, which qualifies as a related party transaction as the Chairman and three other directors of the company were also directors of the Bank as at December 2010.

The facility exceeded the single obligor limit of the Bank set at 20% of the shareholders’ funds (N68.3 billion) as at 31 December 2010, as a result of reclassification of commercial paper balances to balance sheet in accordance with CBN circular BSD/DIR/GEN/CIR/03/018 of July 2009. However, the Bank obtained a waiver from the Central Bank of Nigeria via a memo dated 3 December 2010 to exceed the single obligor limit for the facility and to regularise the same by 30 September 2011. The Bank is taking active steps to bring the exposure within the single obligor limit within the year.

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