Notes to the Financial Statements
For the year ended 31 December 2010
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|
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.