BY EMEKA EJERE
The resolve of First City Monument Bank (FCMB), to support businesses weakened by the coronavirus (COVID-19) pandemic to remain viable received a boost last week when the leading Nigerian lender obtained a $50 million loan from International Finance Corporation (IFC), to that effect.
According to FCMB, the fund which is from an $8 billion credit facility launched in March by the World Bank’s private-lending arm to support companies impacted by Covid-19, will enable it “support hundreds of businesses with trade financing and working capital loans.”
The loan, made through IFC’s COVID-19 fast-track financing support package, reflects IFC’s commitment to Nigeria’s private sector following the severe challenges brought by the health and economic crisis. .
Nigeria’s lockdown, to curb the spread of coronavirus, shuttered businesses in the country and caused profits to plummet. The loan aims to provide liquidity to FCMB customers to remain “viable during and after COVID-19,” IFC said in a statement.
With a network of 205 branches, FCMB serves more than 4.5 million customers in Nigeria. IFC’s portfolio in the country stands at $1.3 billion in sectors including manufacturing, financial services, infrastructure and technology.
FCMB’s Chief Executive, Adam Nuru, said, “IFC’s loan facility will allow us to keep credit flowing to SMEs as well as corporate companies across all sectors of Nigeria’s economy, including in the health, pharmaceutical, food and trading industries.”
IFC’s Country Manager for Nigeria, Eme Essien Lore, said, “Supporting financial institutions like FCMB is vital to keeping smaller businesses solvent, saving jobs, and limiting economic damage in the face of a challenge as formidable as COVID-19. Although Nigeria has a strong and dynamic private sector, it needs liquidity now to ensure it remains viable during and after COVID-19.”
IFC, a sister organization of the World Bank and member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets. It works in more than 100 countries, using its capital, expertise, and influence to create markets and opportunities in developing countries.
In the fiscal year 2019, the corporation invested more than US$19 billion in private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity.
FCMB, on the other hand, is the retail and commercial banking arm of FCMB Group Plc, a financial services group with operations in Nigeria and the United Kingdom. From its early origins as an investment bank, FCMB transitioned into a full-fledged commercial bank in 2012 and has since grown to become one of the top 10 banks in Nigeria by total assets.
The bank has been at the forefront of the efforts to ensure that businesses and households survive the ravaging effect of the global pandemic as well as plummeting crude prices. In May, the group announced the plans to restructure half of its loans after plunging oil prices, the COVID-19 lockdown and naira devaluation hindered the ability of its clients to repay their debt.
“Credit facilities across industries ranging from oil and gas to small- and medium-sized enterprises would be reorganized”, Bloomberg quoted the Lagos-based lender to have said during a presentation.
It revealed that the new terms would include a six-to 12-month moratorium on principal debt repayments and an extension on loan maturities of up to two years.
The measures by FCMB came after its impairment charges surged by 61 per cent to N3.7 billion in the first quarter, according to a filing to the Nigerian Stock Exchange (NSE). Loans in the period rose seven per cent to N764.3 billion from a year earlier.
The lender plans to increase impairments to offset losses in unhedged upstream assets in the oil and gas industry, it said. About 37 per cent of the bank’s customers have foreign-currency loans and earn income in naira, so the lender will convert those into the local currency, FCMB said. The bank is targeting a loan growth of between 10 to 14 per cent this year, an earlier report showed.
Response to lockdown
As the pandemic took an intense twist leading to restriction of movement, with negative effect on individuals, households, businesses and health systems, the bank stepped up the tempo of its interventions through various humanitarian gestures.
To enable customers have full access to financial transactions and other services, FCMB ensured the stability of its robust digital channels while also helping the government, communities and individuals to mitigate the impact of the pandemic.
The institution’s intervention has been hinged on providing relief across a range of areas spanning testing, provision of personal protective equipment (PPE), food for the very needy and ease of doing business for small and medium scale firms.
The bank donated N250 million in support of the intervention initiative set up by the Central Bank of Nigeria (CBN), in partnership with the private sector, to assist the federal government respond effectively to COVID-19, known as the Private Sector Coalition Against COVID-19 (CACOVID) .
The fund is also supporting households and businesses to mitigate the impact of the virus, through the building of isolation and treatment centres, providing PPE and distributing food to over 10 million of the most economically vulnerable Nigerians.
Also, FCMB provided relief items to challenged individuals and households affected by the lockdown across Nigeria by working with various charity organisations and state governments. The palliatives include PPE for health workers and food items to sustain a large section of the population whose means of livelihood wee affected by COVID-19 and the resultant lockdown.
In addition, the bank provided support to givefood.ng coalition, coordinated by Babban Gona Farmer Services Nigeria, an agricultural franchise, which aimed to provide meals for 1 million vulnerable Nigerians every week. This went a long way to sustain a large section of the population whose means of livelihood were affected.
In partnership with 54gene, FCMB also sponsored the testing of 3,000 people in Ogun state to determine their COVID-19 status. This was to complement the state’s effort to determine and mitigate the extent of the spread of the pandemic.
With its innovations and the delivery of exceptional offerings especially in response to COVID-19, the bank believes firmly that the nation has a high propensity of coming out of the pandemic stronger and more resilient.