Reported by: Ijeoma G | Edited by: Oravbiere Osayomore Promise.
It is a scenario that would have been unthinkable just two years ago. Three of Nigeria’s biggest banks have failed to declare dividends for their shareholders for the entire 2025 financial year, and the culprit is not a global recession or a pandemic. It is the mountainous bad debt of a single indigenous energy giant, Nestoil Limited. According to full‑year 2025 financial statements, United Bank for Africa (UBA) and Access Bank, two of the country’s flagship commercial banks, have been forced to skip shareholder payouts entirely. UBA was forced to set aside a colossal N331 billion in loan loss provisions for the year, while Access Holdings booked an impairment charge of N287.3 billion on its loan portfolio—a staggering 209 percent jump from the previous year. These massive provisions, mandated by the Central Bank of Nigeria (CBN), directly eviscerated the banks’ net income, leaving nothing left to distribute to investors. The immediate trigger is the same across both institutions: Nestoil’s inability to service a syndicated loan portfolio now valued at an estimated N2.9 trillion.
The ripple effects spread far beyond UBA and Access. First HoldCo Plc, the parent company of First Bank of Nigeria, has taken an even more brutal hit, recording a N748 billion impairment charge on its loan books. This was a direct result of a hawkish directive from CBN Governor Olayemi Cardoso, who has implemented an “orthodox” and “no‑mercy” policy, forcing banks to stop hiding bad loans under the guise of regulatory forbearance and to fully provision for non‑performing exposures. FCMB Group also saw its net impairment losses double to N92.5 billion, and it similarly failed to announce a dividend. In total, the CBN’s clampdown has forced at least five tier‑one and tier‑two lenders—Access, UBA, Ecobank, First HoldCo, and FCMB—to take a combined N2.16 trillion impairment charge. This historic “balance sheet reset” has effectively frozen dividend payouts across the sector, turning what was once a reliable investment avenue into a barren field for shareholders.
At the center of this perfect storm is Nestoil Limited, a large‑scale indigenous engineering and energy firm. The current crisis is the culmination of years of aggressive lending to the independent oil and gas sector, which was facilitated during a period of high oil production and price expectations. When those expectations collided with fluctuating global commodity prices and mounting operational difficulties, Nestoil began to struggle to service its syndicated debts. The troubled loan book was syndicated among a wide range of Nigerian lenders, with the major creditors including UBA, First Bank, Access Bank, FCMB, Union Bank, Ecobank, and even the African Export‑Import Bank. To recover what they can, the lenders have accelerated their legal assault, securing a Mareva injunction in October 2025 that effectively froze Nestoil’s assets—including its bank funds, properties, and even its cargoes—across more than 20 financial institutions. This was followed by a full receivership order that saw armed police officers seal the company’s headquarters in the high‑value Victoria Island district of Lagos.
The legal battle, however, has turned into a labyrinthine saga that has locked up vital capital and threatens to destabilize the industry’s liquidity. Nestoil retaliated aggressively, filing a fresh suit at the Federal High Court in Abuja against eight Nigerian banks and Afreximbank, seeking to halt the receivership. The company argued that the banks were making “wrongful demands and threats” and were relying on “opaque computed figures” without providing proper account statements. This legal maneuvering led to confusion in the courts, with the Court of Appeal eventually stepping in to restore the receiver’s authority. In a dramatic escalation in December 2025, the court‑appointed receiver repossessed Nestoil’s corporate headquarters following a restorative injunction from the appellate court. The legal tug‑of‑war reached fever pitch in early 2026 when the Court of Appeal disqualified Nestoil’s esteemed legal team of Chief Wole Olanipekun (SAN) and Dr. Muiz Banire (SAN), ruling that the company’s board had lost the authority to hire lawyers once a receiver was in place. That decision was later overturned in April 2026 by the Supreme Court, which restored the company’s right to choose its own counsel, clarifying that it was a “legal anomaly” to allow lawyers appointed by the receiver to represent the company.
Despite the intense legal battles, the CBN has shown no sign of relenting. Governor Olayemi Cardoso’s stringent leadership has won praise from international financial institutions but has drawn the fury of investors who see their dividend incomes evaporating. The CBN’s directive explicitly prohibits affected banks from paying dividends until they have fully provisioned for their non‑performing loans, a rule that has already changed the financial landscape for the country’s lenders. Adding to the systemic pressure, Renaissance Capital earlier warned that some Nigerian banks might be forced to suspend dividend payments for multiple years as they struggle to meet the CBN’s stricter prudential standards. For banks like Fidelity Bank, which saw its retained earnings fall into negative territory with a N74.2 billion loss, the journey back to profitability and distribution could be a long one. Fidelity had to transfer a massive N303.5 billion into a non‑distributable regulatory risk reserve, immediately wiping out its distributable profits.
Industry observers warn that the prolonged dispute threatens to lock up vital capital and severely damage the industry’s liquidity. With banks forced to tighten their lending books and prioritize capital preservation, credit to the vital small‑scale manufacturing and import sectors is drying up, potentially deepening the country’s economic contraction. For the ordinary Nigerian shareholder who once relied on bank stocks for steady dividends, the news is a bitter pill. And for Nigeria’s banking sector, the crisis is no longer just about bad risk management; it is a stark test of whether the regulators can clean up the system without causing a catastrophic run on liquidity. As the legal gavels continue to fall in Lagos and Abuja between Nestoil and the lenders, the fate of billions of naira in shareholder value hangs in the balance.
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