Surge in Shipping Risk Coverage Widens NordLB’s Loss

  • As Court orders final forfeiture of Naval boss’s N1.83bn to FG

As a result of a huge increase in the risk provisioning for ship financing, German shipping bank Norddeutsche Landesbank (Nord/LB) closed the financial year 2016 with a loss of EUR 1.9 billion (USD 2.02 billion).

Overall the group set aside EUR 2.94 billion for ship financing risks in 2016, after EUR 840 million in the previous year on the back of “the dramatic deterioration in the global shipping crisis over the course of 2016.”

“The loss posted by Nord/LB for 2016 as a result of the huge increase in risk provisioning for ship financing is painful, especially on this scale,” Thomas Bürkle, Chairman of the Managing Board of Nord/LB, said.

The bank said that the increase in risk provisioning was especially noticeable at its subsidiary Bremer Landesbank (BLB), which was fully acquired by the bank in the wake of the shipping crisis. BLB will in future concentrate mainly on corporate customers, private banking and energy financing in Germany as a bank focused on small and mid-sized companies situated in north-west Germany.

“Ship financing, which was previously run as separate business segments in both firms, will be brought together at Nord/LB. The intention is to combine the capital markets business of the two banks as well. In organisational and legal terms, BLB will be fully merged with Nord/LB, but will continue to operate under its own brand,” the bank said, adding that full integration is the first step in the new group-wide “One Bank” transformation programme.

The programme aims to place the group “as a whole on a new footing,” Bürkle said, adding that the objective is to make the group profitable again by cutting its costs by EUR 150–200 million by the end of 2020.

With a view to improving the quality of the portfolio, Nord/LB is focusing on reducing the ship financing portfolio. The shipping loan portfolio was already reduced from EUR 19 billion to EUR 16.8 billion in 2016. The aim is to reduce the size of the portfolio to between EUR 12 billion and EUR 14 billion by the end of 2018.

“We have set ourselves the objective for 2017 of reducing the shipping loan portfolio by a further EUR 3 billion,” Bürkle said.

Looking ahead, Nord/LB informed that it expects to end the first quarter of the year with a good result. However, it “will continue to have to cope with heavy burdens from the shipping crisis in the coming quarters.” Despite the foreseeable burdens, Nord/LB believed it is realistic to expect a profit for 2017.

In the meantime, a Federal High Court in Lagos on Thursday ordered the final forfeiture of N1.83 billion, belonging to a former Chief of Naval Staff, Admiral Dele Ezeoba.

The court made the order for permanent forfeiture of the sum, following an application by the EFCC prosecutor, Mr Rotimi Oyedepo, pursuant to section 17 of the Advanced Fee Fraud Act 2006.

Joined in the suit as defendants, were Chukwuka Onwuchekwa and Aquila Leasing Ltd.

The trial judge, Justice Muslim Hassan, had on March 15, issued an interim order for forfeiture of the said sum.

Hassan had then ordered the EFCC to make a publication of same in a national newspaper, for the knowledge of interested parties.

Delivering judgment on Thursday, the judge ordered a final forfeiture of N1.825 billion to the coffers of the Federal Government of Nigeria.

He held that the EFCC, having complied with the provisions of section 17 of the Act, as well the EFCC Act and the fact that the property was unclaimed, it was appropriate to make the orders.

“Having satisfied that such property is an unclaimed property, and also satisfying the provisions of the law, the court shall order the final forfeiture of the said property.

“In this view, there is no other proof required to enable the court make an order of final forfeiture; this application is meritorious and hereby granted.

“An order is hereby made for final forfeiture of the total sum of N1.825 billion to the federal government of Nigeria,’’ Hassan ruled.

The News Agency of Nigeria (NAN) reports that the EFCC had, while moving the application, said that the money was traced to the account of Aquila Leasing Ltd and that Ezeoba had agreed, in his statement to the EFCC, to forfeit the money.

He had said that the money was proceeds of crime fraudulently diverted from the Nigerian Navy, under the leadership of Dele Joseph Ezeoba.

The anti-graft agency said Ezeoba used the name of “Chukwuka Onwuchekwa’’ to open a fraudulent account in disguise, while he was the one who truly laundered the money.

EFCC said that the former Naval Chief admitted that the account was opened with Onwuchekwa’s consent while he (Ezeoba) managed it.

The commission said that in a “desperate bid” to further disguise and conceal the illicit source of the funds, Ezeoba entered into a memorandum of understanding to buy Aquila’s shares from Onwucheka, who was the managing director.

It said that the shares were worth N2.4 billion, out of which N1.83 billion had been recovered in drafts in favour of the Federal Government.

The EFCC had therefore, sought for an order of the court to forfeit the entire the N1.825 billion to the federal government.

Meanwhile, the respondent did not oppose the application for final forfeiture of the sums.

Counsel to the respondent, Mr Pascal Madu, had said that his clients were not opposed to the permanent forfeiture of the money.

He, however, said that his clients were not involved in any fraud, adding that Ezeoba, gave them the money to buy shares for him, as part of savings over the years.

World Maritime News with additional report from Nation