Guaranty Trust Holding Company (GTCO) is preparing to write off a significant loan extended to Aiteo Group, an oil and gas company, while also intensifying its recovery efforts. This loan, which has troubled GTCO for several years, is expected to be cleared from the books by the end of 2024. According to GTCO’s CEO, Segun Agbaje, “We’ve put ourselves in a position to write off that loan this year, and it won’t affect our P&L.”
The Aiteo loan has been GTCO’s largest forbearance loan. Although the bank had restructured the loan to provide Aiteo with more time, the results were disappointing. Agbaje admitted, “It hasn’t gone the way we like, and I’m a bit tired of making excuses for it.” Now, the bank is focusing on writing off the loan and aggressively pursuing recovery.
Aiteo has been dealing with financial troubles for some time, and their legal battles with lenders, including GTCO, date back to 2014 when they took out loans to acquire Oil Mining Lease (OML) 29 from Shell. The loans, totaling about $2 billion, were mostly financed by a group of Nigerian banks, including GTCO. Despite Aiteo’s efforts to restructure the loan, the repayment process has been fraught with delays and disputes. “We’ll probably write off the Aiteo loan this year and then go aggressively on a recovery drive because we don’t like how it’s been playing out,” said Agbaje during an investor call.
In 2022, a UK court ruled in favor of the lenders, including GTCO, by granting an anti-suit injunction that blocked Aiteo from continuing legal proceedings in Nigeria. GTCO, however, is well-prepared financially for this move. “We’ve already provisioned over 50% in capital buffers for this loan,” Agbaje stated, ensuring that the bank is well-positioned to absorb the loss while focusing on recovering what it can.
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