Ernest Obiejesi's Nestoil $2.1 billion debt blocks dividends at 3 banks

Ernest Azudialu-Obiejesi's Nestoil Limited, the indigenous engineering and oil services conglomerate at the centre of a N2.9 trillion ($2.1 billion) syndicated loan default, has been identified as the primary driver behind 3 Nigerian banks withholding dividends from shareholders for the 2025 financial year, as the Central Bank of Nigeria enforces a strict provisioning regime that is forcing lenders to absorb some of the heaviest credit losses in Nigerian banking history.

UBA, Access Holdings and FCMB have all declined to pay final dividends for FY2025. The CBN under Governor Olayemi Cardoso has made the position clear: no affected bank will be permitted to distribute earnings to shareholders until it has fully provisioned for its non-performing loan exposure, including its Nestoil-linked credit.

The result is a N2.16 trillion impairment charge spread across 5 tier-one and tier-two lenders, including Access, UBA, Ecobank, FirstHoldCo and FCMB, drawn directly from their 2025 financial statements. That sum, extracted from bank earnings that would otherwise have been available for distribution, is the mathematical expression of what Nestoil's default is costing Nigerian banking shareholders.

What each bank has absorbed

UBA's full-year 2025 results showed loan loss provisions of N331 billion ($240.7 million). The bank declared no final dividend, offering only the N0.25 per share interim payment already distributed during the year. Its share price fell 10% on the opening of trading on Monday April 27.

Access Holdings reported that its impairment charge on loans and advances to customers surged 209% to N287.3 billion ($208.9 million) in 2025. The group posted a record N743 billion in profit after tax but still declined to declare a final dividend, with the provisioning requirement consuming a large share of what would otherwise have been distributable earnings.

FCMB's net impairment losses on loans doubled to N92.5 billion ($67.3 million) from N43.7 billion the prior year. The group contracted its loan book defensively as credit quality deteriorated and has not announced a dividend for FY2025. FirstHoldCo, the parent of First Bank, was described in market analysis as disproportionately exposed to the troubled oil and gas segment, though its situation under chairman Femi Otedola has received separate attention given its own NPL resolution story.

The anatomy of the debt

Nestoil's debt did not materialise suddenly. It accumulated over years as the company expanded its engineering and production footprint across Nigeria's Niger Delta, securing large capital facilities on the expectation of sustained oil production revenues that did not fully materialise. In December 2022, with the debt already under stress, FBN Group led a syndicate of 16 Nigerian banks plus Afreximbank to consolidate Nestoil's long-term obligations into what the lenders called Global Facilities, governed by a Common Terms Agreement with English law as the applicable framework and English courts as the dispute resolution venue.

The guarantors for the consolidated facility included Neconde Energy, Obiejesi personally and his wife Nnenna Obiejesi. Court filings from October 2025 put the total indebtedness, as of September 30 that year, at $1,012,608,386.91 (approximately N1.39 trillion at that exchange rate) plus N430 billion in separate naira obligations. Separate personal guarantees linked to Obiejesi covered N366.8 billion ($266.8 million) owed to Access Bank and various other amounts owed to First Bank and Zenith Bank.

The major lenders exposed include UBA, First Bank, Access Bank, FCMB, Union Bank, Ecobank and Afreximbank. Nigerian banks' total exposure to the oil and gas sector at the end of 2024 stood at N21 trillion ($15.3 billion), a figure that illustrates how concentrated the sector's credit risk has become in Nigerian banking books.

The asset freeze and the legal fight

In October 2025, Justice Deinde Dipeolu of the Federal High Court in Lagos issued a Mareva injunction, freezing Nestoil and Neconde Energy's assets across more than 20 financial institutions, including bank accounts, properties and oil cargoes. A receiver/manager was appointed to take control of the companies' assets. Named in the injunction were more than a dozen Nigerian lenders, ranging from tier-one banks to smaller commercial institutions, reflecting the breadth of the syndicate.

Nestoil fought back legally on multiple fronts. The most consequential courtroom battle was over who had the right to appoint lawyers to represent the company in the proceedings. In January 2026, the Court of Appeal ruled that the receiver/manager appointed by the lenders, rather than Obiejesi's own board, held that power, and disqualified Nestoil's chosen legal team including senior advocates Wole Olanipekun and Muiz Banire.

The Supreme Court reversed that ruling on April 10, 2026, in language that left little room for ambiguity. The apex court accused the Court of Appeal of having "abdicated its judicial responsibility and enabled blatant abuse of process of court." Olanipekun and Banire were restored. The parties must now return to the Federal High Court for the substantive dispute to be heard, a process that legal observers say could take years given the complexity of the underlying claims and the number of institutions involved.

Banks are now moving to seize real estate, movable assets and oil cargoes from the Nestoil and Neconde estate. Prolonged legal resistance from Obiejesi's team, combined with competing court orders from different benches of the Federal High Court, has created a situation in which vital capital is locked up in litigation rather than resolved and recycled into the banking system.

The CBN's "no mercy" position

Governor Cardoso has made his position on this clear through the dividend prohibition. The regulator has determined that banks cannot represent their financial health as sufficient to distribute profits until the full potential loss from NPL exposure is reflected on their balance sheets. In previous cycles, Nigerian banks had more flexibility to provision gradually while continuing to pay dividends. That flexibility has been withdrawn.

The approach has a systemic logic: forcing banks to confront the full magnitude of bad loan exposure at once, painful as it is for shareholders in the short term, removes the risk of a slow-motion crisis in which underprovisionned losses accumulate invisibly until they crystallise as institutional failures. The banking recapitalisation exercise that concluded in early 2026, which required banks to raise minimum capital levels, has provided some cushion for absorbing these write-offs. Several banks used the recapitalisation to raise fresh equity that is now being deployed to absorb precisely the kind of losses that Nestoil has generated.

Whether the CBN's rigid approach restores investor confidence or depresses it further will depend on whether the banks that absorbed the write-offs emerge with cleaner balance sheets that support faster lending growth in 2026, or whether the Nestoil dispute drags through the courts long enough to keep the uncertainty alive for years to come.