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THE CREDIT ANALYST’S NIGHTMARE


Adaku Ogbonnaya Ulasika

The year is 2016, The month Is February and if you are a Credit Analyst in a Country dependent on Oil revenue for its income, things are most likely a little bit uncomfortable.

To understand this dilemma let’s take a step back in time to 2013 and lift a story from a fictional character who understands better than most the changes that have transpired in just over three years.
His name is Williams and he is the Chief Risk Officer of an unnamed Bank in an African Country who is a major exporter of crude oil.

*******************A PAGE FROM HIS BOOK FROM 2013-2016********************
The Average price of Brent Crude Oil is slightly above 100$, The US and Canada Production output is increasing but you are unconcerned because all the pundits say World Oil demand is expected to increase by 1.14 mb/d in 2014 , China still has a lot of money and they are buying steadily, you have several Government Contractors in your books, you rate them as Grade A because everyone knows the Government never defaults on its loans, you turn your nose down on SME’s and prefer Low Risk Customers.


The Companies with affiliations with Government, State or Federal personalities were like a revolving door , there was always some kind of credit available for them, Bid Bonds, APG,s Term Loan, Project Finance, Invoice Discounting, Overdraft Facility then when they were exhausted with the Corporate credits they came for Mortgages, Credit Cards, Asset loans when they were saturated with your bounteous Credit Offerings they would rest for two months and resume for the crazy the circle to be continued.


When the Strategists and Auditors strolled in with their Laptops, and medicated glasses perched on their noses screaming Concentration Risk and Lack of Portfolio and advocating Value Chain Marketing you are at worst slightly irritated. It was their job to worry when there was no need to, the books are strong, and the income was overflowing, they did not understand Risk, No not like you …you had seen it all for more than Fifteen years, these kids were rookies. They did not understand the dynamics, the peculiarity of your environment, you had negotiated high level transactions, Billion dollar Credit Transactions, Nothing in your economic magazines and brief online strategy sessions indicated that your reasoning was flawed, the few articles who surmised on the US Shale Oil activities were unrealistically optimistic, there was no way production costs would sustain that process.


Now it’s 2016, You are yet in another Management Committee meeting, the loss is hitting billions and for the first time in your over Fifteen years in Credit you are speechless, the accusations are pouring in , in quick succession , the attacks are direct and brutal, You are responsible, for your advice, for your projections that went down the drain just like the price of Crude Oil, For your refusal to Re strategize and recognize the obvious signs that could not be missed since the middle of 2014 when Crude Oil prices started falling. For unconventionally disregarding the warning and suggestions from External Auditors and your Bank’s Market Risk Team. You are responsible for being unsightly stubborn and rigid in your stance.

After Fifteen years everything you ever thought you knew has been questioned. So the meeting is over and you walk head down, back to your office, you are no longer the favorite adviser to the Top Management in the Bank. Your opinions are now thought to be obsolete and ineffective.
It’s Five P.M and you seal the envelope in your hands and head to Human Resources , you walk by a familiar face and you pause trying to place it, It’s your worst Nightmare come to Life, The Group you called Rookies a while back were just leaving Human Resources, they were excited that the interview had gone so well. You knew exactly what was happening , you had seen this movie years ago.
They were being groomed to eventually take your role, like a Lion who had lost it's pride your time in this game was up for in a few years they would be your replacement.

https://www.linkedin.com/pub/adaku-ogbonnaya-ulasika/8/641/7b?trk=pulse-det-athr_prof-art_ftr


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