Asset corporation assuages stockbrokers’ fears

After a meeting between top officials of Asset Management Corporation and stockbrokers yesterday in Lagos, some stockbrokers said though they are not totally satisfied with the current arrangement, the indication are that the corporation was prepared to address their concerns.

The meeting, which lasted for about an hour, was the first between the Asset Management Corporation of Nigeria (AMCON) and the stockbrokers since the Senate confirmed the appointment of the board members.

This came as Mustafa Chike Obi, AMCON’s managing director, said it would work within the contents of its operational guidelines, which are yet to be made public.

“Only the Central Bank has the prerogative to release these operational guidelines,” Mr. Chike Obi told stockbrokers at the meeting, which was preceded by another meeting with some bankers. He said based on the guidelines, assets will be held for two to three years while “Central Bank may change this time frame, but any sale will be announced publicly.”

The managing director did not speak with journalists after the meetings.

A source who attended the meeting said stockbrokers were, however, not fully satisfied with how AMCON intends to address the issue of margin loans, which remains a major impairment in their books.

“Mr. Chike Obi was not specific on how margin loans will be treated. Brokers were expecting a categorical statement that once AMCON takes up such loans, it will discharge stockbrokers of their indebtedness,” the source said.

Joshua Omo-Kehinde, managing director of Marimpex Investment Limited, a stockbroking firm, said there are various issues involved in each case of margin loans, which is why it is proper for the corporation to handle each situation on a case by case basis.

“What happens if some of the shares or none of the shares have been sold?” Mr. Omo-Kehinde queried.

“Also, do not forget that there are contractual agreements on each of the loans, which must be honoured. So it will not be easy to apply the same set of rules for all the cases,” he further said.

One of the assurances given by AMCON was that it had no intention to be active owners of companies whose shares are acquired.

“This is due to concerns about nationalisation of such companies,” the source added.

He said AMCON intends to discuss with every debtor with a view to providing forebearance or debt forgiveness, while the asset corporation will help to recapitalise the banks by working with the prospective buyers and merger partners.

As part of the agreement, AMCON will be buying loans and not the underlying assets of the non performing loans, while payments will be made with zero coupon three year bonds, which will be refinanced with a seven year bond to be determined by the market.

Victor Ogiemwonyi, managing director of Partnership Investment Plc, said AMCON has shown that it will take its job seriously.

“Their actions to date and the speed and fair value given to assets they are acquiring in the first phase have given them credibility. The implication for the market is very positive,”Mr. Ogiemwonyi said.

He said once all the toxic assets are taken off the books of the banks, there will be room to resume lending to the economy.

AMCON, however, said it will not acquire tainted assets, which were based on insider related loans, or loans acquired with criminal intent.