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NSE Lobbies AMCON, FG on Margin Loans Debt Relief for Brokers

By on January 24, 2012

At a recent conference on the 2011 Market Review and 2012 Outlook of the Nigerian Capital Markets, the CEO of the Nigerian Stock Exchange, Oscar Onyeama disclosed that the Exchange was seeking relief for stock brokers who had bad margin loans stockpiled on their books.

Toxic margin loans in the system are estimated at close to half a trillion Naira. The forbearance being sought will wipe allow holders of the toxic debt to restructure payments and not have their assets foreclosed upon. This sort of relief will restore market activity to better levels of participation and performance.

Onyeama said, “We have been advocating on behalf of the broker-dealer community with the different governmental agencies that can actually do something about this debt overhang, and what we needed to get from AMCON was a definite answer so that broker-dealers would be able to know how to treat their balance sheet. The law provides that the only person that can give the type of forbearance that we are asking for is the Minister of Finance acting on the instruction of the Central Bank of Nigeria.

“The board of AMCON has written to the CBN asking that they support this forbearance for brokers that would remove the debt overhang, and the CBN has agreed and also written to the Ministry of Finance, and we, the NSE, have in turn followed the process through to the MOF. Right now I can tell you that the MOF is reviewing it.”

Onyeama also stated that the NSE would dialogue with relevant government agencies to ensure that the capital markets are integrated into the Federal Governments fiscal policy framework.

His words, “No fiscal policy was initiated to develop the capital market for the year under review and as a result the stock market suffered major decline in market activities in the year under focus.

“To this end, we will engage with the ministry on ways that we can influence favourable fiscal policies to drive activities and support growth of the capital market and ensure that our market remains attractive to both local and foreign investors.”