By Stanley Opara

Monday, 20 Dec 2010

Stakeholders in the financial sector have expressed optimism over the decision of the Asset Management Corporation of Nigeria to buy all bad bank loans by the end of December and recapitalise the nine banks rescued last year by the second quarter of 2011.

Stakeholders, who spoke to our correspondent in separate interviews on Saturday, maintained that the feat was realisable given the involvement of the right personnel in the process, the various recapitalisation moves by the rescued banks, and the entrenchment of good corporate governance in the financial system.

The Executive Secretary/Chief Executive Officer, Finance Houses Association of Nigeria, Mr. Benn Nwokike, said the success story of loan recovery of some of the banks, was a good sign that AMCON would make a headway.

He said, with the right inflow of funds seen in recent times in the financial sector and the commitment of the banks in the recapitalisation exercise, AMCON was sure of attaining over 70 per cent success in its quest to recapitalise the ailing banks.

According to the President, Association of National Accountants of Nigeria, Chief Iyamide Gafar, AMCON is capable of realising and surpassing its target if it puts the machinery in place, especially in terms of its planned programme.

She said the corporation should take one step at a time in the process.

Gafar noted that in the course of its project, AMCON should evaluate the results of initial actions before taking another to ensure that the process remained transparent and healthy.

However, the Group Managing Director/Chief Executive Officer, Intercontinental Bank Plc, Mr. Mahmoud Alabi, said AMCON remained the principal vehicle in Nigeria for the resolution of the asset quality problems confronting the banking system.

Expressing optimism over AMCON‘s activities, he said, “We view this as a key positive for the balance sheets of rescued banks as more liquid assets would be hitting their balance sheets, which position them to resume core banking functions.”

Alabi said the activities of AMCON would facilitate an improvement in banking sector liquidity, protection of the earnings of banks from further erosion and a reduction in debt overhang on the money and capital markets.

“This should provide a much-needed fillip for the revival of the Nigerian economy,” he added.

According to him, the inclusion of the capital market toxic assets is a welcome development that will bring some respite to the economy.

He noted that there was the concern about the readiness and ability of both operators and regulators, among others, to manage the success of the endeavour.

By buying off toxic assets from the balance sheets of banks in exchange for cash and bonds, AMCON will help tackle the problem of liquidity squeeze afflicting operators in the industry.

 

Source: Punch