By Udeme Ekwere

Wednesday, 5 Jan 2011

Stocks in the banking sub-sector of the Nigerian Stock Exchange recorded increased activities at the end of the first trading day of the year.

This followed the purchase of the toxic assets of banks by the Asset Management Corporation of Nigeria.

At the close of trading activities, the Nigerian Stock Exchange’s Banking Index recorded the highest appreciation among major indices, to close at 412.25 points.

This represents an increase by 3.3 per cent or 13.17 points, compared to 399.08 recorded on the last trading day of the year.

Therefore, the banking shares, drove total volume, as trading in the sub-sector, accounted for 68 per cent of total volume traded.

In the sub-sector, 159.98 million shares, valued at N1.44bn were exchanged by investors, in 2,680 transactions.

AMCON had on Friday completed the process of purchasing non-performing loans of 21 out of the 24 Deposit Money Banks in the country.

The, corporation issued N1.04tn zero coupon initial consideration bonds due in 2013, at its completion meeting in Lagos.

It said, ”AMCON has concluded arrangements to issue initial consideration bonds to the eligible financial institutions in consideration for AMCON‘s acquisition of the eligible bank assets from eligible financial institutions by acquiring almost all non-performing loans in the intervened banks and margin-related NPLs from the non-intervened banks.”

The Chairman, AMCON, Alhaji Aliyu Belgore, said the transactions had the full guarantee of the Federal Government and the full support of both the executive and the legislative arms of government.

All the 21 banks quoted on the floor of the NSE recorded price appreciation on Monday.

Two banks- Unity Bank Plc and Union Bank of Nigeria Plc- rescued by the Central Bank of Nigeria recorded five per cent gain at the close of trading, to close at N1.26 and N4.41 per share. Access Bank Plc and Diamond Bank Plc gained 4.9 per cent each to close at N9.97 and N7.87 per share respectively.

Fidelity Bank Plc and Oceanic Bank International Plc also rose by 4.8 per cent each to close at N2.82 and N2.62 per share.

Speaking to our correspondent, the Managing Director, Compass Securities and Investment Limited, Mr. Emeka Madubuike, said that the banks and indeed the capital market as a whole will perform better as a result of the purchase of the toxic assets by AMCON.

He noted that the overall effect will also trickle down to the general economy, as banks will be able to lend to the real sector.

 

Source: Punch