By Ademola Alawiye

Monday, 21 Feb 2011

Ahead of the meeting with the Asset Management Corporation of Nigeria on Monday (today), stockbrokers have expressed divergent views on the outcome of the discussions, especially as regards the modalities for acquiring margin loans.

Some stockbrokers, who spoke with our correspondent on Friday, said that the corporation should have consulted stock broking firms before arriving at the methodology of pricing the loans.

Others, however, said that the outcome of the meeting would be taken in good faith since the whole process was targeted at bringing the financial sector back on track.

The Managing Director, AMCON, Mr. Mustafa Chike-Obi, had said non-performing loans, backed by shares of listed companies, were valued at an implied premium of approximately 60 per cent on the 60-day average of recent prices, ending November 15, 2010.

He added, “For loans backed by other assets, not shares, we are taking the market valuation from the banks, subject to a review by AMCON within 12 months. For loans with no security or those with ineligible securities, we are paying five per cent of the principal value. We are buying the assets and we are giving them bonds in exchange.”

The Chief Executive Officer, Vintage Wealth Managers, Mr. Idowu Ogedengbe, said that it would have been better if AMCON was absorbing the loans of the stockbroking firms.

He said, “The stockbrokers are in a tight position because AMCON will not give them a clean slate. It could have been better if AMCON was absorbing the loans of the stockbroking firms. But, however, I expect negotiations. I don’t see any firm taking AMCON to court over the margin loans.”

The Managing Director and Chief Executive Officer, Mutual Alliance Investment and Securities Limited, Dr. Olakunle Ologun, said that stockbrokers were aggrieved even though the action was to solve the financial crisis in the system.

“The stockbrokers are upset with the fact that AMCON did not consult them before taking decisions on the price at which they will buy the margin loans. AMCON did not put the stock broking firms into consideration,” he said.

He, however, added that the stockbrokers were ready to talk with the corporation, adding that, “no stockbroker will want to drag AMCON to court like some debtors are doing currently because the corporation was established through an Act. Dragging AMCON to court will be an exercise in futility.”

AMCON had held a completion board meeting in December where it signed agreement with 21 banks to issue N1.036tn worth of bonds to purchase their bad debts.

Source: Punch