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2009-07-10:Banks’ Margin Loan Stands At N1trn – NSE DG

By Nkiruka Anene

The Nigerian Stock Exchange (NSE), yesterday revealed that Banks' margin loan to both stockbrokers and other institutional investors following the financial meltdown stood at about N1 trillion.

Speaking at a parley with Chief Executive Officers (CEOs) of quoted companies, the Director General of the exchange Professor Ndi Okereke-Onyiuke said, contrary to reports that the banks, loans were all advanced to dealing members of the exchange, only N300 billion was actually given to them, while the remaining N700 billion was loaned to other institutional investors.

She said the statistics of the facilities by the bank are contained in the coffers of the Central Securities Clearing System- a subsidiary of the exchange, noting that the money loaned to the dealing members and mostly to real estate investors was stuck due to the global financial meltdown.

According to Okereke-Onyiuke, with the exposure of the banks to the margin loans, and being that banks control almost 50 per cent of transaction in the equities market, there is a great loss in the value of investors' wealth in the market.

Onyiuke-Okereke who said the effect of the meltdown on the market was huge, explained that controversy the dogging margin loans and frosty relationship between many banks and their stockbrokers, posed real danger to market stability.

On improving shareholders value, the NSE DG enjoined the quoted companies’s CEOs to improve on their organisation's culture of customer relationship while building a strong reputation, even whiling ensuring periodic appraisal through risk management policy for efficiency and effectiveness. "Cost reduction without prejudice to building a strong revenue base, increasing productivity and product quality service and ensuring compliance with regulations guiding your organisation's business are necessary tools for efficiency in business", she said.

"The current challenge is an eye opener that our listed companies should consider the option of investment in corporate bonds for increased sourcing of medium and long term fund from the capital market', she added.

The NSE DG who said the fundamental of companies in the market were very strong, noted that the exchange has opened a new window to accommodate private placement to make investment more credible unlike what was obtained post-consolidation.

Meanwhile, the CEOs called on the NSE to embark on a more aggressive campaign to return the market to profitability, while expressin of their reservations on the numbers of insider dealings in the market which have caused loss of confidence on the part of investors.

Source:Leadership Nigeria


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