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After
a meeting between top officials of Asset Management Corporation and
stockbrokers yesterday in Lagos, some stockbrokers said though they are
not totally satisfied with the current arrangement, the indication are
that the corporation was prepared to address their concerns.

The
meeting, which lasted for about an hour, was the first between the
Asset Management Corporation of Nigeria (AMCON) and the stockbrokers
since the Senate confirmed the appointment of the board members.

Operational guidelines

This
came as Mustafa Chike Obi, AMCON’s managing director, said it would
work within the contents of its operational guidelines, which are yet
to be made public.

“Only
the Central Bank has the prerogative to release these operational
guidelines,” Mr. Chike Obi told stockbrokers at the meeting, which was
preceded by another meeting with some bankers. He said based on the
guidelines, assets will be held for two to three years while “Central
Bank may change this time frame, but any sale will be announced
publicly.”

The managing director did not speak with journalists after the meetings.

A
source who attended the meeting said stockbrokers were, however, not
fully satisfied with how AMCON intends to address the issue of margin
loans, which remains a major impairment in their books.

“Mr.
Chike Obi was not specific on how margin loans will be treated. Brokers
were expecting a categorical statement that once AMCON takes up such
loans, it will discharge stockbrokers of their indebtedness,” the
source said.

Joshua
Omo-Kehinde, managing director of Marimpex Investment Limited, a
stockbroking firm, said there are various issues involved in each case
of margin loans, which is why it is proper for the corporation to
handle each situation on a case by case basis.

“What happens if some of the shares or none of the shares have been sold?” Mr. Omo-Kehinde queried.

“Also,
do not forget that there are contractual agreements on each of the
loans, which must be honoured. So it will not be easy to apply the same
set of rules for all the cases,” he further said.

No nationalisation

One of the assurances given by AMCON was that it had no intention to be active owners of companies whose shares are acquired.

“This is due to concerns about nationalisation of such companies,” the source added.

He
said AMCON intends to discuss with every debtor with a view to
providing forebearance or debt forgiveness, while the asset corporation
will help to recapitalise the banks by working with the prospective
buyers and merger partners.

As
part of the agreement, AMCON will be buying loans and not the
underlying assets of the non performing loans, while payments will be
made with zero coupon three year bonds, which will be refinanced with a
seven year bond to be determined by the market.

Victor Ogiemwonyi, managing director of Partnership Investment Plc, said AMCON has shown that it will take its job seriously.

“Their
actions to date and the speed and fair value given to assets they are
acquiring in the first phase have given them credibility. The
implication for the market is very positive,”Mr. Ogiemwonyi said.

He said once all the toxic assets are taken off the books of the banks, there will be room to resume lending to the economy.

AMCON,
however, said it will not acquire tainted assets, which were based on
insider related loans, or loans acquired with criminal intent.