As the Nigerian capital market continues to wallow in the troubled waters of prolonged loss of value, investors and operators are railing accusations against the banking sector for their die-hard posture on recovering margin loans, an instrument that played a crucial role during the market boom period.
This is coming against the backdrop of the directive by the CBN instructing financial institutions to reschedule all loans used for investment in the capital to the end of the current year in order to provide recourse to the borrowers of funds and allow for more time to pay back their debts.
Operators narrate their tale of woes in the hands of the banks who, they say, are the major cause of illiquidity in the stock market. According to them, the banks do not honour cheques they issue to their clients for selling their stocks if the stock broking firm owes the bank through the margin facility.
Also, as clients make payments into their accounts for the purpose of share purchases, the banks divert it to the loan account to reduce the debt portfolio, thereby leaving the brokers trapped, not being able to meet their obligations to their clients. This scenario, brokers regret, has resulted in lowering further market activities as there is no fund at their disposal to buy the stocks that are now peanuts.
Market watchers wonder why with all the good results coming from the banks, they are so much in a hurry to recover loans which were used to promote their stocks value when market was bullish.
Industry players say this suggests why none of the banks have come out boldly to defend its stock value by buying up the statutorily approved 15 percent of their shares in the market. In the light of this air of suspicion, analysts call for a closer monitoring and supervision by the CBN on banks’ activities, especially their financial records.
To some stakeholders, whether market will recover losses this year or not would depend on the Federal Government rolling out a robust bail out package for the market.
According to a source, “the unfortunate thing is that our leaders are clueless and have quickly run out of ideas. They seem not to be in touch with happenings around the world and the steps they have taken to restore investors’ confidence in other markets”.