The Asset Management Corporation of Nigeria, (AMCON) has said that the bond it had issued so far was four per cent of the nation’s nominal Gross Domestic Product (GDP).
Managing Director of AMCON, Mr. Mustapha Chike-Obi, who made this remark in Lagos? at the Lagos Chamber of Commerce and Industry (LCCI) Financial Services Group Luncheon seminar with the theme: “Restoring Financial System Stability: Role of AMCON,” said that four per cent was huge for a single institution.
Chike-Obi, who was represented by the executive director, AMCON, Mr. Gboyega Benson, further explained that AMCON had issued bonds worth? N1.24 trillion to take up non-performing loans (NPLs) in the financial sector.
?
According to AMCON, the NPLs were secured by listed securities which accounted for N291 billion, real estate collaterals of N925 billion and unsecured assets worth N24 billion.
Chike-Obi explained that? the amount issued in bond excluded the N680 billion that was injected into the three nationalised banks.
He said that the corporation attributed a lot of value on the collateral, adding that loans were priced on the value of underlying collateral.
?He was optimistic that the bonds would be tradable as? they were? backed with a sinking fund with the aim of sustaining the bond obligations in order to ensure financial stability, adding that the Central Bank of Nigeria( CBN), on its? own part contributed N50billion cash which would go a long way to enhancing sustainability of the bond.
?
“In terms of bond market, we cover about 45 per cent and getting our bond trading is top of our priority because it is part of our fixed income market. Our bond will trade because there are layers of support. We have support from sinking fund while the CBN contributes N50billion cash. These takes the bond obligation down the line to ensure financial stability and sustainability.”
On what informed their decision to list the bond, Chike-Obi said it would provide liquidity for the banks and allow the banks to access cash faster to enable them lend to the real sector.
This, according to him,? would also help deepen the market in terms of security, as well as provide price reference point for future AMCON issues.
“We need to ensure the effectiveness of what we do.? We have listed our bonds and we would be accountable. We should be transparent. We need to manage these securities, we cannot come to the market and offload, we need to manage them for disposal in a well structured manner,” he said.
Earlier, the President , LCCI,? Mr Femi? Deru called on stakeholders to draw appropriate lessons from the on -going reforms in the banking sector.
?
He explained that there is need to up hold the rules and tenets of professional ethic,? strengthen oversight functions in banking sector and? public companies, as well as total over hauling of the banking sector to bring about transparency in the banking sector, among others. ?
The Financial servicing Group Chairman, Mr. Olusola Soetan said that the theme of the seminar attest the fact that the stability of the sector is crucial to the growth of the economy.
He however commended AMCON for the steps taken so far to further restore health to the financial services sector, considering the imminent systematic collapse it faced two years ago.