Business
Shareholders To Recover Lost Investment
Shareholders hitherto relegated to the background in preference for saving depositors’ fund will soon recover their lost investment as the Senate Wednesday finally passed the harmonised Asset Management Corporation (AMCON) Bill.
A statement signed by Mohammed Abdullahi, head, corporate communications of the apex bank said “”the ministry of finance and the Central Bank of Nigeria remain convinced that with the setting up of this corporation, the nation is close to a final resolution of the banking crisis and the repair of bank balance sheets. Also, AMCON will ensure that shareholders recover part of their lost investment and assist in reducing the debt overhang that has slowed down the recovery of the capital market”.
Investors will be particularly pleased to see their investments recouped after a year of steep downturn at the nation’s capital market.
Afrinvest Research estimated that non-performing loans, otherwise referred to as toxic assets worth over N1.0 trillion have been drowned in the rough waters that hit the financial market early last year, with the stock market investors incurring substantial losses.
But with the passage of the AMCON Bill, the toxic assets will be bought over, thus allowing the markets – money and capital – some growth space.
“We also reiterate that the soak up of toxic assets will bear heavily on the outlook for the distressed banks in particular, and for equities in general, as banks remain quite reluctant to create new risk assets (after huge provisions made for bad loans)”, said Afrinvest in its first quarter review.
Abdullahi said the AMCON is a multi-purpose resolution vehicle that is empowered to purchase non-performing assets from banks as well as inject needed capital in the form of appropriate securities (Tier 1 or Tier 2). In the case of distressed banks, AMCON will therefore play the key role of facilitating mergers, acquisitions or capital injection by new investors. The boards of directors of the banks have led and reached an advanced stage of discussion with interested parties.
The bill is expected to be submitted to President Goodluck Ebele Jonathan for assent after which it becomes an Act of the National Assembly. This will pave way for the formal establishment of the corporation as a principal vehicle for recapitalisation of troubled banks. It would be recalled that the AMCON bill was tabled by the executive branch and, therefore, an expedited assent is expected.
Wale Abe, chief executive of the Financial Market Dealers Association of Nigeria (FMDA), told The Tide’s source an interview that the development will bring about improved liquidity situation in the system, as well as reduce the burden that was almost crippling some banks, particularly the rescued ones. This will also ensure that the banks become slimmer to be able to function properly.
Abe said he expects either the AMCOM or the central bank to come out with guidelines that will help establish proper pricing for the toxic assets to allow for seamless take-off of the vehicle that is expected to bring succour to the financial industry.
Razia Khan in her recent report titled On-The-Ground (OTC), Nigeria – Assessing Inflation Risk, said though the decline in the growth rate of private-sector credit preceded the bank rescue, record levels of provisioning across the banking sector last year may have taken heavy toll.
“Banks are risk averse and still cautious about new private-sector exposure”, she said. She however expects the situation to turn around once AMCOM is operational and banks have been relieved of their non-performing loans.
“Payment of tuition fees for undergraduate/postgraduate studies shall be subject to a maximum limit of $25,000.00 per semester,” the Manual states.
The expansion of international card limits also reflects growing confidence among lenders that foreign exchange liquidity has improved enough to support retail dollar transactions.
Speaking recently at the BusinessDay 14th Annual CEO Forum in Lagos, CBN Olayemi Cardoso, governor of the CBN said buying and selling activities now increasingly determine outcomes in the foreign exchange market, unlike in the past when market participants relied heavily on routine Central Bank interventions.
According to Cardoso, Nigeria’s net foreign exchange reserves have risen from just over $3 billion at the start of the reform programme to more than $40 billion, while gross reserves have climbed to about $52 billion, providing stronger confidence for investors and enabling the Central Bank to reserve interventions for periods of market stress rather than day-to-day liquidity management.
The restoration and expansion of international naira card spending limits are increasingly being seen as one of the clearest signs that the benefits of the CBN’s foreign exchange reforms are beginning to reach households, students and businesses making legitimate cross-border payments.
The Secretary-General and Chief Executive Officer, WEC, Dr Angela Wilkinson, disclosed this in a statement, last Thursday.
“Nigeria’s participation comes at a pivotal time as the country seeks to expand energy access, strengthen energy security, accelerate gas development and mobilise the capital required for industrialisation and sustainable economic growth.
“WEC Nigeria will convene leaders from across the energy ecosystem, apply the WEC’s globally recognised Energy Trilemma framework to Nigeria’s unique context, and promote evidence-based dialogue, practical collaboration and informed policymaking.
“It will also ensure that Nigerian and broader African perspectives contribute meaningfully to global energy conversations,” she said.
Wilkinson expressed confidence that Nigeria would play a significant leadership role at the World Energy Congress scheduled for Riyadh in April 2027 and beyond.
The statement also quoted the Chairman of WEC Nigeria, Isa, as describing the country’s participation as an opportunity to deepen national and African leadership within the global energy community through practical solutions tailored to regional development priorities.
He said the platform would promote collaboration across sectors and attract sustainable investments into Nigeria’s energy sector.
The Chief Executive Officer of WEC Nigeria, Wunti, was quoted in the statement as saying that the council would connect leadership, evidence and investment to build a secure, affordable and sustainable energy system.
“This system will be capable of driving economic growth and shared prosperity.”
According to him, the platform will also connect Nigerian institutions and businesses with international knowledge, technology, partnerships and investment opportunities through the World Energy Council’s global network.
Recall that WEC, founded in 1923, is the world’s oldest independent and impartial community of energy leaders and practitioners, advancing informed, collaborative and practical action across the global energy system.