Lagos — Chief Executive Officers (CEOs) of banks in the country yesterday dispelled speculations that following the recent steep fall in stock prices, banks had incurred monumental losses from share purchase loans granted investors.

A newspaper had reported that banks might have lost about N336 billion to stock market meltdown in huge loans given out as margin credits to investors who took the facilities to play in the market.

But the bank chiefs, who met in Lagos, denied the report, saying it lacked substance.

"The reports are erroneous and a gross misrepresentation of facts, due probably to ignorance," the statement signed by the President of the Chartered Institute of Bankers of Nigeria (CIBN), Mr. Erastus Akingbola, said.

The bank chiefs said such share purchase loans were fully secured in many cases up to 150 per cent cover because of the risks associated with playing in the capital market.

"The margin on share purchase loans created by banks ranged between 50-100 per cent against about 35 per cent gross declines in the stock market.

"This means that rather than outright loss, the banks still have profit margins on the loans in the range of 15 to 75%. The loans are fully secured in many cases up to 150 per cent cover. The banks are fully aware of the risk in stock trading and that was why the high margins and heavy protection," the statement said.

The bank chiefs said even stockbrokers, especially those affiliated to banks, had not reported any such losses yet, noting that losses could only crystallise if brokers have sold the stocks they invested at depreciated prices.

"But they have not sold yet and may not sell now as the market has started showing signs of recovery," the statement said.

The bank chiefs expressed optimism that the current rebound in the stock market would be sustained for a considerable period of time, thus further strengthening the positions of the investments in the stock market.

The nation's capital market experienced a bearish run recently with stock prices falling sharply, thereby causing anxiety among the investing public.

But the Federal Government intervened decisively last week, setting up a Presidential task force to work towards the revival of the capital market.

Since then, the market has witnessed some modest recovery as share prices are rising once again.