Leadership (Abuja)

Nigeria: 84 Stockbrokers Get N22.6 Billion FG's Bailout

Photo: This Day
Mrs. Ngozi Okonjo, Minister of Finance

Capital market stakeholders which were eagerly awaiting the promised forbearance package to help revitalise the sector can now heave a sigh of relief as the federal government yesterday announced a N22.6 billion debt relief package for 84 stockbrokers.

Some of the companies, LEADERSHIP investigation revealed, include BGL Securities, FutureView, CashCraft, Profund Securities and Partnership, amongst others.

The government also announced a 12 per cent tax relief package on stock exchange transaction fees, comprising five per cent Valued Added Tax (VAT) and seven per cent in stamp duties. These taxes had in the past constituted major disincentives to investment in the nation's capital market.

Coordinating minister for the economy and minister of finance, Dr. Ngozi Okonjo-Iweala, who announced the relief packages yesterday in Abuja, said these measures were aimed at resuscitating and promoting a vibrant capital market, which is essential to the government's economic transformation agenda.

Briefing the media on the recommendations of the committee chaired by Dr. Kingsley Moghalu, Deputy Governor of the Central Bank of Nigeria, set up to provide measures to resuscitate the capital market, Okonjo-Iweala said the N22.6 billion relief package was to make up for the shortfall of the margin loans purchased by the Asset Management Corporation of Nigeria (AMCON) whose value had fallen from N42.6 billion to N19.96 billion at present.

"AMCON had purchased these margin loans from banks for about N42.6 billion, but the value of the underlying assets or collaterals is worth only N19.96 billion today. In furtherance of AMCON's clean-up of the banking sector, it is necessary to wipe off the debt overhang in the capital market, as this is dampening market activity," she said.

The finance minister, however, stressed that the forbearance would be accompanied with sanctions to discourage excessive borrowing behaviour by capital market operators in the future.

According to her, some of the sanctions include prohibition of benefiting stockbrokers from services to AMCON, requirement of greater disclosure as well as a limit on debt financing for the affected stockbrokers.

Ads by Google

Copyright © 2012 Leadership. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.

InFocus

Bailouts Push Up Nigeria's Stock Market

Stock markets

The bailout from government to more than 80 companies has resulted in a positive boost for the country's stock market Read more »

Debt Relief for Nigerian Stock Firms

Mrs. Ngozi Okonjo, Minister of Finance

More than 80 companies will receive billions from government to clear the debt overhang in the sector. Read more »