First Bank MD, Mr. Bisi Onasanya
By Goddy Egene
The Group Managing Director and Chief Executive Officer, First Bank Nigeria Plc (FBN), Mr. Bisi Onasanya, has decried the lack of an intervention fund in the nation’s capital market.
He asked the federal Government to step in if the nation’s was to witness a full recovery.
Onasanya, who spoke at the 2012 Pearl Award Public lecture in Lagos last Thursday, noted that across the Nigerian economy, regulatory authorities in other sectors had taken actions that had put a floor on the losses of those sectors.
The FBN bank boss, who cited the banking and aviation sectors as example, explained the intervention by the Asset Management Corporation of Nigeria (AMCON) was instrumental in the quick recovery of the banking.
He added that the aviation fund, had positive impact on the health of the nation’s airlines.
“Within this context, it is difficult to understand the continuing absence of an intervention fund for the capital market sector. I note, in this regard, the Coordinating Minister of the Economy and Finance Minister’s (Ngozi Okonjo-Iweala) reiteration of the Federal Government’s plan to work out a forbearance package for stockbrokers as part of measures to stimulate confidence in the Nigerian stock market and increase liquidity,” he said.
According to him, the fact that the capital market crisis had dragged on for so long without any sign of prompt recovery, suggested that we might not be looking at the broad range of policy responses needed to solve this crisis.
He declared that in view of the experience in other sectors of the economy, this was indeed a surprising turn of events.
Speaking on the proposed forbearance package, he said although details of this package were still being worked out, it must include two ingredients.
First is the provision of funds at concessionary rates. These new levels of liquidity will help brokers begin the balance sheet adjustment necessary to return to functional levels of liquidity in the market. Nonetheless, funds at concessionary rates will still be inadequate to address the over N300 billion operators' debt overhang,” he said.
Onasanya added that in order to address this, the capital market would need forbearances on the debt owed by operators, including long-term restructuring of margin facilities.
“AMCON has addressed the bulk of margin lending driven by bank debt. But the bulk of the outstanding debt is owed on proprietary positions, and the obligations attendant upon this has been the single most important cause of industry operators’ insolvency,” he said.