Access Bank Plc, a Nigerian lender, said margin loans on its books totaled NGN 33.4 billion(USD 225.9 million) at the end of March.
The amount, which represents 8.5% of the bank’s total loans, was given to financial institutions, corporations, and individuals “for the sole purpose of acquiring shares,” Lagos-based Access said in its annual report today.
About NGN 2.57 billion was non-performing at the company’s financial year-end. “Adequate provisions have, however, been made for the non- performing margin loans,” Access Bank said.
Eurasia Group, a New York-based research company, said in May that banks in Nigeria may have as much as USD 10 billion of toxic assets. The bad debt is partly the result of, at least, NGN 1 trillion naira (USD 6.8 billion) of so-called margin loans used by speculators to buy shares as equities soared almost 13-fold since 2000, according to Bank of America Corp.
The former governor of the Central Bank of Nigeria (CBN), Chukwuma Soludo, said in March that the CBN planned to carry out a “rigorous” examination of the Nigerian banks to detect “early warning signals” about possible failures. Banks in distress may be provided with loans, have their management restructured, be forced to merge, or acquired by another bank, Soludo said.
See Fitch’s 2009 rating of Nigeria’s banks.
Source(s):
Bloomberg News
