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Shareholders differ on margin loans disclosure

By Lucky Fiakpa

LAGOS—Shareholders have expressed mixed reactions over a directive from the Central Bank of Nigeria (CBN), that banks should make full provision for all toxic assets in their books.

CBN would also want banks to ensure full disclosure as to which loans are performing and which loans are not performing as well as who gets what loans.

While most shareholders seem pleased with the directive for full disclosure as to the performance or non- performance of the loans, not all are in support of banks making full provision for the margin loans at once.

According to the President, Progressive Shareholders’ Association of Nigeria, Mr. Boniface Okezie, while banks such as First Bank are in a position to make full provisions for their loans because of their size and age, the younger and smaller ones could have problems doing so.

“The bigger and older banks have a lot of dormant accounts to fall back on and so they can make full provision for their margin loans and still be able to pay dividend,” Okezie said in an interview with Financial Vanguard.

Given this mindset, he said, it would have been proper for provisioning to have been staggered over five years so that smaller banks will not be unduly driven into a distress situation.

However, Mr. Timothy Adesiyan, President, Nigerian Shareholders’ Solidarity Association, (NSSA), argued that,  “shareholders of like-minds have agreed that the banks should fully provide for the margin loans in their books now instead of postponing the evil days.

“This will allow the banks to start the new financial year on a clean slate and be able to pay us dividend in subsequent years”.


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