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NSE indicts banks over failure to lend to real sector

By Peter Egwautu
The Nigerian Stock Exchange (NSE) has blamed the troubled banks for their woes, especially for  their failure to lend to the real sector that is supposed to act as catalyst to the development and growth of the country.

The Exchange has also cleared the speculation that Dr. Erastus Akingbola may be removed from the Council as its second Vice President following his removal by the Central Bank of Nigeria (CBN)as the managing director of Intercontinental Bank Plc.

Director General of the NSE, Professor Ndi Okereke Onyiuke at a press briefing in Lagos, Monday, said, Akingbola remains the second Vice President of the Council of the NSE for now. He is not representing Intercontinental Bank in the Council. If he is prosecuted by any government agencies and found wanting , then the Council will deliberate and probably place sanction on him if need be. He was the Chairman of the Lagos Ibadan Council of the Exchange, before he was elected as the second Vice President. He is an ordinary member of the Exchange, anybody can be a member, provided that such a person is up to 40 years of age and has contributed immensely to the growth of capital market.”

On the real sector, she said “ The real sector of the economy was neglected by these banks. The manufacturing firms could not be given money because of the long term nature of the facility. If the banks had given the manufacturers the money to produce goods, it could have been better for the country. Nigerians would have stopped importing some of the goods they ordinarily would not have imported. Imagine, this country import tooth pick because banks were not encouraging the real sector that are productive oriented.”

Continuing, she said, “ Even the quoted manufacturing companies that are responsible are starved of funds to produce the needed goods that will affect the economy positively. When a quoted company that produces goods are starved of funds, then it cannot produce. The oil and gas companies do not produce goods, what they do is to buy and sell petroleum products. So the bank prefer to lend to this sector because it is juicy and generate quick profit. They forgot that when the manufacturing sector is stabilised and keep producing it have ripple effect on the economy.”

Commenting on the meltdown which had been attributed to the margin loans , she stated that the CBN has really come out with the true position of the margin loans that Nigerians have been accusing the stock brokers of According to her, “ Stockbrokers accounted for less than 20 per cent of the over two trillion naira loans The CBN stated that margin loan accounts for N426 billion, but actually it is less than N400 billion. Why it is up to N426 billion is the indirect loan collected for real estate. The real estate accounted for 30 per cent of the entire loans, while the oil and gas got the rest.”

She explained that the bank was not lending to the real sector that they were supposed to lend to , adding that they gave their money to petroleum importers. “ The problem started when the federal government said any body who has money can bring in petroleum products and people who even do not have ideas about petroleum products went to banks asking for loan without collaterals. So being an oil and gas business, the banks just gave out the loans with the hope that the price of oil will keep rising. But unfortunately, the international price crashed and the debtors were unable to pay.”


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