By Peter Egwuatu

Standard Chartered Bank has opened a multi-million dollar alternative window for the disposal of non-performing loans by Nigerian banks, raising the prospects of timely resolution of emerging bad assets and recapitalisation of financial institutions.

At a high-level interactive breakfast seminar with officials of banks and the Assets Management Corporation of Nigeria (AMCON) in Lagos on Monday, Mrs Bola Adesola, Managing Director and Chief Executive Officer, Standard Chartered Bank Nigeria, said the bank has committed funds to explore investment opportunities with clients in the distressed assets’ market in Nigeria.

She underlined that given the inadequate capital formation in most African economies, including Nigeria, and the huge funding requirements for infrastructure, there is a need to resurrect values in non-performing loans and distressed assets to secure additional capital.

She further said that, with the launching of the Standard Chartered Alternative Investments Group in Nigeria, the bank is bringing its huge financial capability, experience in various markets and skilled personnel to promote the development of a private distressed assets market.

“We are amongst the oldest asset management outfits for distressed assets in Asia. Leveraging Standard Chartered’s infrastructure, client base, products and geographical coverage, we can become an active investor or co-investor with other interested parties,” Adesola said.

Mr. Vinayak Bahuguna, Head of Standard Chartered Bank Alternative Investments Group, said that the availability of an alternative private market for the management and unlocking of value in non-performing loans in Nigeria would provide an efficient bypass for Nigerian financial institutions to manage distressed assets. He noted that given the nature of banking as a risk business, losses are bound to happen and, as such, non-performing loans management must not be a one-time exercise but a key ongoing management priority.

He pointed out that being able to manage old non-performing loans and distressed assets quickly would enable the institutions to deal better with emerging new bad assets adding that non-performing loans values, like ice, melt away with time. According to him, institutions with bad assets stand to suffer the multiple jeopardy of income cessation, provision charge and capital reduction.

Bahuguna outlined that by ridding their balance sheets of bad assets, banks and financial institutions stand to benefit immensely in form of recouping capital, higher return on equity, velocity and leverage benefits, improved ratings, improved market perception, higher employee morale and mitigation of moral hazard usually associated with bad assets.