By Peter Egwuatu, Michael Eboh &Providence Obuh
Stockbrokers have lamented the delay in the release of operational guidelines for Assets Management Company of Nigeria (AMCON), even as they say it is not the only panacea to lifting the stock market.

While reacting to the passage of the bill into law, stockbrokers who spoke to Vanguard said the passage of the bill into law was not a surprise to them as it was an executive bill.

In an interview with Vanguard recently, Managing Director/CEO, Dependable Securities Limited , Mr, Chinenyem Anyanwu said, “ The Asset Management Company (AMCON) bill is an executive bill, it was so, before it became law now. Because it was an executive bill, the certainty of its signing into law was there, it was a matter of amendments of some of the guidelines, here and there to make it through. Hence, it was not surprising to me and many of the stockbrokers, because of the source of the bill.

“The bill when it was first muted, has as its major benefit, the fact that it created hope, especially at the time that the market needed all confidence to and everybody believed that as soon as it is signed into law and become operational, things would be better.

The market has ridden on that hope till this point. Any other major move will be when the substance of that hope appears, that would be when the AMC begins operations.

However, the nitty-gritty of the law has not been given to us, how is it is going to be applied , there are still grey areas that needed to be addressed going by what we have been hearing. But I believe that as soon as they bring out the guidelines and make available the funds and begins the mopping up exercise, the market would leap. The market should actually ride on the back of that bill.

I do not see any thing near the CBN using the AMCON to sell the banks to their friends. If you know the background of the company, it is supposed to mop up toxic asset of the banks, and from what we hear, they can cherry-pick the ones they consider most viable. So  it will not be compulsory that every stock in the market would be picked by the AMCON.

Banks may choose or not to give a particular stock to the AMCON. That is being the case, it is the one that is seen as toxic that would be surrendered. Also, it is supposed to be held for a while, and then offloaded as things stabilise.

I am aware that some banks prefer to deal with their clients directly, more so, as the market begins to recover, why would anybody surrender a stock that would eventually move up. This is because this stock, despite the fact that they are low presently, we believe that they would move up.

The results released by most of the banks, revealed that they are coming out of the woods, Every of the so-called ‘Sanusi banks’ are now declaring profits, it is therefore hoped that the market would improve, even without  the AMCON in place.

“Another thing that bother us in the market is who are the people that will manage the AMCON. I have my concern especially in this time of our a political era where gratification is given left and right for being part of or associated for supporting one person  or the other. You will see that somebody who knows little or nothing about investment portfolio will be given appointment to manage the company because he belongs to a party or the other.

Managing Director/CEO, Mr. David Adonri in his reactions on the newly signed bill by President Jonathan said, “It is a much awaited welcome development that finally the AMCOM bill has finally been signed by the President into law and we are now hoping that implementation will commence so that very shortly the damaged balanced sheet of the rescued banks will be repaired so that they will come back fully into business and serving the economy with credits, so that is our expectation.”

That is for banking industry, there will therefore be a tripping down effect to other sectors of the economy, if the rescued banks are rehabilitated to the point that they can start providing credit to the economy again, together with what the sound banks are doing, the assurance is there, that the credit extension to the economy would be restored and if the economy works with sufficient credit that would translate into increase in the generation of productive employment and also the creation of wealth which on the long run will impact positively on the capital market, because if the quoted companies are getting more prosperous making more profit and distributing some of the profits to investors then the interest, the confidence of investors will increase in those companies and by implication in the market and so we will have ripping down effect on the capital market, so is a good situation for the economy and also the capital market.

“ I think the principles upon which AMCON will operate are encapsulated in the enabling law and basically their job is to take up toxic assets, the modality have not been strongly spelt out but generally we all know that the duty of AMCON is to take up toxic assets and the toxic asset are the real bad assets.
On the issue of the ownership of the troubled banks, the existing shareholders still own them. So the coming of AMCON is quite different thing if not being derail . They are actually different things entirely, considering the fact that the issuing if AMCON is very clear that is to buy up toxic assets from the banks, this one has nothing to do with ownership.
AMCON will take over the  liabilities, there are securities that their values have gone down  it is expected that they will be bought and warehouse them until it rises again.

Those banks whose balance sheets are already damaged will  immediately crab this lifeline, because if the CBN has not dolled out the bailout fund to those banks, a lot of them will not be existing as we speak, those bailout funds were not gift to them, they were loans to them, to serve as their true capital which they are to pay back to CBN, so if the apex bank decides to recall the loans those banks will collapse immediately, so I don’t see the banks not supporting the AMCON.

What is happening now in the stock market  is an extra effort, that is why we are  trying to make sure that those banks are brought back into the system, because if those banks fail, the consequences for the economy are very dare, and unimaginable to come up with some financial instruments with which to pay them.

I understand that government might issue some bond for this purpose with which to pay them, if they have the machinery, it is not from that the capital base of  AMCON they are going to pay them, they are going to do some bond issues with which to pay them.

Vanguard gathered that the CBN Governor, Lamido Sanusi  plan, is to make AMCON  focus first on  the margin loans given by banks, which severely led to crash of the capital market  as they are easier to value.

AMCON if properly managed and controlled, experts say is expected to distribute those assets to investment managers, who will have the option of taking a variety of portfolios through an investment strategy that will be defined by it.

“This could be through selling some of the shares and going into real estate. AMCON would also maintain a portfolio of diverse assets including equities, fixed income bonds and real estate, and provide equity capital on such terms and conditions as the corporation may deem fit. It will also be responsible for the issuance of bonds or other debt instruments as a consideration for the acquisition of eligible bank assets” a financial expert added.