Apparently, this temporary measure is being taken in the interest of national economy - micro and macro - even though it was some individuals' greediness that led to it. It is for this reason (greed) that Sanusi announced that those responsible must first of all bear the full consequences.
According to him, the asset management company even if set up would only take off assets after owners have taken the hit. "We're not going to take on assets at cost. They've got to be properly written-down on the books of banks.
"This led to the new vogue we are witnessing among banks. Before now, many were declaring huge increase in profits, but thereafter, nearly all the banks have declared losses and huge decline in profits." This is even as Sanusi promised they have all made provisions for their non-performing loans, but the true bottom line finally came to light afterwards.
The CBN boss had earlier commented in an interview that what banks needed to understand was that banking is a business. When the stock market is booming, some banks take risks and make a lot of money, and if it goes down, they take the losses too.
"As somebody once said, you cannot privatise your profits and socialise your losses. That is for me a minimum. They've got to take their losses, and then we will do everything we can to make sure they don't go under," he had said.
Once the company is set up, it is expected to buy up the toxic assets of troubled banks. Sanusi believes this singular action will empower banks, enable them to resume normal lending responsibilities while at the same time allowing for more liquidity and financial activities in the economy.
But the question on the lips of many observers last week is "what could N250 billion do, even if it is an initial amount?" They think it is a huge joke that over N250 billion has been proposed to set up the AMC to absorb the toxic assets of banks.
The CBN is expected to contribute 60 percent of the fund, while the ministry of finance will provide the remaining 40 percent. What observers worry about now is the toxic assets of banks estimated to be over N1.0 trillion, but the question still remain, "what will a mere N250 billion do in a situation like that." As an observer expressed, "it is like a tiny drop in the ocean."
But Bismark Rewane, chief executive officer, Financial Derivatives, disclosed in a telephone interview that what is important is to start first. In fact, he said the AMC issue should have started long before now.
"Even if it is zero kobo, let them start it, it is a way forward," he said.
Wale Abe, chief executive of Financial Market Dealers Association of Nigeria (FMDA), who agreed with Rewane, said it is pertinent to remember that some funds have already been released to remedy the situation before now in the form of bail-out.
"For now, what is important is for the AMC to take off, so as to address some other issues," Abe noted.
As it is, the ball will soon be in the courts of the National Assembly. The early take-off of the AMC will be dependent on how soon the National Assembly acts.
One of the observers said he is optimistic the National Assembly will act fast because one way or the other everybody's interest is tied to the capital market.
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Money Banking & Finance Will AMC turn around fortune of banks, stock market?
Money Banking & Finance Will AMC turn around fortune of banks, stock market?
Will AMC turn around fortune of banks, stock market?
Since the mention of Asset Management Company (AMC) by Sanusi Lamido Sanusi, Central Bank of Nigeria (CBN) governor, stock market operators and banks have not stopped hoping and looking up to the company as their only 'saviour.'
Apparently, this temporary measure is being taken in the interest of national economy - micro and macro - even though it was some individuals' greediness that led to it. It is for this reason (greed) that Sanusi announced that those responsible must first of all bear the full consequences.
According to him, the asset management company even if set up would only take off assets after owners have taken the hit. "We're not going to take on assets at cost. They've got to be properly written-down on the books of banks.
"This led to the new vogue we are witnessing among banks. Before now, many were declaring huge increase in profits, but thereafter, nearly all the banks have declared losses and huge decline in profits." This is even as Sanusi promised they have all made provisions for their non-performing loans, but the true bottom line finally came to light afterwards.
The CBN boss had earlier commented in an interview that what banks needed to understand was that banking is a business. When the stock market is booming, some banks take risks and make a lot of money, and if it goes down, they take the losses too.
"As somebody once said, you cannot privatise your profits and socialise your losses. That is for me a minimum. They've got to take their losses, and then we will do everything we can to make sure they don't go under," he had said.
Once the company is set up, it is expected to buy up the toxic assets of troubled banks. Sanusi believes this singular action will empower banks, enable them to resume normal lending responsibilities while at the same time allowing for more liquidity and financial activities in the economy.
But the question on the lips of many observers last week is "what could N250 billion do, even if it is an initial amount?" They think it is a huge joke that over N250 billion has been proposed to set up the AMC to absorb the toxic assets of banks.
The CBN is expected to contribute 60 percent of the fund, while the ministry of finance will provide the remaining 40 percent. What observers worry about now is the toxic assets of banks estimated to be over N1.0 trillion, but the question still remain, "what will a mere N250 billion do in a situation like that." As an observer expressed, "it is like a tiny drop in the ocean."
But Bismark Rewane, chief executive officer, Financial Derivatives, disclosed in a telephone interview that what is important is to start first. In fact, he said the AMC issue should have started long before now.
"Even if it is zero kobo, let them start it, it is a way forward," he said.
Wale Abe, chief executive of Financial Market Dealers Association of Nigeria (FMDA), who agreed with Rewane, said it is pertinent to remember that some funds have already been released to remedy the situation before now in the form of bail-out.
"For now, what is important is for the AMC to take off, so as to address some other issues," Abe noted.
As it is, the ball will soon be in the courts of the National Assembly. The early take-off of the AMC will be dependent on how soon the National Assembly acts.
One of the observers said he is optimistic the National Assembly will act fast because one way or the other everybody's interest is tied to the capital market.
Apparently, this temporary measure is being taken in the interest of national economy - micro and macro - even though it was some individuals' greediness that led to it. It is for this reason (greed) that Sanusi announced that those responsible must first of all bear the full consequences.
According to him, the asset management company even if set up would only take off assets after owners have taken the hit. "We're not going to take on assets at cost. They've got to be properly written-down on the books of banks.
"This led to the new vogue we are witnessing among banks. Before now, many were declaring huge increase in profits, but thereafter, nearly all the banks have declared losses and huge decline in profits." This is even as Sanusi promised they have all made provisions for their non-performing loans, but the true bottom line finally came to light afterwards.
The CBN boss had earlier commented in an interview that what banks needed to understand was that banking is a business. When the stock market is booming, some banks take risks and make a lot of money, and if it goes down, they take the losses too.
"As somebody once said, you cannot privatise your profits and socialise your losses. That is for me a minimum. They've got to take their losses, and then we will do everything we can to make sure they don't go under," he had said.
Once the company is set up, it is expected to buy up the toxic assets of troubled banks. Sanusi believes this singular action will empower banks, enable them to resume normal lending responsibilities while at the same time allowing for more liquidity and financial activities in the economy.
But the question on the lips of many observers last week is "what could N250 billion do, even if it is an initial amount?" They think it is a huge joke that over N250 billion has been proposed to set up the AMC to absorb the toxic assets of banks.
The CBN is expected to contribute 60 percent of the fund, while the ministry of finance will provide the remaining 40 percent. What observers worry about now is the toxic assets of banks estimated to be over N1.0 trillion, but the question still remain, "what will a mere N250 billion do in a situation like that." As an observer expressed, "it is like a tiny drop in the ocean."
But Bismark Rewane, chief executive officer, Financial Derivatives, disclosed in a telephone interview that what is important is to start first. In fact, he said the AMC issue should have started long before now.
"Even if it is zero kobo, let them start it, it is a way forward," he said.
Wale Abe, chief executive of Financial Market Dealers Association of Nigeria (FMDA), who agreed with Rewane, said it is pertinent to remember that some funds have already been released to remedy the situation before now in the form of bail-out.
"For now, what is important is for the AMC to take off, so as to address some other issues," Abe noted.
As it is, the ball will soon be in the courts of the National Assembly. The early take-off of the AMC will be dependent on how soon the National Assembly acts.
One of the observers said he is optimistic the National Assembly will act fast because one way or the other everybody's interest is tied to the capital market.
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