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84 stockbrokers to get debt relief

03 December 2012, 15:14

 Abuja  -The Minister of Finan ce, Dr Ngozi Okonjo-Iweala, said on Monday that 84 stockbrokers would be recommended for debt relief to enable them to operate in the Nigerian capital market effectively.

Okonjo-Iweala made this known while briefing newsmen on the Recommendations of the Capital Market Committee, in Abuja.

``With the permission of the president, this committee has made a couple of very important recommendations which we want to take off with.

``The first thing we will to do is to announce forbearance for stockbrokers that were participants in the market but have not been able to get backing because of the type of debt overhang they been experiencing and have prevented from going back.

``There are about 84 of these stockbrokers and they were part of a vibrant capital market; they took some margin loans, AMCON purchased these loans at the cost of N42 billion, far below what the original loans were,’’ she said.

According to her, the asset underpinning the loan is at N19.96 billion, adding that the forbearance will enable the brokers to have a relief and begin active participation in the market.

She noted that the debt overhangs had been a deterrent to the market .

Okonjo-Iweala added that Stamp Duty and Value added Tax (VAT) had also been waved for the market operators.

``This make up I think about 12 per cent in terms of taxes on the activities in the market waved, we believe that this is a very strong measure that will enable market participants to have some new way in their transaction.

``We will monitor this waving of tax and see how it will help to reinvigorate the capital market and see how to take off from there,’’ she said.

She said that there would be sanctions to prevent behaviour that would lead to the situation experienced before to occur in the future.

``The stockbrokers that are benefiting from the forbearance will be prohibited from giving services to AMCON for three years.

They will not be allow to provide any professional service to AMCON

``They will have to make greater disclosure, their businesses and service will have to be more transparent; they will be required to reveal to Securities and Exchange Commission, any dealings in securities valued at a minimum 25 million executed in a single or multiple deals on the same day on behalf of their client,’’ she said.

This, the minister said, was in line with effort to ensure monitoring, adding that there would be a limit on debt financing for the brokers.

Okonjo-Iweala said that credit bureaus would be given the details of the 84 brokers that were given the forbearance but added that there would be some trading restrictions on the brokers.



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