subject: AMCOM on track to buy all NPL's and issue tradable bonds by March 31 [print this page] AMCOM on track to buy all NPL's and issue tradable bonds by March 31
March 1(www.easykobo.com) - The Asset Management Corporation of Nigeria is set to resume the purchase of non performing loans from healthy banks. This will be the second round of loan purchases and would cover loans with a value between N20 - N50 million. AMCOM has plans to issue a further N500 billion in bonds to cover this purchase.
AMCOM CEO Chine-Obi Mustapha told reuters that ""We are sending out notices tomorrow in which we would invite the healthy banks to submit non-performing loans (NPL's)with a face value of 20 million naira,I have two hard deadlines, the end of first quarter for taking out all the NPLs and the end of second quarter for recapitalising the banks,"
In its first stage of loan absorption, AMCOM issued 1.03 trillion zero coupon face value consideration bonds to 21 banks at a discounted value of N 770 Billion. These bonds will become tradable by the end ofMarch 2011, AMCOM has already received all the regularity approvals for this according to CEO Chike-Obi.
AMCOM was set up last year to buy out all the non performing loans fromfailed banks. Its main task is the replace the shareholders' equity in these banks so that they become investment targets by good Nigerian banks and foreign banks. In 2009, the CBN bailed out 9 banks that led to a liquidity crunch in the economy.
The Nigerian Stock Exchange (NSE)has suffered major losses over the period. When AMCOM started buying out non performing loans in January, the NSE responded with a big rally that saw the NSE Index climb over 27000 points. Since then, the AMCOM delays in getting the regulatory approvals on time has seen the index fall back again. Today's news failed to spur the NSE with the index down by 0.5% at 2:30pm in Lagos.
An analyst that spoke to Easykobo said "If all goes well as planned, we are looking at a huge rally beginning around the end of 2nd quarter that could continue to the end of the year". Banking stocks are expected to be hot following the inevitable mergers and aquisitions. "Investors are looking to buy banking stocks that acquire other banks rather than get acquired".
