CBN: No Plans to Stop Margin Loans
The Central Bank Governor, Prof. Chukwuma Solodu, has said the apex bank did not stop banks from giving “margin loans” to customers to acquire shares in the nation’s stock market, contrary to the rumour currently creating worries in the financial sector.
When banks lend money to customers to trade in shares, it is known as “margin loans”.
There have been insinuations that the alleged directive by CBN to banks to withdraw margin loans from stockbroking firms is partly responsible for the current bearish trend in the stock market.
But speaking to THISDAY last night, Soludo said the apex bank did not give any such directive.
He said that the banks’ lending to customers to acquire shares has not reached the level that would warrant any intervention by the CBN.
While banks are allowed to lend to customers to buy shares, they are not allowed to finance the buying of their own shares.
The Securities and Exchange Commission (SEC) at the weekend similarly denied knowledge of any such directive from the CBN.
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