SEC: Housing Revolution Will Enhance Banking Operations

The Director-General of Securities and Exchange Commission (SEC), Ms Arunma Oteh, has expressed the need to embark on a housing revolution in Nigeria to enable banks take off mortgages from their balance sheets.

Oteh who was responding to questions from the media during the Nigerian Debt Capital Markets conference, held in Lagos last week, explained that if banks took off mortgages from their balance sheets, it would enable them to lend more, as well as perform other functions within their core areas of operations.

She said Nigeria needed to move from 20,000 to 50,000 mortgages to many more, considering her population of over 167 million.

Oteh pointed out that the capital market can tap into the revolution through securitisation of these mortgages after which banks would be free to move them off their balance sheets and sell it to the capital market.

She said, “What is obtainable in Asia is about securitisation of Small and Medium Enterprises scale loans while in Korea, banks do small and medium scale loans which create jobs and they move them off their balance sheet and sell it to the capital market so that the banks can do much more.”

The SEC boss, who reiterated the Commission’s commitment to market regulation and development, noted that when there is sufficient demand for products from domestic and retail investors, it would create the needed demand that would support huge requirements for securities.

“Here, you also need to restructure the instruments so that the kind of instrument you are making would not require taking any extraordinary risk. For example, the Debt Management Office has issued 20-year bonds but we do not have any other issue that is up to 20 years and here, what we need to do is to extend maturity so that we can have mortgages.” She said.

source: Leadership News

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