The House of Representatives Committee on Capital Market has asked the Securities and Exchange Commission to stop banks from accessing the capital market until some grey areas are sorted out.



Nigerian banks have raised more than N500bn from the capital market in the past one year as part of efforts to further boost their capital base.



This is coming less than two years after the Central Bank of Nigeria compelled all banks to increase their minimum capital base to N25bn from N2bn.



The House also questioned the rationale behind SEC’s decision to raise the minimum capital base of stockbroking firms to N1bn.



The Committee also expressed apprehension over the usual delay in completing allotments to subscribers in banks’ offers, after the deal had been sealed at the capital market.



However, SEC has taken steps to address this with a recent directive that allotments should be concluded within six weeks after an offer.



These reservations were expressed in a letter signed by the committee’s Chairman, Mr. Ahmed Wadada, to the Director General, SEC, dated September 10, 2007, but released on Sunday in Abuja.



The two-page letter also queried SEC’s approval of Transnational Corporation of Nigeria’s decision to float a bond, when it was still mired in debts. It demanded explanations from the SEC’s Director-General, Alhaji Musa Al-Faki.



The letter reads, “At issue here is the all-important matter of Transcorp’s capital structure. This is with particular regard to the corporation’s recent floating of bonds, while it is already a debt-ridden company.



“The floating of bond, must of course, have been approved by the Securities and Exchange Commission.



“It must be noted that in addition to our normal, routine statutory responsibilities, this honourable committee duly recognises that it has some added obligations and concerns with particularly special respect to TransCorp, considering that it is a conglomerate company that has been put together from national public assets.”



In view of these, the committee resolved that SEC should “halt and suspend for now, any action for the purpose of implementation and continuation of any directive and further approval as the case may be, in respect of re-capitalisation of stockbroking firms and the continuous approval for banks to access the capital market respectively.”



When contacted on the telephone on Sunday, a spokesman of SEC, Mr. Lanre Oloyi, denied knowledge of the letter from the House or the SEC’s approval of a bond issue for Transcorp. - Punch