Banks’ Share Prices Fall--NSE Suspends Bailed-out Banks
By Jibrin Abubakar and Kayode Ekundayo Lagos
Shares of banks tumbled yesterday at the Nigerian Stock Exchange (NSE) on the first day of trading after Friday's shakeup of top managers of five banks and a N400 billion bailout.
In an apparent loss of confidence in the banking sector, investors yesterday offloaded millions of shares of listed banks, dragging the all-share index 2.5 per cent down.
The Central Bank of Nigeria last week injected N400 billion into Afribank, Finbank, Intercontinental Bank, Oceanic Bank and Union Bank and also sacked their managing directors and executive directors to prevent what it said was a looming distress. CBN also appointed interim heads for the banks, with a mandate to recover unsecure loans totalling up to N1.2 trillion given out by the five banks.
Trading in shares in the five ailing banks was suspended before the market opened yesterday, but other banking stocks—including Diamond Bank, First Bank, Guaranty Trust Bank, Zenith Bank and United Bank for Africa, which a CBN audit cleared—all fell, most of them by the maximum 5 percent limit.
Only six of more than 200 listed companies saw price gains on the exchange, only one of them bank stock.
The volume of transactions rose sharply to 406 million shares traded from 266 million on Friday.
“The shock was too much for the market to bear. The market is going to continue to go down,” one fund manager told Reuters news agency, asking not to be named.
Yesterday, the share price of Diamond Bank fell from N6.91 on Friday to N6.57, First Bank fell by 4.96% from N14.90 to N14.16, Guaranty Trust Bank (GTB) also shed from N13.24 to N12.58, Skye Bank came down from N5.23 to N4.97 while the shares of UBA fell from N12.38 on Friday to N11.77. Zenith Bank's share price also came down from N13.04 to N12.39, while Unity Bank dipped from N1.29 to N1.23.
Sterling Bank was the only bank that leaped from N1.39 to N1.45 at the close of yesterday's trading.
Acting on the directive of the CBN and Securities and Exchange Commission (SEC), the NSE yesterday placed a two-week full suspension on traded equities of five banks whose managements were sacked by the CBN last Friday.
With the suspension, there would not be any trading buying or selling of the affected banks' shares until the suspension is lifted.
Spokesman of the exchange Mr. Sola Oni explained to Daily Trust by telephone last night that the five affected banks will go on full suspension, meaning their stocks would not be traded at all. This, he said, is different from technical suspension where stocks are still listed and can still be bought/sold at a frozen price. He said there is no cause for alarm as the market is vibrant.
NSE Director-General Ndi Okereke-Onyiuke, who announced the suspension of trading in the affected banks' shares in Lagos, said the sacked group managing director of Intercontinental Bank Eratus Akingbola would continue to hold his position as the second vice president of NSE council and Chairman of Lagos/Ibadan branch since he was not indicted.
Okereke-Onyiuke said the decision to placed full suspension on the five banks was arrived after a meeting with chief executives of stock broking firms and Chartered Institute of Stockbrokers, and after consultations with SEC and CBN.
Earlier yesterday, the director general had had a closed door meeting with chief executives of stock broking firms where it was resolved that the new managements of the five banks should be invited to speak on their new task and how they intend to go about it.
On the impact of the suspension on the market, Okereke-Onyiuke said the action would impact negatively on the market capitalisation and also shake the confidence of investing public but added that the impact would be temporary as the long term effect would bring positive development to the market.