NSE TO BROKERS: WITHDRAW ACCOUNTS FROM 3 NEW BANKS

By Babajide Komolafe, Emma Ujah & Michael Eboh
LAGOS-The Nigerian Stock Exchange (NSE) yesterday, directed stockbroking firms and dealing members to withdraw their settlement accounts from the three nationalised banks, even as the Nigeria Deposit Insurance Corporation (NDIC) said that the three banks are still open to interested buyers.

Meanwhile, the Central Bank of Nigeria (CBN) officials yesterday went round the nationalised banks to monitor their activities especially their response to customers and staff.

However the newly appointed management of the banks were yet to resume duties as at the close of business yesterday.

A visit to some of the branches of the banks in major commercial centres in Lagos revealed normal banking transactions with customers depositing and withdrawing money, except for a couple of customers who expressed concern about the safety of their money. There was no sign of mass action in any of the branches visited.

NSE directs brokers to withdraw accounts
Vanguard was reliably informed that the NSE held a meeting with stockbroking and dealing members where the issue of the three nationalised banks was discussed. Sources at the meeting confirmed to Vanguard that the NSE directed stockbroking firms and dealing members operating settlement accounts in any of the affected banks to move their accounts to other safe havens.

Confirming this development, the chief executive of a stock broking firm who pleaded anonymity told Vanguard 'The meeting with Stockbrokers this morning centred on nationalization of the banks. Dealing members were informed that the stocks will be placed on full suspension preparatory to delisting since they no longer qualify to be listed. Dealing members were requested to move their settlement accounts from those banks to other PLC banks in line with the policy of The NSE'.

Corroborating the directive, the Chief Executive of another stock broking firm said the directive was part of the steps to delisting the banks and was necessary to protect the settlement system from whatever happens to the banks. 'It is a natural reaction in this kind of situation. Just like individuals would move away their account for security so also the market has to be protected from any disruption that could arise from the new status of the banks.'

Meanwhile the NSE yesterday commenced moves to delist the three banks. The NSE, in a statement signed by Mr. Wole Tokede, Head, Corporate Communications, Monday, announced the suspension of trading on the shares of the banks, saying that, 'This is the first step towards their delisting from the Daily Official List.'

Tokede said that the delisting becomes necessary since the banks no longer exist, following the revocation of their licenses by the CBN.

He, however, said that transactions in the shares of the three banks up to and including Friday, August 5, 2011 will be allowed to settle and also assured the investing public that the NSE will continue its efforts at protecting investors in the capital market.

Investors lose N237bn
Vanguard investigations also revealed that the nationalisation of the banks has cost investors about N237 billion. As at August 14, 2009, when the CBN first announced the take over of the management of the banks, Afribank with a total issued shares of 13.56 billion was sold at N5.49 per share, Spring Bank Plc, with an issued share of 11.32 billion went for N5.59 per share while Bank PHB Plc, with an issued share of 20.15 billion was being sold at N4.97. Put together, the total capitalization or investment value of the banks stood at N237.9 billion. As at the end of trading last Friday, when the banks were nationalized, the share prices of the banks were N0.64, N0.57 and N0.84 for Afribank, BankPHB and Spring Bank respectively.

Meanwhile, in a reaction to the development, there was a general decline in the prices of banks' stocks and stocks in other sectors.

The value of investment on the NSE dipped by N138.932 billion, representing a decline of 1.86 per cent.

Banks open to buyers-NDIC
However, Managing Director/Chief Executive, NDIC, Alhaji Umir Ibrahim said that the three banks are still open to interested investors. He spoke while fielding questions from journalists, at the end of the opening ceremony of the International Financial Reporting Standards, IFRS, in Abuja, yesterday.

'They remain open to investors who want to buy them', Alh. Ibrahim told journalists who sought to know the future of the banks.

The MD stated that the corporation had to take a proactive step by taking over the three banks, even before the September 30, 2011 deadline which was initially set by the Central Bank of Nigeria, for their recapitalization, as according to him, there was no hope for core investors buying into the institutions before the deadline.

He explained that if the banks were left to themselves up to the deadline, they would not only die but make resolution more difficult.

His words, 'if they have not been able to sign irrevocable Transaction Implementation Agreement up to this moment, they will not be able to do so before the deadline and if we wait until that deadline, the banks will be more than dead'.

The NDIC boss said, however, that the banks still had bright future, given the fact that banker of proven integrity had been appointed to their Boards of Directors and that with the insistence of the new boards members to play according to the rules, they would turn the fortunes of the banks round.

'I believe the future is bright. They have excellent boards. There are prospects that they will be bought over by investors who will have all it takes to continue with banking business', he said.

He added 'like all insured banks we will continue to monitor them, continue to examine both onshore and offshore in a very comprehensive manner to ensure that just like other banks, they play by the rules. We will give them all the advice, all the guidance they require to remain in business'.

Alh. Ibrahim added that the interests of depositors and other stakeholders in the affected banks were of utmost priority of the NDIC and that every necessary measure would be taken to protect them.

CBN team monitors banks
Meanwhile, a team of CBN officials led by the Special Adviser to the Governor & Director, Risk Management, Mrs Folakemi Fatogbe was at Enterprise Bank (formerly Spring Bank) making enquiries about customers' reaction to the change of ownership of the bank and whether the staff were at their duty posts. Vanguard reliably gathered that the team was on ground to monitor nationalised banks for first hand assessment of customer reaction.

At the headquarters of Keystone Bank (former Afribank) three senior management officials were at the banking halls monitoring customer reaction and to respond to enquiries. Leader of the team, Mrs Joke Giwa, who is one of the outgoing executive directors, told Vanguard that the bank is still awaiting the arrival of the new management of the bank.

Vanguard also gathered that the Managing Director/Chief Executive of Asset Management Company (AMCON), Mr. Mustapha Chike-Obi visited the headquarters branch of Enterprise Bank to open account to assure depositors that it is still safe to do business with the nationalised banks.

Banks' operate normally as customers ask questions

A visit to some of the branches of the banks in major commercial centres in Lagos showed that they were operating and attending to customers normally without any sign of a run or mass withdrawal by customers. It was observed that while some customers even deposited money with the banks while those that withdrew money did so for normal business transactions. It was also observed that the Automatic Teller Machines of the banks were in operation and dispensed cash to customers.

Although some customers expressed worry over the change of name, asking how it would affect the future of the banks, officials of the banks were seen explaining that the name change is just to signify that the banks now belong to new owners and that this would not impact their operations.

While a customer in one Allen Avenue branch of one the banks said that she was not comfortable with the change of name of the banks and hence came to withdraw her money, a customer at the Broad street branch of one of the banks, Mr. Sanya Ootosho said that since the government has assured depositors and injected money into the banks withdrawing her money, she doesn't see any reason to stop dealing with his bank.

Analysts lambast NSE, SEC
Meanwhile financial analysts have lambasted the NSE and the Securities and Exchange Commission, SEC, for their inability to safeguard and protect the interests of investors in the banks.

Speaking on the planned delisting, Mr. Opeyemi Agbaje, Managing Director, Resources and Trust Company Limited said that the NSE has failed in protecting investors, adding that the NSE may be deemed complicit in the series of events beginning from the consolidation share offers and subsequent abuses that has led to the banks' problems and nationalisation.

According to him, ordinary investors are the ultimate losers in this crisis. The bankers have become rich; depositors are protected; while CBN/NDIC/AMCON among others, flex muscles with the bank owners.

Also speaking, Mr. Tunde Adeyemi, Vice President, DHTL Capital Management Limited said, 'This is a deliberate act to destabilise the whole financial markets and threaten the whole economy.

'The proper advice that people will be giving to investors is to stay clear of the Nigeria financial markets and start looking for alternative markets and economy, like Ghana, Cameroon, Sao Tome, Liberia, Gambia among.

'Investors' protection is not on the agenda of SEC and NSE and like you've pointed out, the actions of the regulators and SRO's, especially in the last three years have heightened the political and investment risks of the country, which means we have finally lost the confidence of foreign and local investors in our capital markets. No investors will invest where situation like this happens.'