Investors' confidence dampenedTHE well orchestrated take over of three listed banks by the Federal Government penultimate Friday, has continued to raise dust, even as the injection of funds into the newly fashioned out banks poses more questions than answers.The nationalisation of the banks has further stifled the relative confidence the equities market has been enjoying, since the appointment of new managers in the stock market, who were assigned the sole responsibility to turnaround the fortune of the market.Other mandate given to the Exchange new managers led by the Chief Executive Officer, Mr. Oscar Onyema, was to bring the market to be at pal with developed markets in the areas of credibility, transparency and sound corporate governance, and they have been doing just that.However, the alleged take over of the banks on the ground of avoiding their total collapse, based on inadequate capital and the subsequent placing of full suspension on their shares, preparatory to their being delisted, is one bitter pill too many for investors to swallow.And as an aftermath of the nationalisation of the banks, the technical suspension placed on the shares of Intercontinental, Oceanic and Union Bank to guide against value erosion, has once stired up fear in investors as to whether or not they are still sound to continue operation.This development has resulted in equity prices falling beyond even the expectation of market observers.The loss in the twin market indicators; the All-Share Index and market capitalisation in three days last week stood at N340 billion, just as this figure shows that the banking index suffered most with a one year value dip.Transactions in shares in the banking subsector usually account for 55-60 per cent of total trade on a daily basis at the exchange, and value of trade in the subsector always dictates the direction of the market in terms of volume, value and deals.The shareholding structure of the banks shows that Spring Bank Plc has 11.3 billion ordinary shares valued at N9.6 billion, Afribank Plc 13.6 billion ordinary shares valued at N9.49 billion ordinary shares and Bank PHB Plc 20.2 billion worth N10.7 billion. The banks nationalisation Nigeria Deposit Insurance Corporation had taken over the running of three banks rescued in a N620 billion 2009 bailout because they seemed unlikely to meet a September 30 central bank recapitalisation deadline.Assets and liabilities of Springbank, Afribank and Bank PHB have been transferred to newly formed Bridge Banks, in the interest of depositors and to prevent possible liquidations, NDIC said."Four of the (nine) rescued banks are in the process of concluding merger plans. The three banks have not shown necessary capacity and ability to recapitalise before the September deadline," said NDIC managing director, Mr. Umaru Ibrahim.Assets from Spring Bank were transferred to a newly formed Enterprise Bank Ltd, Afribank to Mainstreet Bank Ltd, while that of Bank PHB were transferred to Keystone Bank limited.The central bank said in a statement it had granted licences and extended interbank guarantees to the three Bridge Banks and guaranteed the safety of deposits moved into banks.The NDIC said it would operate the Bridge Banks until it engages AMCON to open up negotiation with investors who would be interested in capitalising the newly formed lenders. Safety of investment as guaranteed by SEC and NSE Commenting on the decision to liquidate the banks, SEC stated that the actions of the Nigeria Deposit Insurance Corporation (NDIC), the Central Bank of Nigeria (CBN) and the Asset Management Company of Nigeria (AMCON) were significant in the resolution of the banking crisis, noting that it would accelerate the recovery of the Nigerian capital market.The Director-General, SEC, Ms. Arunma Oteh, said that investors' shareholdings in the nationalised banks were already negative before they were taken over, noting that the commission might come up with an acceptable resolution of the controversy this week.She said that the commission was looking at a lot of concerns and would react to them as soon as possible.'We are looking into the issues and we are trying to see the profiles of the investors to see if there is anything that can be done. Maybe in about a week from now, we will know, but right now, those shares have been suspended. In fact, the shares are on full suspension, meaning there cannot be any trading on them,' Oteh said.The SEC boss, however, reiterated that the shares of the banks were already suspended and could not be traded upon.The NSE said that, transactions in the shares of the three banks up to and including Friday, August 5, 2011 will be allowed to settle.Transactions last week Investors on the Nigerian Stock Exchange (NSE) on Monday suffered a major dip in the value of their investment, as the effect of the three nationalised banks placed on full suspension in the market resulted in a loss of N139 billion in the day.The day's trading witnessed a massive downturn, leading to most capitalised stocks shedding a maximum of five per cent even as panicked investors were try to exit the market for fear of the 'unknown'.Specifically, in what market watchers has described as unprecedented, nine companies which included Skye bank, Honeywell, Access, Guinness shed a maximum of five per cent, to close at N5.89, N3.80,N6.27, and N228.00 per share respectively.Julius Berger, United Bank for Africa, Vitafoam, Conoil and Ashaka Cement also shed five per cent to close at N47.50, N4.75, N5.70, N34.21 and N20.54 per share.Guaranty Trust Bank and Oando also dropped 4.98 percent to close at N12.59 and N35.51 per share respectively.On the other hand, eight stocks appreciated in price, led by Okomuoil and Continental Re insurance with five per cent to close at N17.85 and N1.05 per share respectively. Followed by Eternaoil with 4.51 per cent to close at N5.10 per share.Analysts said that the massive drop in indices was due to the three banks that were suspended.Tuesday's trading showed that notwithstanding the assurance given to firm up investors' confidence, the heat of the banks' nationalisation has continued to take its toll on trading on the Nigerian Stock Exchange, as heavy offloading of shares continued in the day. Transaction in the day saw investors expressing fear of losing their entire investment in the remaining rescued banks, thus causing market capitalisation to drop significantly by N281billion in two trading days. The NSE Banking Index, which measures the performance of the top 10 most capitalised stocks in the sub-sector, fell by 13.4 per cent at the close of trading on Tuesday.Except for the rescued banks which failed to even make the losers chart, Ecobank, Zenith Bank, Access bank, First Bank, Skye Bank, Fidelity, UBA, Unity Bank, Diamond Bank, Wema bank, Sterling Bank and FCMB pitched their tent on the laggard. Particularly, market capitalisation slide by N281billion or 3.9 per cent from N7,484 trillion recorded at the end of transactions on Friday to N7, 203 trillion while the All-share index fell by 877.79basis points or 3.8 percent, from 23,397.44 to 22,519.11. Major bluechip companies, comprising of 38 stocks, depreciated in price while seven less capitalised ones recorded price appreciation. Nigerian Bags Manufacturing Company and Ecobank led others in the losers chart with five percent, to close at N2.09 and N2.85 per share respectively while Oando followed with 4.98 per cent to close at N33.74 per share. Ecobank TransNational Incorporated and Zenith Bank lost 4.97 per cent to close at N18.15 and N13.77 per share respectively. Access Bank also shed 4.95 per cent to close at N12.28 per share. Losses recorded in 30 stocks on Wednesday further dragged down the twin market indicator by N59 billion, even as equity trading sustained sliding profile in the volume of traded shares.
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