NSE to assist quoted banks on new capital base
By Gbenga Agbana (Lagos) and Azimazi Momoh Jimoh (Abuja)
ANY bank quoted on the Nigerian Stock Exchange (NSE) may not need to panic over the new N25 billion minimum capital base announced by the Central Bank of Nigeria (CBN).
In the event of their being unable to meet the December 2005 deadline, the NSE has offered to keep them afloat. There are 31 banks listed on the Stock Exchange.
The Senate is also planning to whittle down the supervisory role of the CBN through a bill to amend the CBN Act.
Speaking at the presentation of the facts behind the figures of Access Bank Plc yesterday in Lagos, the NSE Director-General Dr. Ndi Okereke-Onyuike said the Exchange had the capacity to salvage quoted banks that might not meet the deadline for the N25 billion capital base.
Stockbrokers who spoke with The Guardian on the performance of the stocks of quoted banks since the CBN announcement, explained that investors were already dumping the shares of banks perceived to be weak.
Also yesterday, the Senate Committee on Banking, Insurance and Financial Institutions, summoned the CBN governor, Prof. Charles Soludo, over the N25 billion recapitalisation base for banks. He is to appear on July 19.
The stocks of those regarded as solid banks are instead being patronised by the investors, they say.
Responding to the investors' fears, Okereke-Onyuike urged them to remain calm, saying that since the capital market had been deregulated, "it has the capacity to meet the capital base requirement either from local investors or from foreign investors."
She said the banks could do a hybrid of offers like dollar-dominated issues to meet the deadline.
"If a bank is quoted on the NSE, unless it is not ready to salvage itself, it has the capacity to meet the requirements. Our market is deregulated. So any bank can do a hybrid of offers and issue dollar-denominated offers. Our listing requirements are approved by the United States Securities and Exchange Commission.
"It's the methodology that will separate the boys from men. The NSE will support the quoted banks. Preach the word that people should not dump their shares," she said.
Okereke-Onyuike said out of the 31 quoted banks, 25 would make it: "There is no way an unquoted bank will swallow a quoted bank because we don't know their worth."
Similarly, the Managing Director of Access Bank Plc, Mr. Aig-Aig Imokhuede said: "Stockbrokers should understand the process of consolidation. The fact is that it is not shouting that will solve the problem of the new capital base, it is not force, but sense and intellect"
A stockbroker, Mr. Olu Odejimi added that mergers and acquisition had become the vogue in the banking industry worldwide. He assured that the stockbrokers and the Exchange would support quoted banks to recapitalise.
The Managing Director of Great African Securities, Mr. Wole Abegunde said that the fear that some banks would not meet the capital base was already gripping the stock market. "The prices of some banks' shares are already dropping.
"The prices of the shares of big banks are rising in the market. The market share of these big banks will increase. The new generation banks will lose funds to old banks," he added.
The Senate Committee on Banking and Insurance vice chairman Senator Farouk Bello who spoke on the plan to amend the CBN Act in Abuja, yesterday explained that the bill would be introduced to both houses of the National Assembly when they reconvene.
Bello also hinted that the laws establishing the community banks, the Nigerian Deposit Insurance Corporation (NDIC) were being reviewed by the Senate.
His words: "Now we are set to review our own laws to make sure that the appointment of the governor and deputy governor of CBN are subject to the confirmation of the Senate, we may not have the problems that we are having today. Then if we call on the CBN governor to do what we want him to do, I believe he will respect the wisdom of the people as reflected by their representatives. We will have to accelerate that process so that we don't sit down and see an otherwise good sector of the economy rubbished. "There are several things in that law that have to be looked into. They include powers to supervise banks. Look at community banks. We know the way things are now.
"The CBN supervises community banks when there is an Act that established the Board of Community Banks. And ordinarily, a bank that is supervising banks with N25 billion capital base should not also allow itself to be dragged into running community banks."
He added: "We will allow the CBN to do what it is doing and other sectors to do what they are doing."
The new law, he stated would check "arbitrary budgetary decisions by the CBN."
He queried why the auditors of CBN should be appointed by the Accountant-General of the Federation.
The lawmaker noted that the constitution requires the CBN to report to the National Assembly its affairs every six months. "I can assure you that we have not received such a report as a Senate. Senate banking committee does not have a report of affairs of the CBN on six months basis."
Bello declared that CBN had no right to force banks to merge by imposing the N25 billion capital base on them.
