Shareholders of five banks lose N180bn in two weeks



Stock price could collapse to 50 kobo by November
Shareholders of the embattled five banks have lost about N180 billion in two weeks, an indication that they are in for hard times, according to Renaissance Capital. The analysts declared yesterday that going by the continued fall in the share prices of the banks since the lifting of the suspension, their shareholders may be in for more troubles.
Renaissance Capital observed that in the last two weeks, the shares of Afribank, Finbank, Intercontinental Bank, Oceanic Bank and Union Bank
[Sanusi Lamido, governor, CBN]

Sanusi Lamido, governor, CBN
slumped by 26 percent, 32 percent, 36 percent, 36 percent and 40 percent respectively, being the equivalent of 61 percent of the total market lost by the Nigerian Stock Exchange (NSE) within the same period. This, meanwhile, is against a market growth of over 6 percent attained by the NSE within the same period.
Consequently, the analysts predicted that there is even every possibility that their share prices would further fall to 50 kobo, a situation that may further erode their fortunes. For instance, as of Tuesday, the shares prices of the banks stood at, Afribank, N3.86k; Finbank N1.06k; Intercontinental N4.64k; Oceanic N3.14k and Union bank N7.59k.
“The road to 50 kobo could be shorter than we think, their 15th September closing prices… we estimate that Finbank, Oceanic, Afribank Intercontinental and Union would get to 50 kobo by October 5, November 3, November 9 and 26 respectively, if they continue to go limit down on this basis. Notably, if the share prices of the fallen banks fall to N50 kobo, their collective market values would fall at N277 billion,” the report stated.
The report further bemoaned the lack of full disclosures on the financial position of the banks before the lifting of suspension on their shares, arguing that the development has denied analysts of informed decision on them. Besides, it suggested it is instrumental to the waning confidence on the banks by investors.
“On August 17, we suspended comment on Intercontinental Bank, Oceanic Bank and Union Bank on the basis that we did not have the necessary fundamental data on the current financial position of these banks and therefore could not make an informed decision on their fair value month on.
“In our opinion, full transparency on the financial position of these banks should be published before they are allowed to trade. We believe therefore, that there is a real risk that their shares will fall to their nominal value (50 kobo),’’ the Renaissance Capital report stressed.
The analysts nonetheless commended the Central Bank of Nigeria (CBN) for the capital injection of the N420 billion and the initial suspension on their shares but frowned at the subsequent lifting, adding “while we understand the reason for CBN’s decision to inject capital to support the fallen five and NSE had to suspend the shares on the announcement, we do not know why the NSE has decided to subsequently lift the suspension.’’
With the foregoing, other analysts contend yesterday that the stage may have been set for the chief executives of the embattled banks for the struggle for the soul of the banks. This is against the backdrop of revelations of deep infractions on the accounts of the banks.
But, even at that, the chief executives are thinking of introducing austerity measures to curtail expenses if only they are to maintain the current workforce in their various organisations.
For instance, one of the chief executives was said to be surprised over the over head cost running to billions monthly. As a way of curtailing it, the chief executive was said to have told the management of the subsidiaries, whose expenses were usually incorporated into the bank’s own to commence merging of some departments while he will be working on the possibility of merging the subsidiaries soonest.


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