Warning: Padi padi regulation is taking over Nigeria’s financial sector

by Tunji Andrews

From having virtually every full year result, covertly pointing accusing fingers at the Central bank of Nigeria, for over regulation and being insensitive to their profit margins; to being on the same page with the CBN on bank earnings, must be a really big leap forward for Nigerian banks. In wave after wave of banking regulation the CBN has loosened the noose and given banks a little more leg room, in their already luxurious business class. A recent report published quoted that 12 banks earned a total of N1.4 trillion in pre-tax profits between January and June 2014, with the report further explaining that published trading results showed that these 12 banks made a combined after tax profit of N223 billion. This does call to question the bank’s defence of dwindling margins as an excuse for the reintroduction of remote-on-us ATM charges.

The new CBN governor, Godwin Emefiele, has been described by some commentators as the "bankers governor".
The new CBN governor, Godwin Emefiele, has been described by some commentators as the “bankers governor”.

Some commentators have termed the new CBN governor, the “banker’s governor” because of his compassion towards banks, with many pointing fingers at his immediate transition from being the head of a regulated bank, to being the head of the regulatory body. Having been at a table, just few weeks before, observing his banks books, to having access to the bank books of all Nigerian banks. The thought does come to mind, what the level of his impartiality would be, since his heart would have been 100% Zenith bank only a few weeks ago. With palms still warm from handshakes, can he realistically be able to set aside his emotions and be the impartial judge?

It however does bring to mind another name that was being touted by pundits for the role of CBN governor, Aig Imoukhuede, former MD of Access bank and the first Vice President of the National Council of The Nigerian Stock Exchange; who will however be taking over as president of the Council, after this month’s 53rd AGM of the council.

In seemingly unrelated events though, news broke on Monday that Access Bank shares has been placed on technical suspension, which is the interruption of price movement in listed shares for a specified period so that any dealings in the shares which occur during the period of the suspension will not result in any change in price, which change may have occurred had the suspension not been implemented.

The Nigerian stock exchange said it had granted this anticipatory approval to place Access Bank Plc’s shares on technical suspension based on a written request by the Bank in anticipation of its proposed rights issue. With this being a reletively new action with the NSE seemed odd as by granting anticipatory approval, the exchange would be indicating to the capital market that in “appropriate circumstances”, it will entertain requests from issuers to place their shares on technical suspension.T he relevant provision is in Chapter 2 of The Exchange’s Green Book (Listings Requirement) which addresses Subsequent Listing of Securities.

While this may be a great idea questions do begin to arise as to why Diamond bank wasn’t given such discretionary concretions with its own rights issue only a few weeks ago. The issue, which opened on July 30, saw the bank offering a total of 8,685,145,863 ordinary shares of 50 kobo each to its shareholders in the ratio of three new ordinary shares for every five ordinary shares held as of June 13, 2014 at N5.80 per share.

Many have criticised the return of bank charges to ATMs.
Many have criticised the return of bank charges to ATMs.

Many do point to the fact that the NSE is basically exploiting a gaping loophole or ambiguity in the SEC rule giving it enormous powers to place a stock on technical suspension whenever it likes and without objection provided it notifies SEC within 24 hours. This assumes the notification does not require any approval or suggestion that SEC can reasonably withhold consent to the suspension. NSE therefore can based on “rule of thumb” place a stock on technical suspension.

With more questions than answers, the elephant in the room would be the timing of this novel idea, that had conveniently occurred weeks after a similar rights issue, and just in time to favour Access bank; and how all this may have (or not) been influenced by the new council president.

Leave a reply

Your email address will not be published.

cool good eh love2 cute confused notgood numb disgusting fail