Lagos — As the war of attrition between the Governor of the Central Bank of Nigeria (CBN), Sanusi Lamido Sanusi and shareholders of the troubled banks continue, emerging facts show that investors may not only have lost about N1.864 trillion investments in banks, but have to wait for recovery in the next five years.

This is sequel to the disclosure by the CBN's boss that shareholders of the eight troubled banks it bailed out recently do not have ownership claim on the banks anymore because "they have lost their capital."

Even as seven of the banks are quoted on the NSE, the remaining bank, Equatorial Trust Bank (ETB) is not quoted on the bourse.

Those quoted on the NSE are Intercontinental Bank Plc, Afribank Plc, Union Bank of Nigeria Plc, Fin Bank Plc, Oceanic Bank International Plc, Bank PHB and Spring Bank Plc.

Stock market observers argue that with the recent pronouncement of CBN, the shareholders could not even lay claim to the paltry N315 billion cap as they have totally lost out due to the bail out of the banks by the CBN.

Said Sanusi, "Shareholders need to understand what we are doing and we are merely being charitable when we talk about shareholders. Look, you've lost your money. If your capital is zero or negative, you no longer have a bank.

"That is the truth people do not want to hear. Somebody says he's speaking on behalf of shareholders. If we publish what we have, they will see; there is no capital, it's been gambled away --that is the truth. But we're trying to have discussions so that the shareholders would still have something.

Using the movement of share prices at the month of October this year in comparison with the situation a year ago, additional investigation also show that whereas Intercontinental Bank's stock traded at N3.09k last month with a market capitalization of N62.7 billion, the stock was priced at N20.92k on same day last year but with a fat market capitalization of N424.5 billion, revealing a sagging percentage of 85 percent in capitalisation.

The story was the same for Afribank plc with the stock trading at N2.80k recently and a market cap of N37.8 billion as against N18.98k achieved on same date in 2008 with a market cap of N256 billion. This shows a fall of 85 percent.

Union Bank Plc's stock closed at N7.15k as at last week of October with a market cap of N82.8 billion compared with the closing price of N36.55 and a market cap of N423 billion reached on same date last year, a decrease of 80.4 percent.

Fin Bank Plc was also humbled by the collapse in share prices on the NSE as the stock closed at N1.01k within the same period under review with a market cap of N9.8 billion as against the price of N6.23 and market cap of N59.5 billion of third week of October in 2008.

Oceanic Bank Plc did not fair better as the stock closed at N2.64k during the last week of October with a market cap of N58.7 billion, a far cry from the same period last year as it closed at N16.80k and a market cap of N374 billion. The capitalization ebbed by 84.3 percent.

At N2.41k, the stock of Bank PBH closed same period with a market cap of N44.7 billion, which was 83 percent below N263.4 billion market cap of October in 2008 and a closing price of N14.20k.

Spring Bank displayed the same picture with its tagging partner as the stock closed at N1.63k and a market cap of N18.5 billion in October this year as against the closing price of N5.59k and market cap of N63.5 billion a year ago. The capitalization sagged by 71 per cent.

Experts say the total bail-out of N620 billion from the CBN had totally eroded the capital holdings of the existing shareholders of the banks. The total capitalization of N315 billion of the third week of October this year as a percentage of the N620 billion bail-out fund is 51 percent, while the total bail-out is a staggering 197 percent of the paltry market capitalization recently.

While shareholders of the troubled banks are looking confused over their loss of capital, those of the banks that passed the apex bank's audit test would be without any return on their investment in the years to come.

This is due to the fact that the banks might continue to post losses because of their dire situation over the holes in their balance sheets and the appalling investment climate in the country.

Speaking on recovery possibilities, director general of the Nigerian Stock Exchange (NSE), Dr. Mrs. Ndi Okreke-Onyuike raised the bar of hopelessness on the stock market crisis by saying that appreciable stability may take about five years to climb back to the peak level of N13.88 trillion which the market capitalisation stood at on February 29, 2008.

Emerging indications show that despite the Federal Government's plan to rejuvenate the economy by injecting $2 billion under a proposed stimulus package and also boost its spending, the stock market may remain relatively weak for a longer period as most market players have adopted cautious trading techniques, with speculators dominating the market.

Michael Ojo, a stockbroker in an interview confided in Daily Champion that the five year recovery position by Dr. Okrere-Onyiuke may be real after all considering the fact that the real sector which serves as the pivot on which the economy stands has been systematically weakened by near zero funding facility from banks which in turn lowers corporate profit by quoted companies. This situation, according to him, has endangered investors' taste for equities and affects share price performance.

Continuing, Ojo noted that the sky-rocketing unemployment rate and the inability of the government to achieve a single-digit inflation rate are factors that may keep the market's full recovery in abeyance considering the fact that some aspects of the market performance is inter-related with the economy and regulatory policies of the government.

The market indicators which opened the year, relatively weak have also been depressed further. For instance, the All-Share Index which opened the year lower 31.450.78 points (compared with its January 2, 2008 position of 58,579 points), has recorded a year-to-date deprecation of 30.14 percent, and compared with the 21,971.01 points it closed recently.

Already, most stock market experts are currently expressing fears that the emerging bond market could have a negative effect on dividend payout, if not properly managed for equity holders which may dampen investors' preference and wound or kill any recovery.

However, as more quoted firms strategise on how to venture into the emerging bond market, the future of the Nigerian stock market is threatened as bonds may obstruct its timely recovery.

No doubt, with higher debt financing dominating the capital structure of most quoted companies in the country; priority would be given to debt holders as stipulated by the law.

Obviously, with the low level of economic activity in the country and the poor investment decisions displayed by most managers of Nigerian quoted firms; especially banks, the romance with the bond market as another investment outlet, will surely increase corporate leverage unjustly and also affect the earnings and profitability of companies.

Ordinarily, a decline in companies' operating profit after tax and interest will have a corresponding effect on dividend payout and the share price performance which are the main returns on equity investment.

Bond issuance simply has to do with more leverage level on debt, meaning more earnings is expected to be set aside for interest payment as well as for final maturity payment from the company's earnings.