13 February 2011

Nigeria: Shareholders Optimistic of Better Days for Rescued Banks

As the Central Bank of Nigeria puts finishing touches to its plan to unveil prospective investors eyeing some of the eight rescued banks, there were indications last week that shareholders that fled at the height of the 2009 crisis are staging a comeback into the banks.

Sources said there is a coordinated plan by some shareholder groups to take positions in the banks as CBN implements its blueprint on the recapitalization of the rescued banks.

According to sources, shareholders were directed to start investing in shares of the said banks in order to have a say in the running of the institutions when new investors take over.

A random survey of the share prices of the affected banks last week showed that having lost in their bid to halt their planned recapitalisation, some shareholders who exited in 2009 are already mopping up large chunks of shares of the banks.

The rising appetite for banks' shares has led to a rise in their share price and valuation.

A comparative analysis of the price of shares of rescued banks between January 7 when Asset Management Company of Nigeria announced its injection of funds and last weekend, showed an improvement in the value of some of the banks' shares.

Banks that enjoyed such price movements include Oceanic Bank, Spring Bank and Finbank as their shares which were sold for N2.88, N1.03 and 82 kobo on January 6, had risen to N3.30, N2.02 and N1.08 respectively by the close of trading Thursday.

Also, Bank PHB was traded at N2.16 per unit last Thursday, against N2.01 on January 6. Others are Afribank, whose share sold at N2.73 last Thursday whereas the same share was traded at N2.50 on January 6. Intercontinental Bank was not left out as it was sold for N2.75 on Thursday, up from N2.48.

Perhaps, Union Bank was the only rescued bank which suffered a marginal fall in price as it was traded at N4.52, down from N4.74 on January 6.

Some capital market operators told THISDAY at the weekend that many things are indeed working in favour of the rescued banks.

One of such, according to them, is the robustness of the intervention of AMCON which had injected N770 billion for the purchase of bad loans in the banks.

Another reason adduced for shareholders' interest in the rescued banks is premised on CBN's resolve to name prospective core investors in the banks soon, so shunning the shares of the bank would deny them a role in the operations of the banks in the future.

Consequently, the leadership of the various shareholders associations were said to have directed their members to swoop on the shares of rescued banks with a view to owing a sizeable chunk of shares in those institutions.

CBN governor, Lamido Sanusi had expressed his resolve of to completethe process of recapitalising the eight recently.

Industry watchers expect at least four banks to complete memoranda of understanding with new investors this week.

The rescued banks include Afribank, Intercontinental Bank, Oceanic Bank, Finbank, BankPHB, Spring Bank, Union Bank and Equitorial Trust Bank.

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