Jim Ovia, Zenith Bank MD, desperate

Ovia, MD Zenith Bank

Zenith Bank Plc’s Managing Director, Mr. Jim Ovia has reasons to be worried. He is the largest single shareholder of his bank, numbered at 407,232,000 units as at the bank’s year end June 30, 2007. Besides, Zenith Bank profiles subsidiary concerns that are mainly stock market focused. Overtime, Nigerian investors have specially developed an avuncular kind of respect for Ovia for his knowledge of the Nigerian stock market. The Ovia’s cult of investment followers would not, normally, bat an eye lid to place a bet on the performance of the Zenith Bank stock in the stock market.

Now, when the stock market suddenly started on a free fall, it is expected that Ovia should be worried and in consequence of the worries, become desperate as to seek ways of salvaging a snarling market that threatens to negatively affect the usually sterling performance template of Ovia’s banking group’s operations.

It was part of his effort to stem the savagery of the bearish market as it impacts his bank’s stock that Ovia, about three weeks ago urgently rallied stockbrokers to a meeting. The meeting, according to a FORTUNE & Class Weekly source, was intended by Ovia to energise confidence in the Zenith Bank stock by outlining the ongoing strategic direction of his bank to firm up the Zenith Bank stock.

“Mr. Ovia was quite unhappy with the direction the market is headed,” a stockbroker, who attended the meeting, said. “He confessed to us that investors took things to the extreme while investing during the bullish session. He spoke of how people approached his bank for loan to execute some other projects without relationship to the stock market but soon after these loans were disbursed, the people rather than go execute the project, simply headed for the stock market to invest. Things, like this, he told us, contributed to the down-turn in the stock market because investors were investing irrationally. The other result of this is that much of the bank’s fund is locked-in in the stock market,” the stockbroker told FORTUNE & Class Weekly.

Part of Ovia’s Zenith Bank’s stock rebound strategy, is, according to the stockbroker, to give impetus to the newly introduced Federal Government intervention measure of allowing publicly quoted companies to buy back their shares. (Shares buy back restriction has been waived on the recommendation of the 16-man Presidential Advisory panel that was put together to evolve policy measures that may help revive the ailing market.)

Another stockbroker present at the meeting also informed FORTUNE & Class Weekly that Ovia sought the cooperation of the stockbrokers to help drive the market’s rebound.

Zenith Bank stock had fallen from a price high of N51.15k this year to a low of N36.89k. Aside, Ovia’s Zenith Bank singularly leads the frequency of fund raising through the stock market with three public offerings, one in 2004, before the public announcement by the Central Bank of Nigeria of the recapitalization regime of Nigerian banks. And the other two following each other in succession in 2006 and January 2008.

Zenith Bank had at different times straddled the market as the most capitalized company on the Nigerian Stock Exchange.

Some stockbrokers on the sideline were, however, said to have been doubtful of Ovia’s commitment to the share buy back approach. They argued that the commercial banks, in the first instance, were responsible for the panic state the stock market had degenerated to.

“The fact is that the banks related to the stock market as a purely money making platform without any thought of developing the market,” a stockbroker said. “They simply took any advantage presented in the market for profit. I am very sure that this share buy back thing that Mr. Ovia is talking about would be done in a way that may not favour the generality of the market. Some of us think that the banks may actually wait until price of their stocks fall to the very possible flat bottom before they start talking of shares buy back. This will benefit them because they will be buying back the shares at rock bottom price. So who will be favoured, the banks or the investors? The stockbroker queried.