SEC to force Finbank to list 2008TO LIST OVERDUE 2008 PUBLIC OFFER

In the consideration of mainstream investment community the public offer conducted by Finbank, (known at the time of the offer as First Inland Bank) has become one of the most storied public offers in the annals of the nation’s capital market activities. So many things seemed to have gone wrong with the offer climaxing, last […]

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SEC TO FORCE FINBANK TO LIST OVERDUE 2008 PUBLIC OFFER

In the consideration of mainstream investment community the public offer conducted by Finbank, (known at the time of the offer as First Inland Bank) has become one of the most storied public offers in the annals of the nation’s capital market activities. So many things seemed to have gone wrong with the offer climaxing, last week, in the management of the Securities and Exchange Commission asking companies and entities that were part of the January 2008 public offer to meet with it at the Board Room of the SEC Tower in Abuja.

Though Fortune&Class Weekly could not access the conclusions of the meeting last Friday, the major item on the agenda was to discuss the reason for the delay in the listing of the shares on the floor of the Nigerian Stock Exchange, the shares of FirstInland Bank Plc after the SEC had granted approval of allotment in June 2008.

Those invited to the meeting were: FirstInland Bank Plc, FirstInland Capital Ltd, Furtuerview Financial Services Ltd, Greenwich Trust Ltd, BGL Securities Ltd and Integrated Trust & Investment Ltd. Others were Sterling Capital Markets Ltd, Oceanic Bank Int`l Plc, Skye Bank Plc and FirstInland Securities & Assets Management Ltd. Deap Trust Investment Ltd and FinBank Registrars Ltd were also invited.

Most stock commentators insisted that the FirstInland Bank offer witnessed so much slow down at every point of its scheduled activation that people could no longer adduce reasons for what is happening to the offer.

The dispatch of the share certificates of the offer did not commence until November, 10 clear months after the offer was concluded and four months after allotment was cleared and approved by the Securities and Exchange Commission. Many investors that bought into the public offer still protest strongly that they are yet to collect their certificates.

Since January 2009, one year after the conclusion of the offer and with the non-listing of the shares sold during the offer, speculations had rented the air about the fears of the bank getting its shares listed at a time when general stock prices are falling.

“It would seem that with the intervention of the Securities and Exchange Commission, the limiting factor to the listing of the shares sold during the public offer may be significant, a source said

Growing Suspicion Ndi Okereke-Onyiuke Is Planning To Transmute From DG To CEO

DG, NSE

DG, NSE

Not a few capital market watchers hailed the announcement of the demutualization of the Nigerian Stock Exchange. Literarily, demutualization is the equivalent of the stock exchange transforming from a quasi public sector self regulating organisation (SRO) to a publicly quoted company, accountable to its shareholders and governed by the laws and regulations that other publicly quoted companies are answerable to in the market.

Most stakeholders had commended the prospect of the demutualization in the expectation of the fresh breathe of life that would predominate in the capital market under a new leadership and operating environment. Some operators were particularly excited over the expectation that the current Director-General of the NSE, Prof. Ndi Okereke-Onyiuke, will not be qualified to continue in the office of the CEO of a demutualised stock exchange.

Recent indications emanating from the stock exchange, according to observers, are telling signs the DG is clearing the field to make her continued stay in the high office of the stock exchange secured even beyond the year 2010 proposed year for the demutualisation of the exchange.

Reports of recent administrative activities at the exchange indicate that Okereke-Onyiuke has been restructuring, personnel are being moved and new appointments being made. Of major concern to stakeholders is that some of the recent appointments at the exchange are somewhat connected to the DG. For this reason, the concerned stakeholders argued that the DG’s maneuvers suggest that she is positioning her people to pave the way for her come back to the head of the stock exchange after its demutualization.

PRICEWATERHOUSECOOPER GETS MANDATE TO RESTRUCTURE SECURITIES AND EXCHANGE COMMISSION

SEC is ill

SEC is ill

Though it is yet to be made public, it has been confirmed that the capital market apex regulatory agency, the Securities and Exchange Commission is being sized up and re-engineered to cope with emerging challenges of regulating the nation’s capital market.

SEC’s inside source said multinational management and auditing giant, PriceWaterHouseCooper has been mandated to refocus the operational template of the Commission. The restructuring consultant is expected to review the Commission’s processes and performance profile with intent at positioning it to be more responsive to new developments in the capital market.

FORMER MD OF IDEAL SECURITIES SUSPENDED FROM CAPITAL MARKET

The Securities and Exchange Commission has announced the suspension of Mr. George Nchendo Okafor, the former Managing Director of Ideal Securities and Investments Limited from all Capital Market activities.

The suspension, according to a notice on the Commission’s website is as a result of the serious allegations made against him by the Board of Directors of Ideal Securities and Investments Limited relating to his tenure as Managing Director of the company.

The Commission affirmed that the suspension remains in force until Mr. George Nchendo Okafor clears with the Commission all outstanding issues raised in the allegations.

OCEANIC BANK, BANK PHB AND STERLING BANK GET CBN LIFELINE

L-R, Cecilia Ibru, Oceanic; Francis Atuche, BankPHB; Yemi Adeola, Sterling

L-R: Cecilia Ibru, Oceanic; Francis Atuche, BankPHB; Yemi Adeola, Sterling

Nigeria’s version of the global credit crunch might have crystalised into a reality that may not be easily wished away. Reports from sources inside the Central Bank of Nigeria asserted that three banks in Nigeria have been given lifelines to shore up their liquidity standing. These banks according to the source are; Oceanic Bank Plc, Bank PHB and Sterling Bank. With the exception of Sterling Bank that secured a N90billion lifeline, the other two got N100billion funding in what banking industry analysts said is akin to a financial bailout for the banks.

This is coming on the heels of a meeting of chief executives of banks held on Tuesday, 15 October 2008. The high point of that meeting was the decision by the banks’ chief executives to formally request the Federal Government to intervene in the nation’s financial sector to forestall the effect of the ongoing global financial crisis on the system.

The committee of banks chief executives also agreed at the meeting to request the Federal Government to intervene in the nation’s financial market through a package of measures similar to those introduced in developed countries and that the Central Bank (CBN) should continue to support the interbank money market.

Reports indicated that the bankers would have preferred the United States of America and Europe’s option where government directly intervened to inject funds into selected crisis ridden banks and, in some cases, nationalizing the financial institutions that were strategic to the main-stream banking public but whose liquidity profile had become moribund.

Sources inside the Central Bank of Nigeria informed that the CBN Governor rather opted for the fiscal management approach. The CBN, had, before the meeting of the banks chiefs, granted the banking industry a concession through a circular directive of October 2, 2008 to restructure some of their capital market exposures to December 31, 2009. Interpreted, this concession allows banks not to make provision for non performing loans and other facilities that had gone into the nation’s capital market that had taken a dive for the deeps since March, 2008.

“Apparently, the concession was not enough to stave off the simmering threat of illiquidity banks were experiencing.” The CBN source said. “In response to the appeal of the banks chiefs, the CBN offered the option of an expanded discount window operation. The key elements of the expanded discount window operation provided the opportunity for banks that need to assuage their liquidity problems to use short term financial instruments, like overnight standing facility, treasury bills, federal government bonds and non-federal government securities as collateral to secure long term funds from the CBN. You know the CBN conducts liquidity mop up of the money market by selling treasury bills and also sell bonds to financial institutions, normally, treasury bills are due in 30 days while bond are due in period ranging from 90 days to 180 days. Now, to help the liquidity problems in the banking sector, the CBN, with the expanded discount window, allows the banks to present these short term instruments which the CBN will use as collateral to provide funds for them for repayment period of 365 days.” The source explained.

This option does not seem to have been effective, the Nigeria Inter Bank Official Rate, the rate at which banks lend themselves money, have continued to increase, spiking to as high as 21 percent last week. This may not be unconnected to the fact that just a few banks are in the position to lend money to needy banks. Fortune&Class Weekly reported last week that many banks chief executives continued to troop to First Bank Plc, to negotiate and secure funding to keep their operations going.

NIGERIAN COMPANIES AND THE HERD MENTALITY

Philip Kotler, in his book, Marketing Management, posited that “all companies must look beyond their present situation and develop a long-term strategy to meet changing conditions in their industry. They must develop a game plan for achieving their long-run objectives.” He further opined that there is no one strategy that is optimal for all companies. Each company must determine what makes the most sense in the light of its position in the industry and its objectives, opportunities, and resources”.

This principle was applied by some notable companies in the United States and Japan in varying degrees to strengthen their operations as well as markets and hence improved revenue base. Companies like Goodyear Tire and Rubber Co., Uniroyal and Armstrong Rubber Co. in the US and Toyota in Japan applied this strategy to perfect their operations and products.

In the tire industry where all the major players adopted it, it was so used efficiently that each of the company got something and was, in a way, content retaining its distinct character and having to run to the other for assistance at any given time.

Here in our dear country, Nigeria, any thing and every thing runs on the herd mentality, This is why any strategy employed by company A to shore up its operations is automatically copied by company B irrespective of the differences in objective, resources and opportunities available to the two companies and to some extent, experience in their respective fields?

It is for the same reason that our telecom providers are all in the race to promote one event or the other usually in the entertainment sector that in a way alter and pollute our culture. No thought is given to the education sector by way of empowering the youths through scholarships as the oil companies do nor assisting with social projects that benefit the majority across economic strata.

During the re-capitalization efforts by banks, the stock market became the centre of attraction to all the banks. And they are yet to leave that market till date, not even the crisis in that pot of confusion is discouraging them, no. When it was the turn of the insurance sector to shore up their capital base; they too turned to the capital market for succor. The irony in this as it concerns the insurance companies is that the sector that is supposed to invest more in the capital market and in such other critical areas of our economy because of its potential to raise more money than other financial institutions, is the one begging for money. A direct opposite of what obtains in other climes is what our insurance sector represents here in Nigeria. Too bad.

By some slips arising from misconceptions or miss-application of strategy, our banks are increasingly finding it difficult to match reality with expectations. Rather than attempt a review of business plans and carry out some radical changes, marketing plans are being updated and probably are now made to replace business plans the result of which are the various panic measures being put in place to hunt for deposits even from school children as if that is what will give value and stability to their business.

While all these comedies are playing out, some of the banks are declaring mind boggling figures and mouth watering figures as profits, some as high as 98% over the previous year. And if we are to believe these fantastic performances it then becomes very difficult to reconcile the crazy hunt for deposits that now bothers on desperation. Worst still is the fact that daily, our highly performing banks are being accused of cheating their customers maybe to make up for the big profits declared.

Understandably, and in line with the bandwagon behavior, the new craze has shifted to the micro finance sector with virtually all the major banks falling over themselves to take vantage (?) position in that area. The obvious fact that that sector is also banking at the low level makes no meaning to the extent ‘deposit money’ will be sourced there.

While commending our banks for their innovation and ingenuity in what is gradually becoming a phenomenon in the way we do business in this country, it is better some good thought is given to carry out a review of operations based on reality. It will be a better strategy for each bank to look inward and turn its distinctive competence into its competitive advantage as IBTC used to be. Cutting an edge for your business will be a better strategy to this uniformity approach. Harassing people on the streets for deposits sends a signal that all is not well with our banks.

Can we be more creative in doing these things? Enough of these pretensions.