Sterling Bank’s share reconstruction dust yet to settle

The dust raised as a result of the recent share reconstruction done by Sterling Bank Plc is yet to settle.


This is coming on the heels of investors’ reactions that trailed the banks letter to Proshare NI defending the action.


As published on Proshare’s website on October 30 2008, Sterling Bank explained in summary the whole process of the share reconstruction;


Here are the reactions of investors, some of whom are shareholders of Sterling Bank, in respect of the share reconstruction.


Morris Hill in his reaction expressed doubt on the rational behind the Sterling Bank share reconstruction and has called on regulatory authorities to look into the activities of the bank. While Bello Ahmad Abdulmalik is of the opinion that where such share reconstructions occur, the Nation’s Capital Market is not expected to grow. “How would you expect foreign investors” Abdulmalik said. He further affirmed that there are no regulators in our Capital Market.


Ade Adeoye, a shareholder of the bank in his reaction wished to know those investors that benefited from the additional shares issued.  “How about those who bought the shares after the merger and a day before the closure of register for the reconstruction?” he queried. Adeoye suggested that perhaps, the Directors of the bank sold their shares during the period of the reconstruction.


“This is the more reason information should be made available to the investing public on a timely basis” Adeoye said.


He further affirmed of the need for the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE) to clarify the Sterling Bank share reconstruction saga.


“Anyway, it is a known fact that the Nigerian market is a BUYERS BEWARE Market. How else will such things happen?” he wondered.


As earlier reported Sterling Bank had a recent post merger share reconstruction that resulted in the allotment and issuance of additional 13,317,026,285 ordinary shares of 50kobo each ranking pari-passu with existing shares and bringing the Bank’s total issued shares to 23,869,873,936 ordinary shares and thereafter reduced its outstanding shares through reconstruction.


This investors of the bank were not happy with this, but Sterling Bank claimed that the Bank’s shareholders at its 45th Annual General Meeting (AGM) approved the resolution for the reconstruction of the Bank’s shares which was eventually carried out on the ratio of 10 new shares for every 19 existing shares held.

Most investors of the bank became suspicious that despite the shares reconstruction, the impact did not reflect in the price of the Sterling Bank’s stock which, rather than move upward, as expected the stock price hit the dirt.