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After
recording positive performance for the eighth trading day, and
recovering over N278 billion during the period in view, the Nigerian
Stock Exchange (NSE), which lost about N15 billion last Friday, further
plunged by N51.3 billion on Monday.

Analysts
have attributed profit taking activities by investors to the downturn
as sell pressures continued across the sectors on the bourse. Even the
news of the assumption of office of the three new chief executive
officers of UBA, Zenith, and Skye banks could not change the banking
sector’s direction. Equity Analysts at Proshare Nigeria, an investment
advisory firm, at the close of trading on Monday, said the negative
trend resumed last Wednesday. “Sectors such as banking that experienced
strongest rally on the back of Asset Management Company expectedly
witnessed the strongest sell pressures,” the analysts said.

They,
however, said considering the positive developments in the market, and
barring any negative news in the market, “we are of the view that the
present bearish mode may not last longer than necessary, as investors
may have reasons for holding some stocks when their prices hit some
certain points.” At the close of the day’s proceeding, the Exchange’s
market capitalisation lost N51.3 billion, or 0.81 per cent, to close at
N6.269 trillion. The All-Share Index was also down by 0.81 per cent to
close at 25,634.39 basis points, reflecting a decrease of 209.79 units.

The
number of gainers at the close of trading session stood at 25 compared
with the 22 gainers recorded on Friday, while losers also closed higher
at 43 compared with the 42 recorded last trading day. The banking
sector led the market transaction volume on Monday with 110.721 million
units valued at N892.096 million exchanged in 3,205 deals. Transactions
in the shares of Zenith, Diamond, First Bank and UBA boosted the volume
traded in the sector. The total volume of 49.586 million units valued
at N590.225 million traded in the shares of the four banks accounted
for 48.75 per cent of the entire sector volume.

Seamless takeover

Meanwhile,
seamless takeover was it at the three banks whose new chief executive
officers assumed office on Monday. Phillip Oduoza for UBA, Phillip
Emefiele, Zenith and Kehinde Durosimmi-Etti for Skye assumed office on
Monday. At the head offices of the three banks, it was business as
usual as there was no visible indication that a change of guard had
occurred. At UBA head office; there was no unusual happening as people
moved in and out of the premises. It was the same thing at Skye Bank
head office on Victoria Island. A visit to one of its branches in the
Central Business District on Lagos Island, revealed the usual throng of
customers conducting normal transactions.

Nasir Ramon, of the media unit of UBA, said the handover was smooth
and seamless. “The new managing director assumed his position
officially on Sunday. Everything is going on well”, he said. The
Central Bank in January unveiled new sets of corporate governance codes
that would see chief executives of banks spending a maximum of 10 years
in office. Bank CEOs who were affected by the directive include Jim
Ovia of Zenith Bank and Tony Elumelu of UBA, who have spent 19 and 12
years as CEOs of their respective banks. Akinfemi Akinfehinwa, former
CEO of Skye Bank, had also spent over 10 years.

A South African
business lobby may buy 15 per cent of one of the country’s listed
banks, the head of the group said on Monday, in a deal that could be
worth billions of rand.

The National
African Federated Chamber of Commerce and Industry (Nafcoc) aims to
eventually take about a quarter of a listed bank, and will get help
from that lender to raise money for the deal, said Gilbert Mosena, the
group’s secretary general.

Selling a stake to
Nafcoc, which represents small companies often owned by blacks, could
help a lender raise its black ownership. Companies in South Africa are
required to meet government targets for black ownership.

Malawi is ready to
cut its spending in order to sustain growth if foreign donors reduce
crucial aid, Finance Minister Ken Kandodo said on Monday. Britain’s
Department for International Development (DFID) said last week it was
adjusting its programme in Malawi as part of a global review of
bilateral aid.

“The forecast for the global economic recovery remains
uncertain on account of huge budget deficits in major economies of the
world and the expenditure cuts in these countries has the potential of
upsetting the growth prospects of other countries including ours,” Mr
Kandodo said.

An investment fund
plans to raise $100 million to buy assets in Zimbabwe ahead of a
hoped-for bounce back from the country’s status as an economic basket
case.

Masawara Plc has already secured a $25 million commitment from
one of Britain’s biggest investors, Invesco Perpetual’s Neil Woodford,
and its managers hope to achieve a total capitalisation of around $155
million. The new vehicle will invest in sectors where the
breadbasket-turned-pariah has a perceived comparative advantage, such
as mining and agriculture, its manager, Shingai Mutasa, told Reuters on
Monday.

Austen Oniwon, the
group managing director of the Nigerian National Petroleum Corporation,
has reassured the international oil companies operating in Nigeria that
the Petroleum Industry Bill, PIB, currently before the National
Assembly, was not designed to victimise them, but to simplify and
streamline the process of doing business in the Nigerian oil and gas
sector in such a way that all investors would operate on a level
playing field.

Mr. Oniwon made
this clarification during a meeting with the French ambassador to
Nigeria, Jean-Michel Dumond, who paid a courtesy call on him at the
NNPC Towers, Abuja.

He disclosed that
some of the concerns raised by the companies about doing business in
the country have been reflected in the bill, and urged France and other
western countries to invest in the downstream, midstream, and upstream
sub-sectors of the petroleum industry in Nigeria.

He called on the
ambassador to invite Total, the oil giant, to invest in the downstream
sector of the value chain by building refineries in Nigeria. He also
reiterated the federal government’s commitment to the deregulation of
the downstream sector in order to allow market forces to control the
prices of petroleum products.

Responding, Jean-Michel Dumond commended Nigeria for its quest to
promote transparency and accountability through the PIB, and expressed
the readiness of France to sustain its strategic business partnership
with Nigeria, disclosing that France is the second largest investor in
the petroleum sector in Nigeria.

Bharti Airtel, a
telecom services provider, has announced the appointment of Andre
Beyers as the chief marketing officer for its African operations.

The company
recently acquired the mobile services operations of Zain in 15
countries across Africa and is working towards introducing its brand
‘Airtel’ in these markets shortly. Mr. Andre will report to Manoj
Kohli, CEO (International) and joint managing director.

Commenting on the
appointment, Mr. Kohli said, “We are delighted to have Andre on board
and believe that his experience will be immensely valuable and
contribute to our vision of making Airtel the most loved brand in the
daily lives of African people.

“It will be our
endeavour to achieve leadership position in all our markets by
delivering a superior brand experience backed by world-class service,
strong distribution network, and innovative products that delight
customers. I wish Andre the very best for his new assignment.”

Mr. Andre brings
with him over 20 years of rich experience in marketing and brand
management, particularly in the telecom sector. He contributed towards
Vodacom’s marketing and brand efforts for 11 years. Andre spent 4 years
supporting Vodacom’s incubation hub (the fast tracking of advertising
and communications relating to new ideas) and managing Vodacom’s brand,
whilst working for FCB (South Africa’s largest advertising group) and
then led Vodacom’s marketing function for 7 years (2001 to 2008) during
which both customer base and revenue grew manifold.

Under a cooperation
agreement with the Bank of China, Ecobank Ghana has become the first
affiliate of the Ecobank Group to have a dedicated desk manned by staff
seconded by the Bank of China. The cooperation agreement between
Ecobank, a leading pan-African banking institution, and the Bank of
China, the country’s leading international bank, is a reciprocal pact
focusing mainly on international trade, projects and investments.
“Today sees the beginning of an exciting partnership between Ecobank
and the Bank of China,” Ecobank Group CEO, Arnold Ekpe, said. “We shall
open dedicated desks at selected Ecobank branches across Africa. In
return, the Bank of China will be our primary conduit in our business
dealings in China.”

Speaking at the
signing ceremony in Accra, Ecobank Group Executive Director, Corporate
Banking, Albert Essien, said: “The pact will allow the Bank of China to
cater more pointedly to their clients in Africa using the Ecobank
platform, while it also enables Ecobank to grow its China business.”
Ecobank and the Bank of China stand to benefit from the growing trade
and investment links between Africa and China. African exports to China
have increased significantly in the past few years reaching $30.14
billion in 2008. China exported goods worth $23 billion to Africa over
the same period.

Depositors
and shareholders of Savannah Bank Plc and Societe Generale Bank Nigeria
Limited may have to wait longer before accessing their funds since the
Central Bank of Nigeria (CBN) has outlined conditions under which both
institutions can open their doors for business.

Lamido
Sanusi, CBN governor, said even though their licenses have been
returned, both banks must show proof of strong financial capacity, a
new business model and foreign or local partners to show that they are
ready for business before it can extend any assistance to the promoters
of the banks.

“Of
course, with non performing loans, if they have collateral, we can buy
the non performing loans. If they want support similar to the ones we
have extended to other banks, CBN will give them all the support that
is reasonable.” According to him, it is left for the banks’ owners to
decide whether they wanted to remain in banking business or not.

A tale of two banks

Societe
Generale, owned substantially by second republic senate leader, Olusola
Saraki, was sent out of the clearing house in 2003 following its
inability to meet its financial obligations. During this period, the
bank was unable to fund its CBN Account, which was overdrawn by several
billions of naira. It also couldn’t meet the N25 billion minimum
capital during the banking consolidation of 2005, which led to the
withdrawal of its banking license.

The
bank then began legal proceedings, insisting that the revocation of its
banking licence was in bad taste, and that it was not given enough time
to recapitalise. In April 2008, a Federal High Court sitting in Abuja
granted its request and ordered the CBN to restore the bank’s license.

For
Savannah Bank, a Federal Court of Appeal in Abuja on February 20 2009
declared that the CBN and Nigeria Deposit Insurance Corporation (NDIC)
wrongly revoked the bank’s license and that it should be allowed to
return to business. The court then granted the bank an 18 month
recapitalisation deadline which expires next month. Savannah Bank is
also owned by a former governor and senator, Jim Nwobodo.

This
was supposed to be a breather for the bank’s 85,000 shareholders, and
over 750,000 depositors who had their fund trapped for the seven years
that the bank was closed.

However,
since both banks won their case against the regulators, there had been
no visible effort to reopen for business. “It is not for the central
bank to be working towards bringing SGBN or Savannah back but for the
directors and shareholders to work towards opening for business,” Mr.
Sanusi said.

Open shop, not partnership

Obi
Adindu, media consultant to Savannah Bank said then that the bank was
planning a multiphase opening strategy that would see the bank opening
its branches gradually and not all at once. “What we are doing right
now is harmonisation of assets to ensure that what we have in our books
tally with what are in the books of the liquidators. This is a normal
process. It is after this that we will take full control of our
premises nationwide.”

Boniface
Okezie, the leader of one of the shareholders’ group said the central
bank should not force the partnership option on the bank but should
rather support the bank to open its shop to customers first. “It is
obvious that the current investors do not have the financial muscle to
run the banks. The CBN should allow them to open shop first, reactivate
accounts of customers and from there they can begin to talk about other
things. They need to get new hands who will install corporate
governance in place so that the bank can be run professionally.”

Shareholders
say a major concern is the ability of the bank to return to an industry
that has undergone fundamental changes since its doors were shut about
eight years ago. Apart from meeting obligations to depositors, the bank
would need to deploy funds in total overhaul of its operation
machineries.

Banking
is highly IT driven and most of the facilities and infrastructure which
the bank relied on seven years ago have become obsolete. The hardware
and software would require total replacement while the requisite
manpower would have to be deployed to ensure the competitiveness of its
operation.

A
source who preferred to be anonymous said the greater challenge would
be for the bank to stand alone at a time when many operators are
anticipating further mergers and acquisition in the industry. “Efforts
at reopening the banks must be communicated to the public so that all
stakeholders would appreciate the genuine effort to reposition the bank
and open for business. This will help to build confidence of depositors
and shareholders,” he said.

The Central Bank of
Nigeria (CBN) recently released two exposure drafts, as part of its
ongoing reform of the financial services sector. Designed to complement
the proposed dismantling of the universal banking model, the “CBN
Scope, Conditions and Minimum Standards for Commercial Banks”, and “CBN
Scope, Conditions and Minimum Standards for Merchant Banks”, lay down
the conditions precedent to the licensing of these categories of
financial services providers, going forward. Industry practitioners
have been invited to review the proposals, and make comments where
necessary. Given the rather unassuming nature of industry operatives
vis-à-vis their regulator, they may well endorse these proposals in
their entirety. But from a much different vantage, all one hears are
sighs over the dangers from “reform creep”.

A slight variation
on a phrase first used in 1993 by journalists working with the
Washington Post to describe the status of the UN Peacekeeping mission
in Somalia, a useful definition of this malady is “the expansion of a
project or mission beyond its original goals, often after initial
successes”. It is also the case that persons who use this term mean no
endearments, because the new phases in the mission are perceived as
undesirable due to the fact that the dangerous path of previous
successes only breed more ambitious attempts, a process that invariably
stops with a catastrophic failure. Largely, this reading of the CBN’s
current reform trajectory is educated by one interpretation of the root
cause of the most recent financial crisis in the country.

Second-round
effects of the Great Recession, there may have been, but the main
finding of the apex bank’s special audit of the banking industry last
year, was the full extent of the failure of governance in the industry.
This failure showed up in the inability and unwillingness of the
managements and boards of some of these institutions to govern and
control them with a “view to increasing shareholder value and meeting
the expectations of the other stakeholders”. However, no less important
was the fact this governance failure was also about the CBN and allied
regulators’ capacity to oversee the industry properly. How much
interest did the apex bank show in the effectiveness of the corporate
governance of the institutions under its regulatory remit? And to what
extent were compliant directors able to rely on the CBN’s continuing
oversight of the risk profile and of the adequacy of the internal
control systems that were in place in their banks?

If these were
central worries then, they are no less so now. The only difference is
that the bulimia with which the apex bank has pursued its reform
initiative raises the question of the extent to which the new licensing
requirements address these concerns. How does a tiered commercial
banking licensing arrangement conduce to improve governance in the
financial services sector? Does it not instead add to the CBN’s
regulatory burden? In which case it helps to know, what effort the apex
bank has made to address its own regulatory lapses. What guarantees are
there that ahead of the next crisis, the CBN’s structure will not act
as it did before the last one, by ignoring wiser counsel from down the
ladder in favour of the ostriches in positions of authority? This test
is failed immediately, if the response to this latter query is that the
ostriches have since been gotten rid of. For the critical concern was
always with how the ostriches got into such positions in the first
place, and the support institutions, which subsequently kept them there.

Now, flightless birds apart. The other problem arising on the back
of the apex bank’s never-ending reforms is that it gives the impression
that we are doing all that is necessary to avoid the next crisis. This
is impossible. At best, we’d be working to ensure that lapses
identified as responsible for the last crisis are fixed. Part of the
crisis of capitalism is its need for regular cleansing – Schumpeter’s
process of creative destruction. So, that there will be another crisis
is without question. The markets are thus best served by a process that
strengthens institutions against observed lapses, while reinforcing the
capacity of most participants to auto-regulate. Micro-management is so
at odds with this requirement, and at variance with the need to ensure
that the market proffers solutions to our most difficult worries.