Nigeria Content Online

The Nigerian Stock
Exchange has said that there is no definite time frame for the
restoration of its website that has not been functioning for about two
weeks.

The website of the
Nigerian Stock Exchange has been down for about two weeks and
subscribers are getting irritated as information can no longer be
accessed online. In an age where bourses across the globe are
increasing their usage of technology, the exchange website cannot be
accessed leaving investors and customers helpless in relying on the
website to make important decisions. The customer care service official
who spoke on the issue without disclosing her name, on phone, said she
does not know when the website would come back. “I do not have the
information on when the website would be available and made accessible
for public use,” she said. “It would be ready soon. We are working to
bring it up soon.”

The page that comes on in place of the website’s home page states
that the website is undergoing an upgrade. “This site
www.nigerianstockexchange.com is currently undergoing an upgrade. The
site is scheduled to come up very soon. We regret any inconveniences
this may have caused you. Thank you. Management.” A broker who spoke
under anonymity, however, downplayed the website malfunction saying,
“We use the Central Security and Clearing System (CSCS) more for our
operations than the NSE website, but it is still necessary for the
image of the exchange that the site come up quickly.” The Nigerian
Stock Exchange (NSE) was established in 1960. All listings are included
in the only index, the Nigerian Stock Exchange All Shares Index. The
Exchange has an Automated Trading System and data on listed companies’
performances are published daily, weekly, monthly, quarterly and
annually.

Electricity workers, on Thursday, gave the Federal Government a 14-day
ultimatum to pay the arrears of their monetised benefits. The workers,
under the aegis of the Senior Staff Association of Electricity and
Allied Companies (SSAEAC), and the National Union of Electricity
Employees (NUEE), gave the ultimatum in a statement, in Lagos, signed
by SSAEAC’s President, Bede Opara, and NUEE’s General Secretary, Joe
Ajaero. They threatened to throw the country into total darkness if at
the end of the ultimatum the government failed to settle the arrears.
“If by July 25 the government and the management of PHCN fails to
address all the three issues, we will shut down electricity supply
nationwide,” stated the workers.

Nearly a year after
the bank reforms initiated by the Central Bank, some banks shareholders
are still lamenting, saying they are yet to reap the benefits of their
investments.

The share prices of
bank stocks at the Nigerian Stock Exchange (NSE) have depreciated in
the past 10 months, leaving most investors broke.

Some investors
believe the journey ahead for the banking sector will not be any rosy,
while others are of the view that the recent progress being made on the
establishment of the Asset Management Company of Nigerian (AMCON) will
soon ease the ‘survival struggle’ in the industry.

Bola Oke, a finance
analyst at Wealth Zone Limited, an investment firm, said the current
banks performance show that they are bouncing back to profitability.
“Havoc has been done in these banks. The present bank managers are just
turnaround managers, though we hear some of them have started spending
unnecessarily.”

However, Ms. Oke
said banks’ inability to declare good dividends and bonuses is not
making investors happy. “We (shareholders) cannot be happy since our
expectations were not met, even after the bank reforms. But we just
have to give the banks some time to get their foot back on the ground,”
she said.

Looking forward

Egbo Amaechi, an
executive member of the Shareholders Association of Nigeria, said all
indicators show that the banking sector is still struggling to recover.

“So far, progress
has been made. Remember that this time last year, financial results of
banks, like Oceanic and Intercontinental, that were overdue could not
be presented at the floor of the Nigerian Stock Exchange. Today, banks
are posting results, even when they are not encouraging,” Mr. Amaechi
said.

He said the success of the Asset Management Company will further boost the future performance of the banking sector.

Insolvency

Last week, Oceanic
Bank International, one of the rescued banks re-presented its financial
results to the NSE. The bank, however, could not meet the bonus of one
for 10 earlier promised its shareholders.

Ndi
Okereke-Onyiuke, the director general of the NSE, said the bonus cannot
be paid to the investors because “the bank is technically insolvent,”
adding that “there was no money in the bank’s reserve and there was no
money in the shareholders fund.”

After recording
loss after tax of N234.692 billion for the 15 months ended 31 December,
2008, and loss after tax of N89.007 billion for the year ended 31
December 2009, Oceanic Bank, for the first quarter ended 31 March
posted a profit after tax of N1.676 billion.

More results

In a related
development, Spring Bank and Afribank also posted profits after tax in
their first quarter results, after recording huge losses in their
previous financial results.

Spring Bank audited
result for the eight months ended 31 December 2009 shows a loss after
tax of N24.164 billion, compared with N10.228 billion during the 12
months period ended April 2009. However, the bank unaudited result for
the first quarter ended 31st March 2010 shows profit after tax of
N613.41 million, compared with loss after tax of N1.754 billion in 2008.

Afribank Nigeria audited result for the nine months ended 31
December 2009 shows loss after tax of N230.140 billion, compared with
N158.473 billion during the 12 months period ended March 2009. The bank
unaudited result for the first quarter ended 31 March 2010, shows
profit after tax of N1.919 billion, compared with loss after tax of
N230.140 billion during the nine months ended December 2009.

Reprieve
may have come the way of Unity Bank and Wema Bank, following the
decision of the Central Bank to extend the deadline for their
recapitalisation.

The
banking industry regulator in September 2009 gave both banks until June
30 to recapitalise. However, when it became increasingly difficult for
both banks to meet the deadline, the Central Bank extended it.

Mohammed
Abdullahi, the Central Bank head of corporate affairs, confirmed this.
“The truth of the matter is that we are extending the deadline for
them.”

But
a statement posted on the Central Bank website last night, ostensibly
after enquiries by a NEXT reporter, said that 30 September is the new
deadline for the two banks. “We wish to inform the general public that
due to unanticipated three months extension in timeline for setting up
Asset Management Corporation of Nigeria (AMCON), the Central Bank of
Nigeria has granted a three months extension for the two banks to
recapitalise.”

Banks’ strategies

Both
banks decided to adopt different strategies to meet the target date.
Wema Bank opted to raise N49 billion from both local and foreign
investors, as well as rely on the proposed Asset Management Company
(AMCON) to raise additional N10 billion. Unity Bank, on the other hand,
hopes to meet its recapitalisation target from existing shareholders
through a rights issue. The issue, which opened on 4 June was expected
to close by 13 July, well after the deadline set by the Central Bank.
The rights issue was intended to raise about N23.9 billion.

Some
stockbrokers who spoke under anonymity, said the bank may have adopted
direct marketing to execute the sale of the rights offer. According to
the managing director of one of them, “Not many of my clients have
Unity Bank shares, and so far I have not received any request to buy.
Don’t forget that the primary market is still very fragile and people
do not have confidence in banking stocks right now. So, accessing funds
from the primary market may not be easy for the bank at this time.”

He
said the bank may have done its campaign to its high networth
shareholders who may be willing to retain their stake in the bank.

Current realities

Tunde
Olofintila, head of corporate affairs, Wema Bank, said the former
deadline was no longer feasible. Mr. Olofintila said the bank had
mapped out its recapitalisation plans and was in touch with the Central
Bank on the progress made. He said Wema Bank plans to raise equity from
the Bank of Industry (BoI) and the Asset Management Corporation of
Nigeria, expected to take off in the next few weeks.

“We have laid out all these plans and we reached an agreement with the CBN. The 30 June deadline may no longer stand.”

In
addition, he said the bank is applying for a regional licence instead
of its current licence, which allows it to operate across the country.
On the implication of this, he said some of its branches will have to
go. “Yes, just a few of our branches will have to go. Maybe 16 or 17
out of 154 branches,” he said. Efforts to get official comments from
Crispin Uduobuk, head, media relations of Unity Bank, did not yield any
result as he did not pick his calls.

Both
banks were accused by the Central Bank of not meeting the N25 billion
minimum capital, which deadline ended on 31 December, 2005.

Also,
during the stress test conducted by the Central Bank last year, both
banks were found to have failed the liquidity criteria, capital
adequacy ratio, and corporate governance, and yet did not sack the
management of the two banks as it did for the other seven banks which
did not meet these criteria.

In
addition, both banks were not up to date with publishing their
quarterly and full year result, in clear violation of Central Bank
rules.

The Central Bank said on Monday that reforms were necessary to improve the state of Nigeria’s corporate debt market.

Sanusi Lamido
Sanusi, the Central Bank Governor, said this in Switzerland yesterday,
adding that further reforms, including pensions and insurance, were
needed to enliven the corporate debt market.

“At the moment a
good corporate will be able to price its bonds at 200-300 basis points
above the risk-free (government bond),” a Reuters report quoted Mr.
Sanusi as saying. “The next challenge for us obviously is not so much
the demand side but the supply side, to ensure that the subscription is
not coming from bank liabilities but is coming from actual
institutional investors.”

Mr. Sanusi said
there has to be progress on the insurance reforms, pension reforms, and
progress on other capital market reforms to attract institutional
investors, so that it is actual real, long-term money that is going
into the subscription, and not savings and current accounts.

Reducing taxes

The government has
already agreed to waivers to reduce the taxes on interest income on
bonds, which had required corporates to issue with very high yields and
therefore limited bonds’ attractiveness.

“I think at the
moment most of the corporates are waiting for other macroeconomic
reforms,” Mr Sanusi said, explaining that it did not make sense to
raise money for a power project until the right regulatory framework
was in place. He added that bad loans are an issue, which is why “we
have got a number of distressed banks in Nigeria, while the asset
management company, which is coming into place soon, is likely to take
care of a substantial part of the bad loan problem”. The importance of
a strong and viable domestic bond market as an alternative source of
finance in emerging economies has been critically affirmed by the
global financial crisis playing a crucial role in bridging the funding
gaps that resulted from the near total freeze in global credit flows as
borrowers in less developed economies were forced to look to domestic
markets in order to meet their medium to long term capital needs.

Experts say the
development of the domestic bond market is one key ingredient required
to strengthen Nigeria’s financial system and limit its vulnerability to
external fiscal shocks in the future.

Addressing infrastructure gaps

However, the
Nigerian bond market is yet to develop an electronic trading platform
on the Nigerian Stock Exchange to facilitate bond trading in the
secondary market.

Ike Chioke,
managing director, Afrinvest, a finance research and analysis firm,
said for the Nigerian bond market to fully take its position and
attract more participants, there should be a framework for adopting
international best practice primarily in bond trading platforms and
settlements and a robust banking sector operating on sound market
principles.

“The introduction of corporate bond issuances (and sustained
liquidity) will alert many investors to the strategic advantage of
corporate bonds, and opportunities for diversification presented by the
move away from sovereign debt” he said.