ByÂ Michael Eboh
An expert in the NigerianÂ capital market, Mr. Amaeze Olisaemeka, has cautioned the Central Bank of Nigeria (CBN) on the need to be transparent in its dealings with the banks and also ensure that due process is followed in its exit plans from the banks in the future.
He noted that the CBN, when recouping its injections in the troubled banks, should ensure that due process and transparency is followed and should not use the opportunity to transfer ownership of the banks to a particular section of the country.
This was following cries and speculations by operators and other stakeholders that the sacking of the Managing Directors of five banks in the country and the injection of N400 billion in the banks by the CBN, is an agenda by the North to take over ownership of these banks.
Olisaemeka, who is a General Manager, Apex Securities, advised the CBN to ensure thatÂ no particular section of the country or individuals is given special preference in theÂ Â equity holdings of these banksÂ when it is taking away its bail out funds in the fulture.
He said, â€œIt is very important the Federal Government exercise a little bit of care and caution , to ensureÂ that when the bailout fund is later converted into shares, they do not end up selling the shares to a particular section of Nigeria. Many analysts have expressed fears that sectional interest might have been the dominant factor in the audit and sanctions of these Managing Director and the actions of the CBN.
â€œIn as much as we know that there are justifications for the CBNâ€™s actions, I want to caution that when these shares acquireed by the CBN in theÂ form ofÂ bailoput is to be offloaded, theÂ mode of disposal should be very transparent, or at most, the government should take back their money when the banks recapitalise in the future. Efforts should not be made in any way, to sell these banks to a section of the country which is being seriously speculated by many analysts, because that will send very wrong signals to the market and the investment community, locally and internationally.â€He expressed support for the actions of the regulatory authorities, the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE), especially for placing full suspension on the shares of the affected banks, noting that it will help protect investors from erosion of their investment, as it will stem massive decline in the share prices of these banks.
â€œThere is a need to protect those banks, because if this is not done, there would be a run on these banks and their stocks can fall as low as N1.00, or even going to their par value. It is a normal development in the capital market that when there is a serious and major adverse development in any quoted companies, that suspension should be placed on its shares.. It is also to protect the shareholders from losing the value of their investment.
â€œIt is like the N400 billion being pumped into these banks by the CBN is meant to protect the customers and depositors, to stem the run on the bank by the customers. If this can be done for the customers, the same should also be done for the investors. It is necessary so that the panic already generated by this development do not depress the share prices of these banks to alarming level, as the shareholders will be worse off at the end of the day,â€ He noted.