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NSE tackles CBN on uniform year-end for banks

By Michael Eboh
….To peg nominal share value at N1

The Nigerian Stock Exchange (NSE) has called on the Central Bank of Nigeria (CBN) to review its decision on the uniform year-end for banks in the country, urging it to instead, adopt a double year-end for the banks.

Speaking during a town hall meeting with Chief Executive Officers of quoted companies, the Director-General of the NSE, Professor (Mrs.) Ndi Okereke-Onyiuke disclosed that the adoption of a uniform year end by all the banks in the country would negatively impact on their performance and on the economy, as it would put pressure on the banks, the accounting firms to audit the accounts of the banks and also on activities in the Nigerian capital market.

She said, “The uniform year-end being proposed by the CBN for banks in the country is really not recommendable, considering the peculiar situation of the Nigerian economy. It will pose serious challenges for banks as they will be struggling to meet up with deadlines and regulatory requirements, thereby putting pressure on the few auditing firms in the country and on their activities. It will also affect activities on the NSE, as the approach of the year-end and the attendant expectations by investors would buoy activities in the market, while a lull would be recorded after the period. To this end, it would be advisable for the CBN to make it a double year end, instead of a uniform year end, maybe June 31 or December 31.”

She disclosed that it has concluded arrangements to parley with the CBN and other regulatory authorities, to advise them on the impact of the policy on the banks and the economy, and also inform them of the need to consider adopting a double year end for the banks.

The NSE boss also advised companies on the need to undertake share reconstruction, so as to reduce the number of their issued shares to a manageable level that will not impact negatively on their earnings in the long run.
To this end, she disclosed that the NSE is considering reviewing the nominal value for shares, from 50 kobo per share to N1 per share, nothing that this will help and guide quoted companies in the reduction of their shares, especially with regards to share buyback and share reconstruction.

Okereke-Onyiuke noted that it hopes to carry the Securities and Exchange Commission (SEC) and the Corporate Affairs Commission (CAC) in the review of the nominal value, to ensure that the companies are not made to pay any fees in the change to the N1 minimum nominal value.
He called on banks and other quoted companies to adopt share buyback and share reconstruction in their quest towards the reduction of their shares to a meaningful portion.

She said, “It is a known fact that quoted companies are facing enormous challenges servicing their huge volume of issued shares, especially with regards to the distribution of dividends and bonus shares to their shareholders. The number of issued shares by some of the quoted companies are enormous, posing serious challenges for these companies. There is the need for them to reduce their shares to a meaningful and manageable level that will not pose serious challenges for them. It is to the end, that we are considering pegging the nominal value of shares at N1 per share, instead of 50 kobo per share. We intend to carry along the CAC and SEC in this regard to ensure that the companies are not charged any fees.”


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