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Banks nationalisation: Operators express fear over 5 banks
WITH the persistent decline in the value of equities, allegedly occasioned by the nationalisation of three banks listed on the Nigerian Stock Exchange, (NSE), Market operators have expressed fear over the fate of the remaining five banks which have entered into various stage of agreement.
The operators said there was no guarantee that the core investors would not go back on their word even as there is no assurance that the apex bank will inject more fund into the banks in case the foreign investors call it quit.
It will be recalled that the trio of Bank PHB, Afribank and Spring Bank had fallen under the nationalisation hammer while Union Bank, Oceanic Bank, Intercontinental Bank, among others, are in various stage of agreement with some core investors to shore up their financial base.
According to the Chief Executive officer, PAC Securities, Chief Eugene Ezenwa, he said that 65 per cent of the total market capitalisation of the NSE was from the banking sub-sector and having removed three banks from the sector, the NSE capitalisation consequently was badly hit. “You can see the direct impact of the banks nationalisation on the market capitalisation which is reduced by probably 15 or 20 per cent, because the three banks nationalised constitute large chunk of the market cap.
“Another impact can be seen from the price of the other five banks that have similar problems. Nobody can beat his chest now that the other five will pull through because we are not sure whether the people that signed the agreement will not renege at the end of the day. Moreso, nobody is sure whether there will be injection of funds into these five banks. So, the whole system is still shaking and because of that you can see lack of confidence in the banking sub-sector.
Consequently, this has brought about apathy or total lack of confidence in the capital market. What this means is that, from now to the last quarter of the year, the market is likely going to be down because I don’t see anything that can drive the market. The regulators seem to be confused and directionless”, Ezenwa said.
Collaborating this, Mr Tunde Oyediran, a market consultant with Deloy Consultancy is of the view that the impact of nationalisation of the three banks (Afribank, BankPHB, and Springbank) is grievous on the stock market.Share