Stock Market Crisis: Bailout fund hits N1 trillion - As 4 more banks inject N400bn

Friday Ekeoba and Odidison Omankhanlen, Lagos
Friday, October 10, 2008


REPRIEVE may have finally come the way of investors in equities in the Nigerian capital market as four more banks have agreed to inject additional N400 billion as bailout funds into the market.



This followed a meeting between the Chief Executives of First City Monument Bank (FCMB), Bank PHB, Oceanic Bank and Access Bank Plc and the authorities of the NSE to work out modalities on how to save the capital market from dipping further.

Each of them agreed to contribute N100 billion as the first six banks that had earlier agreed to inject into the market as Market Makers. Though the chief executives refused to confirm the latest development, investigations by the Nigerian Tribune revealed that they were committed to the bailout programme.

Confirming this development, Mr. Sola Oni, Principal Manager on Media at the NSE said the exchange was holding discussions with some banks as part of the measures to stem the ongoing market meltdown.

He, however, refused to comment on the amount each of the banks had agreed to inject into the market. He also said that the exchange had not picked any financial institution as a market maker, stressing that the present effort was aimed at looking for a way out of the downward trend in the market.

“All that I can say is that the NSE is collaborating with some banks on how to move the market forward, all the issues of appointing any of them as Market Makers is speculation. That is what one of the national dailies misconstrued as denial when I was quoted,” he said.

Market maker, according to the rule, is under obligation to stabilise the market by ensuring continued liquidity, operate within the established bid and offer spread of a maximum limit of three per cent, subject to review.

An expert and former professor of economics, Chris Odezie, while speaking on the market, said “ordinarily the exchange needs to have revived itself but when this is not forthcoming, the government ought to have come in by way of fund stabilisation.”

Odezie, who said the government stabilisation should have been the best option, noted that the Securities and Exchange Commission (SEC) needed to restructure itself as the transactions on the NSE had outgrown the commission’s operations and regulation.


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