paddy_lo:

@Ibime

If Nigerian banks were trading at those ratios u posted(in 2007),then they were all grossy overvalued. . .Banks dont usually trade more than 2times book anywhere in the world

hercules07:

Sanusi was recommended to Yar Adua by Abdulmutallab Senior not Saraki, make una no twist the story abeg. Let Akingbola go and face the allegations against him in the law courts. Please help me ask him why he ran away.

realmen:


Akingbola recollected that two lorry loads of policemen were sent to IB PLC to remove him, saying it was like a bad movie, a big surprise that a person could be driven away from a business he had started and nurtured for 21 years in one hour; and without any opportunity to contest it. “I was surprised that the next morning (Saturday), all the papers carried personal interview with Sanusi, in which he accused all the CEOs of various misdeeds. This showed that it was pre-planned and well-rehearsed.”

In the evening of August 19, the deposed bank chief executive received a call that Sanusi, under the powers that President Yar’Adua delegated to him, had ordered the EFCC, police and State Security Services, SSS, to arrest him and that two lorry loads of personnel were en route to his house. He hurriedly left the house, mindful of all that had transpired in the previous 72 hours. At that instant, he recalled a professional disagreement he had with Sanusi while he was CEO of First Bank PLC. That time Sanusi’s staff were de-marketing IB PLC by spreading false stories that the bank was distressed. Although Akingbola complained to Soludo who reprimanded him, this sad memory convinced him that Saraki and the new CBN boss wanted to take over IB PLC by fraudulent means. He believed that if they should capture and put him in their custody, they could kill him “in order to silence any opposition to their plans.” He voted with his feet.

Or you would say that ICBN had inflated its assets at a faster rate than the market could adjust for.

Or you would say that Nigerian market was naturally speculative, yet they distrust ICBN reporting.

Or you would say the market was inherently inefficient at keeping up with ICBN's wonder results! 




Whatever the case, ICBN would be a red flag for simply being completely out of sync with the market.

Ill post the ratios for the other banks later as proof. . .

At least we agree on one thing. . . . Nigerian banking sector was ridiculously overpriced. . .

paddy_lo:

Heres the big picture

In 2007 the market was for whatever reason,discounting the shares of ICBN while at the same time massively overvaluing the stock of some of the banks u listed above

Now i can also say that ICBN valuation was more down to earth and realistic than the rest of those banks

what with first bank now moving from 5.64 times book in 2007 to 1.42 times book today,

But we do agree that those banks were overpriced,

[b]i dont know who was buying those bank shares at 5times book value. . .thats just dumb[/b]

paddy_lo:

Heres the big picture

In 2007 the market was for whatever reason,discounting the shares of ICBN while at the same time massively overvaluing the stock of some of the banks u listed above

Now i can also say that ICBN valuation was more down to earth and realistic than the rest of those banks

koko_oro:

A sinking rat,
What else do you expect.
Why did he have to wait until now before responding.
Why did he run away if he knew he was innocent
Were the allegations against him wrong.
Akingbola needs to know the time for covering his tracks is up. He should just dance to the tune of the court and pray for the forgiveness of his soul(if he had any)

All banking shares were overvalued, however I beg to differ that ICBN was more reasonably priced. It cannot be the only reasonably priced bank in the whole banking sector. That defies logic.

I would rather say that ICBN's assets were overstated, hence its P/B was low.

First Bank and ICBN marketcap was almost the same (dont have the figures to hand).

Hence ICBN was claiming to have 5 times more assets than First Bank. . . . doesnt make sense. . .

So by Nov 2007, ICBN is claiming to have more than 5 times more net assets than First Bank. . .


ICBN net assets = 485bln/0.92 = N527bln

FBN net assets = 470bln/5.64 = N83bln

paddy_lo:

@Ibime

. . just look at the book value of both stocks. . .
If FBN has a book value of only N6.82 and ppl are paying N38/share for the stock. . .then thats a problem. . .

So by Nov 2007, ICBN is claiming to have more than 5 times more net assets than First Bank. . .

What if people are paying that because FBN was growing assets at breakneck pace, at least they claimed to be doing so and the market believed them. Asset growth was 43% p/y, wasn't it?

ICBN had a credibility gap then, compared to many of its banking peers.

I remember we had a debate here in 2008 about whether banks were cooking their books, this was before the truth came out. Ibime and I thought it was smoke and mirrors, Debosky begged to differ. If Paddy Lo was using NL then, I'm sure he would have been on the side of the believers(given his penchant for believing Naija stats)

I think history has already borne out the fact that it was right to question ICBN's wonder figures. . .

@Paddy Lo

Fraud is a loaded work as it implies criminality but its clear that these banks, fraudulently or innocently, overstated assets and understated liabilities. It could be a genuine mistake as these banks thought there were valid grounds to believe their assets were worth more than current market valuation.

We're having the same problem in Europe with valuing sovereign bonds on banks' books. The US has suspended mark-to-market accounting so their banks can continue to carry impaired assets on their books at par value. Banks' balance sheet are inherently opaque but there is a lot of deception going on and I tend adopt a very skeptical view accordingly.

PS: How is that oil trade going, I have taken quite a pasting shorting commodity stocks in the month of July. Still think we're due for a massive correction in equities and commodities, oil should follow suit unless some Middle-East crises ignites.