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Nairaland Forum / Nairaland / General / Politics / The (Sanusi/Saraki's) Takeover Agenda - Erastus Akingbola (3686 Views)
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Re: The (Sanusi/Saraki's) Takeover Agenda - Erastus Akingbola by Ibime(m): 1:41pm On Aug 12, 2010 |
paddy_lo: 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. . . |
Re: The (Sanusi/Saraki's) Takeover Agenda - Erastus Akingbola by Pukkah: 1:53pm On Aug 12, 2010 |
hercules07: Check out the reason given by Akingbola for fleeing: realmen: I think this issue is even not so much about why he fled or who introduced whoever. It is about what each party can convincingly prove beyond reasonable doubts. You see, this is a catch 22 situation for Akingbola: if the courts rule that Sanusi was wrong in non-compliance with BOFIA in sacking the Board and injecting an amount that was not needed into the bank and then says that the CBN should return the bank to its owners (or back to status quo), would the courts (and the CBN) gloss over the inadequacies which the 'illegal' sacking of the Board has revealed? My take is that Sanusi will eventually eat the humble pie (as he has done by telling the shareholders of the rescued banks to re-capitalise) because of his haste, brashness, non-compliance with the rules, and inconsistency which puts the burden of bias on him but Akingbola may also end up being convicted for the rot which has come out of all this. Then, in order to complete the fight which is somehow personality/ego-driven, I wont be surprised if Akingbola is not already looking for legal ways to get the system/courts punish Sanusi for the manner he went about the reforms. |
Re: The (Sanusi/Saraki's) Takeover Agenda - Erastus Akingbola by paddylo1(m): 2:13pm On Aug 12, 2010 |
Or you would say that ICBN had inflated its assets at a faster rate than the market could adjust for. 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, i dont know who was buying those bank shares at 5times book value. . .thats just dumb |
Re: The (Sanusi/Saraki's) Takeover Agenda - Erastus Akingbola by Pukkah: 2:47pm On Aug 12, 2010 |
paddy_lo: They were not merely buying it, they rushed it in disregard of the fundamentals. FirstBank's N100billion 'Big Offer' was over-subscribed. Eyes were on the ROE. This is why it's not surprising that ICBN, even with a P/B ratio of less than 1, was brandishing ROE and effectively used it as a marketing weapon. Dissenting views on the valuation of those share prices were muffled by the shouts of the majority to mere whispers. Although ratios could be erratic in real life but in theory they are indeed warning signs. With what the CBN has been coming up with, let's ignore the mode of the audit for now, is anyone still surprised that so many assets (especially those many branches) were over-priced? And Intercontinental is not the only culprit ![]() |
Re: The (Sanusi/Saraki's) Takeover Agenda - Erastus Akingbola by Ibime(m): 2:50pm On Aug 12, 2010 |
paddy_lo: 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. . . |
Re: The (Sanusi/Saraki's) Takeover Agenda - Erastus Akingbola by naijaking1: 2:53pm On Aug 12, 2010 |
koko_oro: Did you have time to read through all the write-up? If not, please read through and answer all of your own questions. After you do that, please wait for the courts to make their own findings and conclusions. |
Re: The (Sanusi/Saraki's) Takeover Agenda - Erastus Akingbola by paddylo1(m): 3:06pm On Aug 12, 2010 |
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. [b]Could u pls provide the market capitalization figures from that period for the 2 banks Cause my impression is that First bank is/was the largest bank in Nigeria and Intercontinental was much smaller than First bank Also IF first bank and inter had the same market cap and inter trades at 0.92 book/while First bank trades at 5times book It doesnt necessarily mean ICBN was claiming 5times more assets It just means the market is projecting that First bank will grow its assets at a much faster rate than inter in the coming yrs Thereby bringing Firstbank in line with a much more realistic valuation For example if first bank keeps growing its assets rapidly. . Price to book will keep falling A little example. . If in 2007 first bank traded at 5 times book value and share price is N75/share Lets say book Value is N15 so 5 X 15 is N75 a share Now lets say the market is expecting that in 2yrs time First bank will grow its book value to N50 even if First bank now trades at N120(stock price) in 2 yrs,its Price to Book would have fallen to 2.4. . .ie 120/50 [/b] |
Re: The (Sanusi/Saraki's) Takeover Agenda - Erastus Akingbola by paddylo1(m): 3:44pm On Aug 12, 2010 |
[b]@Ibime I think u are misunderstanding how Price to book works The book value/share we all know what that means. . .thats Assets(Naira or $) - liabitilies(Naira or $)/Total outstanding shares In essence the break up value of the company. . .how much will remain for each shareholder once all current liabilities are paid Now thats book value. . . Price is a different matter as its an artificial number. . .its just shows what an investor is willing to pay for that book value it could be 1,2,3 or whatever Most rational investors dont pay more than 1.5times book for Financial stocks like banks because the book value itself can move up and down sharply because financial assets/liabilities move around a bit in the real world so loans could go bad and liabilities spike,equity Asset holdings may fall,value of houses listed as assets may fall. , etc In essence banking is a risky business so no one in his right mind will pay more than 1.5times book for a bank stock 1 times book is normally thought of as being fairly valued. .while 1.5 times to 2 times book is very expensive,unless the bank is growing assets rapidly Now in Nigeria for Investors to have been paying 5times book value for banks is madness and shows a lack of understanding I even heard some paid 10times book value. .that means u are just throwing your money away cause what it means in lay terms is that as a shareholder if that bank is liquidated and you are supposed to get say N10 per share u are instead paying 10times that N10. . so u are using N100 to buy a stake in a bank in which u are only guaranteed N10 if it liquidates(N100 to buy N10) Thats why rational investors dont pay more than 1.5times book. . . ![]() |
Re: The (Sanusi/Saraki's) Takeover Agenda - Erastus Akingbola by naijaking1: 5:27pm On Aug 12, 2010 |
^^^^ Learning a whole lot from the discussion: Paddy vs Ibime ![]() A few things I wish I knew b/4 buying so much bank shares 3-4 years ago! |
Re: The (Sanusi/Saraki's) Takeover Agenda - Erastus Akingbola by phantom(m): 6:01pm On Aug 12, 2010 |
now there r naira landers i need to read from more often. |
Re: The (Sanusi/Saraki's) Takeover Agenda - Erastus Akingbola by Ibime(m): 6:22pm On Aug 12, 2010 |
@ Paddylo, Here's the First Bank ratios from same time. . . First bank marketcap was N470bln Intercontinental marketcap was N485bln About the same. . . 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
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Re: The (Sanusi/Saraki's) Takeover Agenda - Erastus Akingbola by 4Play(m): 6:38pm On Aug 12, 2010 |
If Ibime's figures are correct, the market was signaling that something is wrong with ICBN's publicized balance sheet in 2007, at least, compared to its peers. There was a credibility gap even then. |
Re: The (Sanusi/Saraki's) Takeover Agenda - Erastus Akingbola by Ibime(m): 6:44pm On Aug 12, 2010 |
^^^ These are Bloomberg terminal figures, not mine. . . would find it hard to question Bloomberg's figures. . . |
Re: The (Sanusi/Saraki's) Takeover Agenda - Erastus Akingbola by 4Play(m): 6:51pm On Aug 12, 2010 |
Believe me, they often give erroneous figures. Not necessarily their fault as asset prices fluctuate and the ultimate source of information on a company's balance sheet is usually the company itself. |
Re: The (Sanusi/Saraki's) Takeover Agenda - Erastus Akingbola by Ibime(m): 6:53pm On Aug 12, 2010 |
^^^ Thats true, they can only report on the erroneous figures that ICBN was giving out. ![]() |
Re: The (Sanusi/Saraki's) Takeover Agenda - Erastus Akingbola by paddylo1(m): 6:53pm On Aug 12, 2010 |
So by Nov 2007, ICBN is claiming to have more than 5 times more net assets than First Bank. . . @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. . . |
Re: The (Sanusi/Saraki's) Takeover Agenda - Erastus Akingbola by 4Play(m): 7:00pm On Aug 12, 2010 |
paddy_lo: 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. |
Re: The (Sanusi/Saraki's) Takeover Agenda - Erastus Akingbola by paddylo1(m): 7:02pm On Aug 12, 2010 |
So by Nov 2007, ICBN is claiming to have more than 5 times more net assets than First Bank. . . Not a big deal. . . remember the word is net assets. . .not total assets. . . So ICBN could have less assets and liabilities,but still have 5times First banks net assets eg First bank Total assets. . . . 1 Trillion Total Liabilities. , . , 900billion Net Assets. . . .100BLN ICBN. . . .Total Assets. . . , N600bln Total Liabilities. . . .N100bln Net Assets. . . .N500bln |
Re: The (Sanusi/Saraki's) Takeover Agenda - Erastus Akingbola by 4Play(m): 7:05pm On Aug 12, 2010 |
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) |
Re: The (Sanusi/Saraki's) Takeover Agenda - Erastus Akingbola by paddylo1(m): 7:07pm On Aug 12, 2010 |
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? Apparently they were growing assets at a high pace,however its not right to conclude that ICBN was fraudulent,because one might as well say FBN was overvalued If u take ICBN out of the picture and any financial analyst looking at those FBN ratios above would tell u to sell the stock and sell fast(a bank selling at 25 times earnings and 5.6 times book value is obscenely overvalued) Today FBN sells at 1.42 times book. . . and 10times earnings Why dont u also say they were fraudulent cause their P/B has fallen down to earth Plus all the people that bought at 5times book are now deep underwater |
Re: The (Sanusi/Saraki's) Takeover Agenda - Erastus Akingbola by paddylo1(m): 7:18pm On Aug 12, 2010 |
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) One thing u got to understand is that all these ratios are a snapshot in time. . . With financials things can change pretty fast So thats why i am not too comfortable condemning anyone today For all we know the stats were true at the time. . . However once a financial crises starts,even the best banks will have their earnings collapse,Liabilities spike and will need to raise more capital to shore up balance sheets In the U.S it happened to the best from American express to Goldman sachs So to avoid being caught up and loosing all your dough never pay more than 2 times book for most Commercial and Investment banks The funny thing is that today most Nigerian banks offer relative value,but ppl are too scared to invest in them |
Re: The (Sanusi/Saraki's) Takeover Agenda - Erastus Akingbola by Ibime(m): 7:24pm On Aug 12, 2010 |
I think history has already borne out the fact that it was right to question ICBN's wonder figures. . . |
Re: The (Sanusi/Saraki's) Takeover Agenda - Erastus Akingbola by paddylo1(m): 7:31pm On Aug 12, 2010 |
I think history has already borne out the fact that it was right to question ICBN's wonder figures. . . My take on it is that if u must question,. . then it has to be all banks not just ICBN |
Re: The (Sanusi/Saraki's) Takeover Agenda - Erastus Akingbola by 4Play(m): 7:43pm On Aug 12, 2010 |
@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. |
Re: The (Sanusi/Saraki's) Takeover Agenda - Erastus Akingbola by paddylo1(m): 7:58pm On Aug 12, 2010 |
@Paddy Lo I agree with u on that 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. yea Valuing financial companies usually boils down to book value. . .but how do u even calculate book value accurately with all kinds of off balance sheet shenanigans going on. . . 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. Am out of oil and now trading in and out of equities mostly using options. . . The trades lately are very difficult. . .the HFT and machines have taken over with light volumes that move markets up or down very fast Earnings season is basically over,so theres little or no catalyst in the short term Maybe i should move to Naija and trade penny stocks,am sure that will be less frustrating. . .lol |
Re: The (Sanusi/Saraki's) Takeover Agenda - Erastus Akingbola by safariman(m): 9:27pm On Aug 12, 2010 |
Interesting discussion. For what is worth, the treatment of certain assets/liabilities can certainly distort the bank's financial statement, and I'll like to disagree with Paddy Lo when he said that rarely is a bank sold for more than 1.5 of its book value. We just purchased a bank at 3.5 times its book value without any government incentives. To stay on topic, I can't wait for the court case to see how things unfold, what are the other CEOs' defenses for the questionable loans and cooking of the books? |
Re: The (Sanusi/Saraki's) Takeover Agenda - Erastus Akingbola by cicero(m): 9:43pm On Aug 12, 2010 |
Guys I don't understand jack from what you guys are writing but I sure I'm having a great time reading. |
Re: The (Sanusi/Saraki's) Takeover Agenda - Erastus Akingbola by Jarus(m): 11:11pm On Aug 12, 2010 |
Threads like this make one feel proud of being a Nairalander. Kudos Ibime, Paddy-lo, Naijaking et al |
Re: The (Sanusi/Saraki's) Takeover Agenda - Erastus Akingbola by becomrich3: 11:38pm On Aug 12, 2010 |
I do not believe you, my reason is , I ask you to show me where you are getting your graphic source from. There is noway oldbank can have more than ICBN. You want to know why. When the new generation bank came on, people stop using the old generation banks. It is just of late they started pumping young people into this old bank management. Many people in nigeria pull all of their money from the Old generation banks and put thier money in the new generation banks. The reason was many of the old generation banks were not effective and not well managed. This is how ICBN asset increase. And dont forget that akingbola had good reputation with the average nigerian compare to the management of banks like old banks. old banks because of thier relationship with the government of nigeria make it impossible for people to want to use them. To be honest with you, at a time in nigeria only a silly man may use this old bank at that point, because they were badly managed. And this is the danger the take over of the bank by the CBN of nigeria would lead to. Poor management. And stealing of public fund , which was the old banks did represented. Look the bank of North was not effective because northerner had so much borrowed money from the bank. That even thier car parking lot was owning. Akingbola, Subo, Jim ovia made the ddifferent in Banking. Dont forget many churches in nigeria use ICBN and they have money and when you compare to old banks, where is thier source of market or fund. Nobody wanted to wait the next day to collect thier money , or sleep in the banks 48 hours. ICBN focus on expansion, When last did first bank built branches. I think you people should give credit to akingbola, ovie and others. Old bank are just coming back from the old label. It would take time to erase this from the minds of nigerian. On saraki issue, I just do not see any connection between saraki and akingbola. There is no connection. The newspaper made up the story, and that newspaper have credibility problem in the first place. It is more political. |
Re: The (Sanusi/Saraki's) Takeover Agenda - Erastus Akingbola by realmen: 4:40pm On Aug 14, 2010 |
all these are very interesting. definitely someone or some people may be jailed. and for me , I would nt be surperised if sanusi is one of them , 'for playing with the whole economy for personal grudges or pursuites' let's wait and see. it is just a matter of time. |
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