Stock Market Loses as CBN Audits Margin Loans
By Ayodele Aminu and Goddy Egene, 06.25.2009

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The Nigerian stock market shrunk by 6.9 per cent within three days following pressure by banks to minimise margin loan losses as well as panic sale by other investors who are said to have reacted to the decision of the Central Bank of Nigeria (CBN) to audit the loans.
The market, which witnessed significant recovery from last April till the beginning of this month, had opened trading last Monday with a fall of 0.9 per cent.
By last Tuesday, the decline was 2.5 per cent before a heavy fall of 3.5 per cent yesterday.
The Nigerian Stock Exchange (NSE) All-Share Index, which is the major barometer for the performance of the market, closed at 26,927.65, down from the opening value of 28,910.19.
Also, the NSE capitalisation, which measures the value of equities, closed at N6.141 trillion, indicating a fall of N452 billion in three days.
Indications also emerged yesterday that three of the big banks have withdrawn their funds from the inter-bank market – where banks borrow from one another to cover their positions – for investments in Treasury Bills and government bonds and Open Buy Back, with a view to shoring up their liquidity for the December 31 common year end for all banks in the country.
Market operators said the sudden bearishness of the market resulted from a combination of many factors including selling-down by some banks to reduce losses in their margin loans - in reaction to three issues raised by the Central Bank of Nigeria (CBN) governor, Sanusi Lamido Sanusi, in an interview with the Financial Times of London.
These issues are: 100 per cent provisioning for margin loans; possibility of another round of consolidation and removal of CEOs that cook their books.
But the governor, who noted that the market had been on the decline before his statements, told THISDAY yesterday that he was undeterred by these developments – because his primary responsibility is to have safe and sound financial institutions.
He said: “If the market marks down bank shares because of reforms, I cannot really help it.
“I am not going to compromise on the altar of the share prices. I think [my] comments should be viewed as positive from the investor perspective because it would institute improved regulation and banking operations in the country.
“It is sad if there are investors who are not happy that the regulator is trying to institute reforms. However, that would not deter me from instituting improved transparency and regulation in the banking system.”
Commenting on these developments, a senior stockbroker said: “Given the fact that the CBN Governor has said banks should disclose their margin loan exposure with the view to making provisions for them, some of the banks are taking advantage of price growth witnessed in the market recently to reduce their losses. That move by the banks at the same time is putting the market under pressure.”
Another broker said that the comments by the World Bank that the Nigerian banking system was under stress, as well as Sanusi’s comments, are sending panic to some investors.
“When the CBN governor makes a statement, it is taken very seriously, considering the relationship between the money and capital markets and given the fact that the banks constitute over 60 per cent of the market capitalisation. Investors are bound to react to such comments by the CBN boss,” another operator said.
The Managing Director of Crane Securities Limited, Mr. Mike Ezeh, said: “Apart from the usual profit-taking, since the market is information driven, any comments that affect listed companies, whether banks or manufacturing firms, are supposed to reflect in the stock market.”
However, the Managing Director of Partnership Investment Company Limited, Mr. Victor Ogiemwonyi, said a bear market was not unexpected given the fact that some banks are preparing for their half year results, while others are trying to align with the December 31 uniform year end stipulated for all banks.
He said: “June 30 is around the corner and companies who have that date as their second quarter or year end are coming together. Apart from the usual month end expenditure pattern that brings in only seller, June is particularly difficult as most institutional investors and banks adjust their books in anticipation of year end.
“The market was not helped by the recent reports that our banks may be weaker than we anticipated. There is also the suggestion that the pent-up sale orders that were held back in the last few days may also have impacted the market yesterday after the limit order was lifted. What investors need to know is that the worst is over for the market. We will need a few more months for the market to stabilise.”
However, a source in the stockbroking arm of one of the banks linked the bearish trend in the past few days to cautious approach by market speculators who are trying to guide against losing the capital appreciation recorded in the past two months.
The source explained that such speculators are not sure of the sustainability of the bull run witnessed recently.
“They want to make sure that what they have gained is not lost. That is why some of them are selling and when there is more supply than demand, prices tend to fall. That is what is happening,” the source said.
About 20 banks recorded price losses yesterday, indicating that banking shares, which constitute more than 60 per cent of the market capitalisation, are being dumped.
Some of the banks had recorded capital appreciation of over 30 per cent since the market began to recover last April.
On the movement of funds from inter-bank market, Sanusi told THISDAY: “This had been on for a while and was not as a result of any statement attributed to me. The CBN has been aware of the decline in inter-bank lending and will introduce the necessary measures to restore confidence in the inter-bank market.”

Just as you have the right to be non-challant about issues like this, others have the right to be alarmed


on the issue of Ukraine being West, yes Ukraine can not be classed as a Western Country as the West constitutes West Europe and the Americas

But recently folks tend to mistakenly describe all of Europe as part of the West

Someone making that minor error does not mean the person is dumb and should not post on NL

Elrazur

You are just being annoying to be honest

The fragility of this country is only remembered when you demand that issues of this nature should be investigated and exposed.
This is not just a plane with weapons landing on our soil.
This is a plane from a country with a notorious reputation of selling weapons to various armed groups in Nigeria landing in a state where the Government of that state runs an illegal police force that carry live arms and use it to intimidate their own people.

If that is not a source of concern to you, it is to me. If you honestly believe that our country is fragile then tell that to those running illegal police contrary to the provisions of the constitution.

ElRazur:

People. Please let us engage logical sense here. Most of the post been made so far is just no asking the right questions. How come a major gun burst as claimed by the report, comprises of only 6 lines? Come on, no names, no interview and no comment from officers working on the case?

The report is questionable, and if true then it is a diabolical journalism.

I am calling bullshi.t on the whole story. Do we have any other site reporting this story?

Its also on BBC.

So where does Hisbah of Kano get the Amunitions they use to oppress there own people.

Anybody who believe's the plane is headed for Equitorial Guinea will believe anything.

This shipment is for Hisbah of kano in preparation for 2011

Instead working hard to earn the people's trust, they are acquiring weapons.

The most fundamental issue here is this guy can't trump Africa Queeen

He is not as talented as he is hyped

He will soon realise this

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naijaking1:

I'm happy for Iranians, even if they don't succeed, their action will be note worthy. Why can't we do that in Nigeria
History, politics, and religion

story ! storry!! story!!!!!!!

ordinary constitutional review is being defeated in the NASS before the review is to begin.

Reason?

The head of the committee by constitution should be the Deputy Senate President. But on this occassion the deputy Senate President is from that part of the country that should never be trusted.

The devide in Iran is between Hardliners and Reformers (Iran is an Islamic Nation)
In Nigeria the reformers will be branded anti Islam and anti North.

The kind of songs they play in Islamic Republic of Iran will not even be allowed in Kano State by Governor Shekarua.

Bialegend:

Illiterate comment at it's best. Singapore is one million times better than your luggard's cage nigeria and Singapore is far smaller than Ghana in size and population.
Ok, China and India are bigger than USA and therefore both are better countries than USA according to your analog. My fren make use of your brain before coming out in the open to type rubbish.

fool

, , , , , , , , , , , , ,

AAaaaaaa

bbc cnn nta

Bialegend

change ur geography textbooks

There is no where recognised as Biafra anywhere in the World

The South East politicians wear green+white+ gren pendants not hal+of+a+yellow+sun

Just wake up to reality

Blind patriotism

My country right or wrong, if your country is right keep right, if your country is wrong make it right

I think right now Soi is keeping the country wrong

o o o o o o o o o o o o o o

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most nairalanders are either kids or are stupid

Abiola died for his ambition and his pocket

folks grow up

ANC was operating in a black majority country
when true democracy came, ANC can only be the default winner as SA was a black Majority country.

Ijaws will not win a National vote, they need other regions.

Ken Sarowiwa sabotaged the first attempt at true federalism, when he woke up from his slumber Ojukwu greeted him Goodmorning.

The Ijaws will not make progress on this matter except they recognise their dismal role in prolonging the failed state called Nigeria and then change course. Given the stightest opportunity you will hear them bragging about how they supported ONE NIGERIA. Well if you are for ONE NIGERIA as it was designed then, then be grown up and live with it.

The only way to change course is to recognise the failure of their grand fathers during the civil war. Exploit the UN Convention which states that if a country have cessation disputes for over 30years then they should be given a referendum to say whether they want to be part of the state or not. If they want to make this struggle about MEND and Ijaw Nation, well the latest crisis started in 2005 and this particular UN Convention that I am talking about may only take effect earliest 2035.

The Ijaw do not necessarily need to cesede. But by launching a court case at the Hague using the first Civil War, that can force a political negotiation back home for true federalism at the NASS. To do that all representatives and senators of the south need to be on one page.

But so long as the Ijaws continue to deny the impunity their fathers engaged in during the first civil war, this cat and mouse game will continue and will be handed to the next generation.

For God sake the Yorubas where initially allies with the Igbos in the First War. We can negotiate a vote where the South as a whole (including South-South, South-West, South-East) decide to go their own way.
We live in a country where the South is willing to embrace civilization while the North continue to rebuff civilization just because of religion.
We can not continue to lick their bum. We have to move on or remain quiet in ONE Nigeria forever.

Sam Milla:

Whether sanusi is shararist or whatever, i dont know what people are so concerned about.

What exactly is left to be done to NIGERIA ?
The past and present leaders has done everything they can to damage the country while we masses stand aside and look.
Someone once said that Nigerians are all idiots and i agreed with him.

We are almost a failed state. The only thing holding the country together is because we have something the west are looking for - OIL.
Take that away and Nigeria will be worse than LIBERIA, SOMALIA and SIERRA LEONE combined together.
We are blessed with very intelligent people.

I dont care about what sanusi will do. He can take all the money in the bank and spread them to the northerners.
He will eventually go. Things will eventually turn around for NIGERIA and the right people, atleast a large percentage of them will be in control of the Country.

I am personally worried about having the economy of this country in the hands of a man who is just 46years but has 3 wives and 12 children

Common this is such an archaic mentality.

nonsense

is howalla not part of islamic banking

used by terrorists to launder untrackable money

introduce that in Nigeria, Governors will start paying their monthly allocation to banks in Yemen, Urman and all of UAE and middle east

adigun101:

BACK TO BUSINESS AS USUAL

From my own point of perspective this thread should be duely named "Sanusi Set For CBN- •‘it’s Going To Be Business As Usual’"
It is sad that Nigeria takes steps backwards under the watch of every Nigerian.
When Soludo was appointed Governor of the central bank did anyone remember that this was the first step in the trend of appointing seasoned/technocrat economists as CBN governors.
Can someone have a look at the profile of central \Reserve bank heads including Alan Greenspan, Ben Bernanke, Sir Edward George , Mervyn King etc
Even that of Dr. Paul A. Acquah (bank of Ghana)
NONE of them had professional banking experience but where sound economists mostly in academia.
Soludo fell into that group and that is why for the first time we had a central bank governor that actually had an impact aside having his signature on the naira.
You need to do some research to find out why academicians/technocrats are more suited for the job.
Sanusi guy might be an excellent banker but why is our situation so perculiar. Is it that we are different or cursed !

And to know that the president on many occasions commended Soludo for a job well done and still replaced him after bowing to cronies BEATS ME !
The fact that he replaced a CBN governor who now has a global role BEATS ME !
The fact that he was so compelled to do it at this point in time of global recession BEATS ME !
The fact that the choice of this nations economic decision makers is completely exposed to political turbulence and sentiments (such as zoning CBN governor) BEATS ME !
What are we going to have next, a party card carrying CBN governor ?
Nigeria, when are we going rise up from mediocrity and underachievement.

The President removed a successuf CBN Governor installed one of his kinsman as he has done in other top financial positions of Finance Ministry and Planning Ministry and then turns arround to lecture everyone else to shun tribalism and support his actions.

Talk about American Republican Hipocrisy

the President is just a smarter Thief

El-Rufai confirmed that

The President also confirmed that in his Guardian Interview when he said 'I can't let IBORI down'

becomrich.:

fashola is wrong on this. that is why we have problem. Let that power be with the national assembly.

Yar adua can not appoint his judge to his election. It is not done anywhere. In the USA system. Party pick member to be part of the national election board and state board.

They are wrong on the election reform , it is not the solution. It is structure reform that we should. You see how did we yorubas feel when northerner control power for so long. if the electoral reform take place and one man one vote. the north should be ready to wait till the next 50 years before the next northerner get power.

Electoral reform is a temporary solution , but putting yorubas, edo, delta and bayelsa in benin republic is a permanent solution. Ki ni awon baru fu. Obe ati wara wa ni benin republic.

Chai!!!

Just when I was about to celebrate that for once this man has made sense he deviates

who will cure this madness

CBN: Senate May Reject Sanusi's Appointment
By Adetutu Folasade-Koyi and Chesa Chesa, Abuja

President Umaru Yar'Adua on Monday announced, as speculated, the appointment of First Bank Managing Director, Lamido Sanusi, as the new Governor of the Central Bank of Nigeria (CBN).

He replaces Chukwuma Soludo, whose term of five years expired on May 29.

But National Assembly (NASS) sources confided on Monday evening that the nomination of Sanusi hangs in the balance, regardless of his clearance last week by the State Security Service (SSS) and the Economic and Financial Crimes Commission (EFCC).

Uncertainty pervades the economic cabinet of Yar'Adua as feelers from Aso Rock say he wants to tinker with the Federal Executive Council (FEC), in deference to the public outcry over his violation of the Federal Character Act, which stipulates that every state be represented in the federal cabinet.

He, however, seems to have made up his mind about Soludo, whom a source said would not be re-appointed if the hawks in Aso Rock have their way.

The source disclosed that Yar'Adua is considering "doing away with Finance Minister, Mansur Mukhtar, because of complaints in government circles over his style at the ministry.

"The next available option for the Finance Ministry, is the Minister of State, Remi Babalola, representing Oyo State in the cabinet; but is ill and away on medical treatment abroad.

"One thing is for sure, Yar'Adua is sensitive to the yearnings of Nigerians that all his economic team should not come from Kano or Katsina State. That is why the Senate, as at 12 noon on Monday was still not sure of the confirmation of Sanusi" who is from Kano.

Even with that, Yar'Adua has requested the Senate to expeditiously confirm Sanusi, in a letter he sent on Monday to Senate President, David Mark, in which he also asked the lawmakers to confirm the renewal, for a second term, of the appointment of Babatunde Lemo as CBN Deputy Governor.

He wrote another letter to Soludo where he commended him for his dedication to service and asked him to make himself available for any future national assignment.

"As your tenure as Governor of the (CBN) comes to a glorious end," Yar'Adua said, "I write on behalf of the government and people of Nigeria to place on record our debt of gratitude to you for your dedicated service and uncommon sense of duty over the past five years.

"I am confident that your worthy antecedents in the CBN and in prior appointments in the service of our nation remain sources of inspiration to an entire generation.

"As I wish you even more astounding successes in the years ahead, it is my fervent hope that you will readily avail us of your distinguished service when the need arises in the future."

Sanusi has experience of more than two decades in the banking industry, including at United Bank for Africa (UBA), where he spearheaded its drive to comply with Basel 2 capital adequacy requirements.

He will face a heady list of investor expectations - steering Africa's biggest oil producer and most populous nation through the global downturn, tightening banking supervision, and forging ahead with monetary policy reform.

Among analysts who welcomed his appointment is Razia Khan, Head of Africa Research at Standard Chartered, who said Sanusi would "bring to the table his experience as a banker and is in a position to tackle the issues facing the banking sector from the perspective of an insider well-acquainted with the current regulatory system."

Sanusi is expected to continue Soludo's banking reform, which created some of Africa's biggest financial services institutions, deepening the country's capital markets, and attracting a new wave of foreign investment.

"It is a welcome development for the market," noted Kemi Owonubi, Head of Research for Vetiva Capital Management, since "Sanusi has a background in risk management and I expect that he should continue with what Soludo has done."

But Yar'Adua's choice of Sanusi is against the clamour by the Igala Cultural and Development Association (ICDA) to have Jibrin Isa, an Executive Director of Afribank, replace Soludo.

A statement issued by ICDA Chairman, Mohammed Salihu, urged Yar'Adua to consider acceptability and balance in the geographical spread of positions, so as not to short change and cause grief for any section of the country.

"Taking into cognisance the need to reflect fairness, vibrancy, dynamism, and impeccable brilliance in this appointment, we, the ICDA, humbly appeal to the good conscience of (Yar'Adua) in appointing (Isa)," the statement added.

"Isa's choice of candidacy is premised on (his) vast years of experience in the banking sector, and his notch for steering revolution and transformation in all his places of work.

"Besides his enviable professionalism, we further appeal to (Yar'Adua) to consider the North Central zone in his choice of CBN Governor."

Salihu argued that despite the avalanche of professionals from the North Central in the banking sector and their contribution to the country, no one from the zone has been given a shot as CBN Governor.

well it seems funny because you dont get it

These folks think ahead of you

Making charity donations with public money in a organisation where you have friends is a classical of diverting public funds

because after all the charade and public show of donations what actually happens to the fund is hardly tracked by members of the public

People are allowed to donate their Private Money where they like, but to donate an organisation's money to your own friends is dodgy

Nigerians dont know the various schemes of the corrupt