Concerns, fears envelope Nigerian Stock Excange, as market reopens for November trading

Equity transanctions reopens at the Nigerian Stock Exchange (NSE) for the month of November on Monday under serious market operators and investors’ concerns that revolves around risk management and
corporate confidence issues.

The concerns, which some dealers termed very serious hovers around Oando Plc huge losses, Stanbic IBTC holdings’ indictment by the Financial Reporting Council of Nigeria (FRC) and the Central Bank of
Nigeria sanction of FBN Holdings and UBA for Single Treasury Account (TSA) non-compliance.

Although both Securities ans Exchange Commission (SEC) and NSE have remained silent on the issues, some capital market operators and shareholders are expressing divergent views on the implications of
those regulatory hammers on the capital market.

Some argued that regulatory sanctions would further compound the nation’s macroeconomic challenges and the dwindling fortunes at the capital market.

Others also said the sanctions was a positive omen for regulatory framework and corporate governance in Nigeria.

Emmanuel Ohanwusi, a stockbroker with Maxifund Investment & Securities Plc, said “The implication of the regulatory sanctions will be very minimal because Nigerian investing public are not very sophisticated and more so when we are dealing with historical information.

“In spite of the fact that the sanctions cast serious aspersions on the management and board of the quoted companies concerned, the market will not be seriously affected.

“On the domestic scene, we dwell so much on stale financial information to the extent that foreign investors who must have reacted then are now waiting in the wings to cash inn on local retail
investors’ adverse reactions.

“Most foreign investors had already taken position on the issues even before the regulatory authorities made it public.”

Oladipo Williams, Managing Director of Support Services Ltd, Lagos, told PREMIUM TIMES the sanctions would affect the market significantly.

Mr. Williams said while shareholders remain disappointed on the financial implications of the huge fines on projected dividends, the regulators must have their way.

“To some of us, the sanctions remain a veritable statement in the political will of regulators engender corporate governance in the market and make quoted companies to meet post-listing requirements,” Williams said.

George Ibhade, a shareholder, also commended the regulators for restoring sanity in the market and implementing the corporate governance code for quoted companies.

Mr. Ibhade said the sanctions would not only leverage investors confidence in the market but showcase the commitment of regulators to investors’ protection.

On the StanbicIBTC Bank Plc saga, Mr. Ibhade said the regulatory approach of FRC leaves much to be desired.

“What we saw from the actions of the FRC executive secretary in the media and which disturbed numerous shareholders was his outright judgement of the bank’s board and management even before any
investigation.

“To some of us shareholders, it seems IBTC sanactions was a personal or corporate vendetta pursued by FRC,” Mr. Ibhade said.

PREMIUM TIMES recalls that the Central Bank of Nigeria (CBN) recently sanctioned FBN Holdings and UBA for non-compliance with TSA.

The CBN, in line with its earlier notification, sanctioned the two banks for failing to fully comply with the directive of the Federal Government of Nigeria on remittance of all deposits relating to the
Federal Government MDAs into the TSA as at September 15, 2015.

The CBN hammered FBN Holdings and UBA N1.9 billion and 2.9 billion respectively.

In another development, the FRC, after its investigation of Stanbic IBTC Holdings Plc, sanctioned the bank for alleged regulatory concealment, accounting irregularities and poor disclosures.

The FRC also ordered the withdrawal of the banks financial statements for 2013 and 2014 respectively in accordance with relevant provisions of the FRC guidelines.

The Council also suspended the four directors of the company for alleged negligence and further reported the company to the CBN and the Economic and Financial Crimes Commission.

In a market related event, Oando, Nigeria’s Integrated Oil and Gas operator, recently announced post-tax loss of N183.9 billion, the biggest loss so far recorded by any listed company on the NSE.

The management of the company attributed the loss to provisions made for the inability of its Joint Venture partners (JVs) to pay for over lifted oil, Naira devaluation, impairment and write-downs on its
upstream assets.