Banking stocks at the Nigerian capital market remained unfazed in the wake of the dissolution of the boards and managements of Union Bank, Polaris Bank and Keystone Bank, as stockbrokers said the market was still watching the unfolding of events.
The Central Bank of Nigeira (CBN) had on Wednesday evening announced the dissolution of the board and management of the three banks for violating sections of the Banks and Other Financial Institution Act (BOFIA), just as it appointed new officials to man the affected banks.
At the end of trading on Thursday, almost all the banking stocks continued with the bullish rally, which they have been on with only Unity Bank recording a 1.95 per cent depreciation in its share price.
According to the Managing Director, Forthright Securities & Investments Limited, Charles Egbunonwo, the market was yet to react to the news considering that the affected banks are not listed on the exchange.
Noting that the information was still fresh and it is a developing story, he said: “looking at the case itself, and the regulators or investigators induced action, one would say as long as the action was taken in the best interest of the shareholders and those who are involved, it is okay.
“There is a process of taking over a bank or acquiring a bank and if a regulator believes that some of those processes were not followed through and they are taking this decision, then it is fine, because the financial service industry need to follow laid down principle of good corporate governance and if the investigators and regulators believe that some of those processes were not followed and they took this action, then it is okay.”
A senior stockbroker, Mr Tunde Oyediran, said the effect is that the other Banks that are quoted on the Exchange will now know that the present management of CBN will not tolerate non-performance, explaining that “CBN will not support the practices that will be fraudulent in nature or that will not make the industry perform well.”
Oyediran added that the Banks will be more careful now and this is why companies like Unity Bank have to sit up.
He also said that this was a signal to the banking industry that the Cardoso-led CBN will not condone non-performance and unethical spending and practices.