Tuesday , 22 October 2019
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Money & Markets

Merger: investors mop.up Diamond Bank shares

Diamond Bank Plc dominated trading activities on the Nigerian Stock Exchange (NSE) on Monday, following its acquisition by Access Bank Plc.

Investors traded  70.98 million shares worth N72.64 million in 129 deals in a bid to capitalise on the merger deal with Access Bank, details of which were announced  earlier in the day.

Mr Ambrose Omordion. a trader attributed the development to the bank’s official acquisition by Access Bank.

Omordion said that the business combination was a good deal for Diamond Bank shareholders as the bank would pay N1 per share plus two units of Access Bank for every seven units of Diamond Bank shares.

“For instance, if you had 10,000 units of Diamond Bank shares, you will get N10,000 and 2,857 units of Access Bank shares.

“This is a good deal for holders of Diamond bank shares. But investors need to confirm what the cut-off date will be,” he said.

Mansard Insurance followed with an account of 20.03 million shares, valued at N40.06 million in eight deals, while FBN Holdings traded 16.52 million shares worth N120.19 million in 175 deals.
Access Bank sold 13.62 million shares, valued at N180. 55 million transacted in 254 deals, while Trancorp exchanged 12.29 million shares worth N14.18 million traded in 108 deals.

An analysis of the price movement table showed that Cement Company of Northern Nigeria led the gainers’ table, gaining N1.45 to close at N17.15 per share.

Access Bank followed with a gain of 70k to close at N8.15, while International Breweries gained 50k to close at N30.50 per share.

Flour Mills increased by 45k to close at N21, while Fidson Healthcare added 35k to close at N4.95 per share.

On the other hand, CAP recorded the highest loss, dropping by N2.40 to close at N34.85 per share.

Forte Oil trailed with a loss of N2.40 to close at N21.70, while Guaranty Trust Bank declined by 95k to close at N34.05 per share.

Unilever dipped 85k to close at N38.05, while Lafarge Africa was down by 50k to close at N11.95 per share.

Specifically, the All-Share Index, which opened at 30,681.50, shed 73.44 points or 0.24 per cent to close at 30,608.06.
Also, the market capitalisation closed lower at N11.180 trillion, shedding N26 billion compared with N11.206 trillion on Friday.

AMCON to sell Polaris Bank ‘in less than two years’

The Asset Management Corporation of Nigeria (AMCON) says it plans to sell Polaris Bank within two years.

Ahmed Kuru, chief executive officer, AMCON, said this in an interview with Bloomberg in Lagos.

The Central Bank of Nigeria (CBN) had revoked the operating licence of Skye Bank in September for failing to meet capital and liquidity requirements.

Polaris Bank was subsequently approved as a bridge bank to take on the assets and liabilities of Skye Bank.

He said the agency has met with the management of Polaris Bank and will sell the financial institution in less than two years.

Kuru added that the authorities intervened in the Skye Bank issue because of “a lot of systemic issues”, including saving more than 5,000 jobs and almost N1 trillion in deposits.

He said AMCON will advertise for financial advisers for the sale of Polaris Bank after an investigation into the cause of its capital and liquidity challenges.

“The divestment must be quick. It’s a very big bank and if you allow anything to happen to it, it will affect some other financial institutions,” Kuru said.

“Because we have put a lot of money there, where we find out that something wrong has been done, I can assure you that people will be held responsible.”

Kuru said AMCON, established in 2010 to buy bad debts, had set a 2023 deadline to dissolve its operations, even as it is still struggling to recover non-performing loans.

Offshore investors pump N86b into Dangote Cement


Dangote Industries had a roaring time yesterday on the Nigerian Stock Exchange (NSE), selling 410 million shares of Dangote Cement valued at N86.1 billion to some foreign investors at N210 per share.

The transaction was crossed at off-market price of N210 in six deals.

Mallam Garba Kurfi, the Managing Director, APT Securities and Funds Ltd. , told NAN that the details of the foreign investors were yet to be revealed.

Kurfi said that the transaction was perfected at N210 against the normal market price of N222.22 per share.

He said some foreign investors were taking position in the company due to its capacity building and high investment yield.

Kurfi recalled that the company, in 2013, sold 1.5 percent of its 95 per cent stake in Africa’s biggest cement producer to South Africa’s Public Investment Corporation (PIC) for 289.3 million dollars.

Consequently, Dangote Cement became the most traded with a turnover of 417.76 million shares valued at N87. 76 billion.

It was followed by FBN Holdings with 61.01 million shares worth N367.53 million. Access Bank exchanged 39.86 million shares valued at N399.59 million.

United Bank for Africa (UBA) sold 38.43 million shares valued at N371.84 million.

The volume of shares traded improved by 73.33 per cent as investors staked N94.05 billion on 849.60 million shares transacted in 5,602 deals.

This was against the 490.16 million shares valued at N5.27 billion achieved in 5,558 deals.

The All-Share Index closed upbeat, increasing by 876.62 points or 2.45 per cent to close at 36,720.62 against 35,844.00 on Monday.

The market capitalisation, which opened at N12.353 trillion, inched N302 billion or 2.44 per cent to close at N12.655 trillion.

Nestle recorded the highest gain to lead the gainers’ table with N21.30. It closed at N102.50 per share.

Dangote Cement followed with a gain of N16.25 to close at N240 and Guinness appreciated by N1.50 to close at N66.55 per share.

PZ Industries increased by N1.15 to close at N24.15. Stanbic IBTC rose by N1.09 to close at N36.99 per share.

Forte Oil topped the losers’ chart, shedding N4.70 to close at N57 per share.

Okomu Oil trailed with a loss of N4 to close at N76.03 and Lafarge Africa was down by N2.72 to close at N55 per share.

Julius Berger dropped by N1.80 to close at N34.20. 7UP declined by N1.59 to close at N90.30 per share.

CBN give Skye Bank one year lifeline


The Central Bank of Nigeria, CBN, has extended guarantees to Skye Bank for another year while it considers the bank’s recapitalisation proposal, Skye said in a statement on Tuesday.
In 2016, the Central Bank shored up Skye Bank with a N100 billion ($328 million) capital injection, after sacking its top management for failing to meet minimum capital requirements. It then appointed a new management team for Skye.
In a statement on Tuesday, Skye Bank said it had recovered N60 billion naira in bad loans, closed some branches and sold four subsidiaries to boost capital in the past year.
Trouble started for Skye Bank after it used short-term funds to buy local lender Mainstreet Bank in 2014 but failed to raise fresh cash, Reuters reports. It was in talks with shareholders and investors last year to raise N30 billion but suspended the plans when weak oil prices hit capital markets and drove foreign investors away.
“The bank continues to require assistance from central bank and government as it repairs the damage inflicted on the institution in the past and charts a sustainable path forward for the bank,” Skye Bank said in the statement.
“We have also reached settlement and restructuring agreements with many of the chronic bad debtors resulting in substantially improved payments and prospects of future recoveries,” it added.
Skye in 2015 recorded pre-tax loss and had submitted its 2016 accounts for approval.
Due to the size of total deposits it holds after it acquired Mainstreet Bank, the Central Bank designated Skye as one of Nigeria’s systemically important banks. This means it has to increase its capital ratio to 16 per cent, the industry average.

EIU predicts tough prospect for naira recovery

The Economist Intelligence Unit (EIU), a member of The Economist Group, is projecting that a rough road is still ahead for the Nigerian currency, the naira, ahead the country’s elections and into 2021.

In a July Nigeria country report just released by the EIU and seen by Businessamlive, the domestic currency is projected at the official, interbank rate to average N324 to the United States dollar by the end of 2017, and to further fall in 2018-2019 as Nigeria’s elections take hold of government and policy officials’ attention.

Post election and following the settling in of a new government, the domestic currency, which has seen decades of a command and control management structure, is predicted to further drop in value against the dollar to trade not far away from N500 to the dollar, the analysts at the EIU said.

Image result for cbn governor godwin emefiele lamenting
Godwin Emefiele
“Overall, we forecast that the official, interbank value of the naira will average N324:US$1 in 2017, down from N196.6:US$1 as recently as January 2016.

“A slight moderation in oil prices accompanying global jitters on the back of a US slowdown, coupled with elections in Nigeria, will lead to further falls in the naira during 2018-19. By end-2021 we expect the naira to be trading not far away from N500:US$1,” the analysts wrote.

Nigeria’s multiple foreign exchange markets have recently seen the hand of the country’s central bank through various injection of dollars to help moderate exchange rates volatility in what many see as the apex bank’s desire to continue to keep its control on the management of the forex markets.

But pressure on external reserves and a strong dollar demand will make it difficult for the banking industry regulator to maintain a hard peg on exchange rate, the Economist Intelligence Unit (EIU) stated in the July Nigeria country report.

The Central Bank of Nigeria (CBN), which has broad responsibility for the country’s monetary policies, has been reluctant to give up its management of the foreign exchange markets, the report noted, but the EIU believes that there would be what it calls, “periods of questionable stability in the official exchange rate”.


Ecobank seeks to upturn ruling in bankruptcy case against Otudeko

Ecobank Nigeria Limited has applied to the Court of Appeal in Lagos for extension of time to enable it seek leave to appeal a ruling by Justice Babs Kuewumi of the Federal High Court in Lagos in a winding-up petition against chairman of Honeywell Group, Oba Otudeko.

The bank initiated the bankruptcy proceedings against Otudeko over an alleged N5.5billion debt by virtue of loan facilities availed Honeywell Flour Mills Plc, Siloam Global Services Limited and Anchorage Leisures Limited, said to have been personally guaranteed by Otudeko.

The appellant is seeking an order by the Appeal Court granting it leave to appeal the ruling delivered last February 19.

The ruling followed the winding-up petition filed by Ecobank on October 17, 2015, accompanied by motion ex-parte and motion on notice.
The bank said the petition was a bid to recover the money from Otudeko “considering the looming and impending danger of having its banking licence withdrawn after the respondent failed to liquidate its indebtedness after several demands.”

Justice Okon Abang, who first handled the case, asked the bank to put the respondent on notice to show cause. After being put on notice, Otudeko filed a motion on notice seeking to dismiss/strike out the petition.

Justice Kuewumi, who took over from Justice Abang, ruled that he would accord higher priority to Otudeko’s motion on notice ahead of other pending applications.

Dissatisfied with the ruling, Ecobank appealed. The Court of Appeal, last October 21, struck out the appeal on the basis that the appellant did not first obtain leave of the lower court before appealing.

The bank is, therefore, seeking for reliefs to enable it invoke the Court of Appeal’s jurisdiction to entertain the appeal.

“The applicant (Ecobank) ran out of time to appeal as a result of the previous proceedings in suit no CA/L/227/16 which was not determined on the merit as a result of failure to procure the needed leave.
“The leave of this court is required to extend time to obtain leave of court to appeal the ruling of lower court. It is in the interest of justice that this application be favourably considered and granted accordingly,” the bank prayed.

The bank, through its lawyer Mr Kunle Ogunba (SAN) is seeking a receiving order against Otudeko’s estate, funds, investment and shares in Honeywell Group, Honeywell Flour Mills, among other companies, as well as an order declaring him bankrupt.

Ecobank prayed for an order commanding Otudeko to immediately avail it the companies’ statement of affairs as well as net worth and other credible financial details as required by the Bankruptcy Act.

It asked for a consequential order empowering the bank to sell Otudeko’s properties wherever they are situated, as well as an order enabling it to utilise the investments or shares in companies in which Otudeko has interest.

In a motion on notice, Ecobank, among others, is also seeking an interlocutory order appointing a special manager and receiver over Otudeko’s assets.

But, Otudeko, in its counter-affidavit sworn to by Omolade Adeyemi, has urged the Court of Appeal to refuse Ecobank’s application.

He said the bank had prosecuted the subject-matter of the appeal and judgment had been given in which the Court of Appeal upheld his preliminary objection and struck out appeal.

The respondent said the appellate court also attended to the appeal on its merits, considered arguments by parties and affirmed the correctness of Justice Kuewumi’s ruling.

“It is in the interest of justice to refuse the applicant’s application,” Otudeko said.

In the lower court, the Honeywell Group’s chairman said the alleged debt “is neither ascertained nor undisputed.”

He added that Honeywell Four Mills and its sister companies commenced a suit against the bank before another judge “owing to disagreements between it (Honeywell) and the respondent (Ekobank) as to the complete liquidation of their outstanding obligations to the respondent having regards to the terms and condition of the credit facility.”

Consumers groan as inflation rate rises to 18.72%

Hopes that the Consumer Price Index which measures inflation would reduce soon following promises by government were dashed as the index increased by 18.72 per cent (year-on-year) in January 2017.
The National Bureau of Statistics in its CPI report which was released on Wednesday in Abuja said the 18.72 per cent rise in inflation rate is 0.17 percentage points higher than the 18.55 per cent recorded in December 2016.
The NBS report said the fastest pace of growth in headline inflation, year on year, were seen in bread and cereals, meat, fish, oils and fats, potatoes, yams and other tubers, wine and spirits, clothing materials and accessories.
Others are electricity, cooking gas, liquid and solid fuels, motor cars and maintenance, vehicle spare parts and fuels and lubricants for personal transport equipment, passenger transport by road.

More to follow…

FG denies N5tr assets sale plan


The Ministry of Budget and National Planning has denied insinuations in a section of the Media indicating that the Federal Government is planning to raise about N5 trillion from assets sale in the next four years.
The publications claimed that the projected amount is contained in the Economy Recovery and Growth Plan (ERGP) being finalized by the Federal Government.
In a statement from the Ministry on Tuesday, the Special Adviser on Media, Akpandem James, noted that, “It has become necessary to state that the ERGP that is being finalized and which will soon be presented to the public has no recommendation for raising that amount of revenue from sale of assets.”
According to him, “To achieve the strategic objectives of the plan, 60 strategies have been developed for implementation with four key execution priorities:
§ Stabilization of the macroeconomic environment
§ Agriculture and food security
§ Sufficiency in energy (power and petroleum products)
§ Industrialization focusing on Small and Medium Scale Enterprises, ” he added.