Reforms hit Nigeria bank shares

LAGOS – Nigerian bank shares fell sharply on Monday following the government’s announcement of a massive withdrawal of public funds from banks as part of a reform of the overcrowded sector.

Out of 31 banks listed on the bourse, 12 fell while only five gained. Two small banks, Access Bank and Universal Trust Bank, lost the maximum five per cent allowed on the exchange per day, closing at 3,74 naira (N$0,18) and 79 kobo respectively.”Small quoted banks and the unlisted banks are the most vulnerable,” analyst Kwent Okolie of Securities Transactions and Trust Company (Sectrust) said.First Bank, the nation’s largest, closed 3,9 per cent down at 27,88 naira (N$1,40) while the third largest in terms of assets UBA fell 1,3 per cent at 11,50 naira (N$0,60).The country’s third largest Standard Trust Bank rose 4,1 per cent to 5,09 naira (N$0,25).Dealers expect smallest banks to be hit hardest by the reforms, which will see large amounts of public funds withdrawn from banks and the minimum capital requirement increase twelve fold to 25 billion naira (N$1,2 billion)in 18 months.The government plans to withdraw 74,5 billion naira(N$3,6 billion) today.The central bank hopes to force a wave of mergers in the sector, which currently has 89 banks.The selling of bank shares forced the all-share index down nearly one percent to 27,035.31 on Monday, continuing a month-long slide triggered by profit taking on blue chips.-Nampa-ReutersTwo small banks, Access Bank and Universal Trust Bank, lost the maximum five per cent allowed on the exchange per day, closing at 3,74 naira (N$0,18) and 79 kobo respectively.”Small quoted banks and the unlisted banks are the most vulnerable,” analyst Kwent Okolie of Securities Transactions and Trust Company (Sectrust) said.First Bank, the nation’s largest, closed 3,9 per cent down at 27,88 naira (N$1,40) while the third largest in terms of assets UBA fell 1,3 per cent at 11,50 naira (N$0,60).The country’s third largest Standard Trust Bank rose 4,1 per cent to 5,09 naira (N$0,25).Dealers expect smallest banks to be hit hardest by the reforms, which will see large amounts of public funds withdrawn from banks and the minimum capital requirement increase twelve fold to 25 billion naira (N$1,2 billion)in 18 months.The government plans to withdraw 74,5 billion naira(N$3,6 billion) today.The central bank hopes to force a wave of mergers in the sector, which currently has 89 banks.The selling of bank shares forced the all-share index down nearly one percent to 27,035.31 on Monday, continuing a month-long slide triggered by profit taking on blue chips.-Nampa-Reuters