The Certificate of Capital Importation (CCI) saga between the Central Bank of Nigeria (CBN) on one hand and MTN Nigeria limited and four banks on the other, seemed to have been settled early last year, according to a letter seen exclusively by BusinessDay.
The letter from the CBN addressed to the chief executive officer (CEO) of MTN Nigeria with Reference number TED/PFIO/CON/PRC/01/036 dated February 22, 2017, agreed to lift the suspension on CCIs issued in favour of MTN Nigeria communications Limited.
“We write to inform you that after a review of your submission, the suspension earlier imposed on your company in respect of remittances/transactions on equity related Certificates of Capital Importation is hereby lifted,” W.D Gotring, a director in the trade and exchange department of the CBN said in the letter.
The Managing Directors of CitiBank Nigeria Limited, Standard Chartered Bank, Diamond Bank and Stanbic IBTC Bank were also copied in the letter.
Sources tell BusinessDay that it is worrying and strange that the CBN cleared MTN and the four banks to continue repatriating dividends with the CCIs last year, only for the regulator to now turn around and impose huge fines for transactions they approved.
“If ever there is a definition of a Banana republic this is it. It tells you that the central bank is being tele guided from elsewhere with little regard by those pulling the strings for financial system stability, economic growth or employment creation,” the CEO of a major investment Bank told BusinessDay last night.
BusinessDay reported last week that Nigeria’s Attorney General Abubakar Malami instigated the new investigation into the matter, when it commissioned an audit from Lagos based law firm ( Tope Adebayo LLP ) last year.
The decision by Central Bank of Nigeria (CBN) to fine MTN and four other banks is also heightening uncertainty in the financial services sector as investors in bank stocks lost N144 billion in two days, following news of the sanctions.
BusinessDay analysis shows, a total of 11 listed banks have lost N144 billion in market capitalisation since Thursday.
“We should expect more sell offs in bank stocks driving prices down and equally putting pressure on the broader All Share Index,” Dolapo Ashiru, a Lagos based stockbroker on the Nigeria Stock Exchange (NSE) said.
The banks include Zenith Bank, GTB Bank, First Bank of Nigeria, Stanbic IBTC, Diamond Bank, FCMB, UBA, Fidelity Bank, ECOBANK, Skye Bank, and Sterling Bank
“The actions of CBN on these banks will scare foreign investors. It shows the lack of consistency on the part of the CBN as the apex bank can just wake up suddenly to place fines on anybody,” Ashiru told BusinessDay from the nation’s commercial capital.
Stocks fell again by 0.68 percent on Friday for the 3rd consecutive day, as the broad NSE all share index returns for the year fell to negative 8.8 percent. Stocks are approaching a correction.
From the Biggest to smallest losers
BusinessDay analysis revealed that of all banks listed on the Nigeria stock exchange market (NSE), Guaranty Trust Bank GTB, the largest listed bank lost a total of N89.76 billion in market capitalisation after prices declined by approximately 3 percent from the previous close on Wednesday of N39.05 to N36 per share on Friday with outstanding shares of 29.43 billion.
This was arrived at by multiplying the difference between the closing prices of the bank as at Wednesday (29th Sept.) and Friday (31st) by its outstanding shares.
Second on the chart is Zenith bank with a loss of N31.4 billion in market cap in just 2 days of the CBN and MTN saga. Zenith bank shares declined by 4 percent to N21 on Friday from N22 on Wednesday with 31.4 billion outstanding shares.
First bank Nigeria plc was also not spared as investors sold the stock, driving prices down slightly by 2 percent from N9 as at close of market on Wednesday to N8.80 on Friday, leading to a loss of N7.18 billion in market cap.
Amongst affected banks that were caught up in the CBN’s penalty were Diamond bank and Stanbic IBTC both listed on the Nigerian stock exchange.
As at close of trading on Friday, Diamond bank lost N3.7 billion in market cap compared to a fine of N250 million as the price of stock fell by 11 percent from N1.39 on Wednesday to N1.23 on Friday.
Stanbic IBTC was also not spared from the negative knee-jerk reaction by investors as the stock fell slightly by 1 percent from N48.50 to N48 losing N5 billion in market cap as at Friday compared to a fine of N1.2 billion imposed on the bank by CBN.
Investors in First City Monumental Bank popularly known as FCMB lost N1.78 billion. On Wednesday its share price closed at N1.89 ending with a market cap of N37.42 billion, however three days later its share price dropped to N1.80 while its market cap was N35.64 billion.
With outstanding shares of 34.2 billion, United Bank of Africa (UBA) shareholders lost about N1.71 billion as its share price dropped to N8.00 to end with a market cap of N273.6 billion on Friday.
After the market closed on Friday, investors in Fidelity Bank lost N1.45 billion as its share price dropped to N1.65 while ECOBANK investors lost N1.2 billion as its share price dropped to N20.
Skye Bank investors lost N0.69 billion. Its share price closed on Wednesday at N0.56 with outstanding shares of 13.88 billion to end leading to a market cap of N7.77 billion. Two days later, after the close of trading its share price fell to N0.51 to end with a market cap of N7.07 billion.
Sterling bank investors lost N0.28 billion, as its share price closed on Wednesday at N1.38 with outstanding shares of 28.79 billion leading to a market cap of N39.73 billion. After the close of market on Friday its share price dropped to N1.37 leading to a lower market cap of N39.44 billion.
Banks not affected yet
Wema Bank, Unity Bank, Union Bank, Access Bank were not affected as at Friday, as their share prices remained flat while Heritage Bank, Key stone Bank and Citi Banks are not listed on the NSE.
“With fine imposed on these foreign banks and MTN; foreign investors will be reluctant to bring in money into the country going forward and this may negatively impact on the GDP growth in the next quarter as one of the major contributors to the GDP is telecoms of which MTN is a giant in that sector,” Ashiru concluded.
DIPO OLADEHINDE & DAVID IBIDAPO
