Investors are cutting ties with Access Bank, Guaranty Trust Holding Company (GTCO) and other firms in the Nigerian banking industry amid the threat of financial sanction from the Central Bank of Nigeria (CBN) over the circulation of new naira.
Last week, Ripples Nigeria had reported that the financial regulator threatened to impose a N1 million fine on any Nigerian bank that fails to pick up the new Naira notes for distribution to customers in the country, as the apex bank races to increase supply before January 31, 2023, when the old N200, N500 and N1,000 banknotes expire.
Recall that the central bank had stated that Nigerian banks wer not coming to pick up the redesigned banknotes of N200, N500 and N1,000.
Although there have been reports that the new naira notes are not sufficient for circulation, prompting the financial regulator to direct banks to halt over-the-counter withdrawal of the redesigned currencies.
It ordered banks to load their Auto Teller Machines (ATMs) instead, to hasten circulation and prevent banks from prioritising politicians and High-networth Individuals (HNIs).
Investors cutting ties with Nigerian banks
With CBN’s hammer hanging over Nigerian banks and uncertainty around other policies that the CBN could roll out to hasten circulation, investors are keeping their money away from the creditors in the capital market.
Ripples Nigeria’s analysis of banks’ capital market performance last week showed that confidence in the financial institutions have dropped among investors, resulting to the Bank Index plummeting by -2.60 per cent between Monday, January 16, to Friday, January 20.
This indicates demand for banks’ stocks dropped, pulling the Bank Index down from 450.51 All-Share Index (ASI) to 438.79 ASI, within the review period.
The Bank Index traded in the opposite direction of the NGX (stock market) Index, which grew by 0.15 per cent, from 52,512.48 ASI to 52,594.68 ASI.
Aside from the low demand for banks’ stocks, the creditors’ total market valuation also lost N62.05 billion, as their combined worth in the stock market depreciated to N3.68 trillion, from N3.74 trillion within five days.
Banks losing and retaining investors
Among the 15 financial institutions tracked in the capital market, seven suffered losses due to investors withdrawal, investors were undecided in four, while they remained bullish in four others.
According to the analysis, investors dropped their demands for Zenith Bank, resulting in a loss of N34.53 billion, Access Holdings lost N8.88 billion, Fidelity Bank, UBA, and GTCO (GTBank) lost N2.89 billion, N8.54 billion and N11.77 billion respectively.
Others that suffered losses were Union Bank and NPF Microfinance Bank, as both creditors lost N1.45 billion and N299.64 million to investors sell off.
Despite investors losing confidence in the aforementioned banks, the capital market maintained demand for FCMB, First Bank, Wema Bank and Ecobank, as they gained N1.18 billion, N3.58 billion, N642.90 million and N917.47 million respectively.
However, the case was different at Unity Bank, Sterling Bank, Jaiz Bank and Stanbic IBTC, as they neither gained nor lost within the period in review.
Join the conversation
Support Ripples Nigeria, hold up solutions journalism
Balanced, fearless journalism driven by data comes at huge financial costs.
As a media platform, we hold leadership accountable and will not trade the right to press freedom and free speech for a piece of cake.
If you like what we do, and are ready to uphold solutions journalism, kindly donate to the Ripples Nigeria cause.
Your support would help to ensure that citizens and institutions continue to have free access to credible and reliable information for societal development.
INVESTIGATION: 4 yrs after completion, Kwara PHC facility inactive, rural dwellers in pains
In the middle of the night sometime in September 2019, Fatimah Ballah struggled with severe pains as she tries to...
INVESTIGATION: How Oyo State, contractors spent N1.1bn on water projects, but communities don’t have a drop
Multimillion naira water projects largely initiated by the late Abiola Ajimobi-led state government in Oyo State to benefit over 40...
INVESTIGATION: In Cross River, civil servants retire into poverty as govt looks away, squanders funds on frivolities
Thousands of civil servants in Cross River State struggle to stay alive as they are denied their gratuities and monthly...
Students suffer as contractors abandon Kano school projects after receiving over N70m
In 2019, to improve the condition of public schools in Kano State, the Federal Government disbursed millions of naira to...
SPECIAL REPORT: World Bank road projects go bad in Enugu, as state govt fails to fulfill promise
Counterpart funded road projects between the world Bank and Enugu State government have started to fail, as the state government...