Investors are reducing ties with Access Bank, Guaranty Trust Holding Company (GTCO) and other companies in the Nigerian banking industry amid the risk of financial sanction from the Central Bank of Nigeria (CBN) over the circulation of new naira.
Last week, Ripples Nigeria had pronounced that the financial regulator threatened to impose a N1 million excellent on any Nigerian bank that fails to choose up the new Naira notes for distribution to clients in the country, as the apex bank races to amplify supply before January 31, 2023, when the old N200, N500 and N1,000 banknotes expire.
Recall that the central bank had noted that Nigerian banks wer not coming to select up the redesigned banknotes of N200, N500 and N1,000.
Although there have been reports that the new naira notes are not adequate 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 forestall banks from prioritising politicians and High-networth Individuals (HNIs).
Investors cutting ties with Nigerian banks
With CBN’s hammer putting over Nigerian banks and uncertainty round different policies that the CBN ought to roll out to hasten circulation, investors are keeping their cash away from the creditors in the capital market.
Ripples Nigeria’s analysis of banks’ capital market performance last week confirmed that confidence in the financial institutions have dropped amongst investors, ensuing to the Bank Index plummeting via -2.60 per cent between Monday, January 16, to Friday, January 20.
This shows demand for banks’ stocks dropped, pulling the Bank Index down from 450.51 All-Share Index (ASI) to 438.79 ASI, within the overview period.
The Bank Index traded in the opposite path of the NGX (stock market) Index, which grew through 0.15 per cent, from 52,512.48 ASI to 52,594.68 ASI.
Aside from the low demand for banks’ stocks, the creditors’ whole 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 5 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.