The stock market will likely continue to be rocked by the Etisalat loan until at least a semblance of stability is reached by the parties, National Daily has gathered.
The recent takeover of the board by the Central Bank of Nigeria, with the apex bank’ deputy governor, Joseph Nnanna, emerging as the new chairman sent investors in a frenzy with banking stocks bearing the brunt.
The Nigerian stock market banking index dropped a whopping 2.26% on Tuesday as investors feared a potential provisioning of the loans by banks.
A loan provision by the consortium of lenders could lead to a loss of between $500million and $1 billion this quarter alone.
As investors feared a dip in banks profitability a sell off of bank stocks ensued with the FUGAZ (FBNH, UBA, GTB, Access Bank and Zenith Bank) leading the sell offs.
First Bank led the way with a loss of 3.43% while UBA posted a day loss of 5.75%. GTB, Access Bank and Zenith Bank also lost 1.28%, 2.25% and 1.51% respectively. Other tier 2 banks, also reported massive losses by the close of business. Ecobank lost 4.94%, while Diamond Bank and FCMB both lost 4.72 percent respectively.
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Apart from banks, all other indices closed negative at the end of the trading day (except the NSEIND which gained a marginal 0.01%), as the bears swept through. Analysts at Meristem also opined, in their daily report to investors, expect the market to close negative week-on-week barring any positive news inflow which could sway market activities
Etisalat on Tuesday announced that the board as resigned appointing members drawn from the CBN, Audit firms (PWC & KPMG), and Dangote Ltd. This move drew the ire of critics who wondered why the CBN is taking a board position on an unlisted telco and why a Chief Executive of a subsidiary of Dangote is also listed on the board of the company.
Etisalat bought its license from Alheri Mobile Services Ltd, a subsidiary of Dangote Industry Limited.