The recent takeover of the board of Etisalat Nigeria by the CBN and (possibly Aliko Dangote) has 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 to $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.
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
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. 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.