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Markets

First Bank shares fell by 6% as fear of AMCON takeover hovers over Honeywell

Analysts have opined that the CBN announcement may trigger an AMCON takeover of Honeywell Nigeria Plc if Oba Otudeko fails to repay his loans.

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First Bank Nigeria Holdings (FBNH) closed with a loss of -6.6%, placing it at the third position in the NSE ASI for Thursday.

After the appointment of the new Managing Director/Chief Executive Officer (MD/CEO) for First bank Nigeria, Mr Gbenga Shobo, the CBN responded by re-instating Dr. Adesola Adeduntan as the MD and sacking all directors of the bank, as well as the parent company, FBN Holdings.

CBN stated that First bank Nigeria was of essential importance to the Nigerian banking sector given its historical significance, size of balance sheet, large customer base and high level of interconnectivity with other financial service providers, among others.

READ: CBN sacks board of directors of FBN Holdings, First Bank, reinstates Dr. Sola Adeduntan

With First Bank Nigeria holding over 31 million customers, and a deposit base of N42 trillion, the CBN took a decisive step to mitigate the damages of corporate misgovernance.

Despite the healthy balance sheet maintained by First Bank up until 2016, FBN was unable to successfully scale CBN’s target examination as it revealed grave financial condition with alarming capital adequacy ratio (CAR) and non-performing loan ratio (NPL) scoring below the acceptable parameters. Hence, the CBN justified its interference as a quest to stabilize the bank and maintain financial stability in the banking sector.

READ: CBN, First Bank on collision course over removal of MD/CEO

However, this intervention may have a substantial impact on the share price of FBNH as stock market traders expect a double-digit dip as the opening bell commences. Part of the concerns raised by the CBN was the issue of loans procured by favouritism, which failed to adhere to the terms for the restructuring of their credit facilities.

However, alternative views suggest that the removal of Oba Otudeko is welcomed by the investing community who view the former Chairman of the bank as a major reason why it has failed to deliver impressive shareholder value.

Shares of Honeywell Flour Mills, a consumer goods company owned by Oba Otudeko fell 3.76% on Thursday and could fall further by Friday when the market reopens as investors digest the impact of the CBN’s announcement and what this could mean for the survival of Honeywell.

Some analysts have opined that the CBN announcement may trigger an AMCON takeover of Honeywell Nigeria Plc if Oba Otudeko fails to repay his loans.

Ubah,Jeremiah ifeanyi is a PhD candidate of Economics in Covenant university. He has held positions as the financial manager in Opera and is also a research ambassador in M&S research Hub. Ifeanyi is currently the financial market analyst for Nairametrics. Follow Ifeanyi on Twitter @ubahjc

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    Markets

    US economic performance bolster Wall Street surge 

    U.S. stocks made a late-session turnaround on Thursday, closing at session highs.

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    U.S stocks futures rebound , cryptocurrency, ExxonMobil, JP Morgan Chase, MasterCard Up by over 10%

    Following upbeat corporate earnings and signs of continuing progress in the labour market, U.S. stocks made a late-session turnaround on Thursday, closing at session highs.

    After jumping around the flatline earlier in the day, the S&P 500 ended just short of a new high, while the Dow Jones Industrial Average jumped more than 300 points, setting a new high. The Nasdaq Composite gained ground as well, ending the day in the black and breaking a four-day losing streak. Earnings were a factor in the stock market’s biggest gainers, as Kellogg led the S&P 500 higher after outperforming analysts’ expectations.

    Treasuries remained stable, with the 10-year yield remaining about 1.57%, a far cry from recent peaks. The Fed said in its semi-annual financial stability report that a growing appetite for risk across a variety of asset markets is stretching valuations and creating vulnerabilities in the US financial system. Meanwhile, applications for state unemployment benefits in the United States hit a new pandemic low, and separate data revealed a productivity rebound. Traders are now looking forward to Friday’s payroll figures.

    Economists expect Friday’s report to show that the US economy added 1 million jobs in April, as the economy recovers from losses suffered during the coronavirus shutdowns. The non-farm payrolls report will be closely scrutinized by investors for information about the Federal Reserve’s next steps, as the central bank has said that it will continue to buy $120 billion in bonds every month until the labour market improves.

    Although markets are benefiting from stronger growth in the world’s largest economy, investors are worried that a faster-than-expected recovery from unprecedented government and central bank stimulus would result in excessive inflation. The Federal Reserve remains committed to near-zero interest rates in order to achieve a complete recovery, but in the second half of this year, an announcement of a reduction in its large monthly bond purchases seems increasingly imminent.

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    Cryptocurrency

    Crypto aftershocks send Doge crashing by 10%

    The fast-rising crypto was trading at below 60 cent posting losses of about 10% for the day on the FTX exchange.

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    doge

    The Crypto market is currently undergoing some form of price correction amid intensified profit-taking and fear of regulatory oversights, thereby pushing Dogecoin below the 60-cent price levels.

    On the broader crypto market, for the day, about 171,444 traders were liquidated. The largest single liquidation order happened on Bybit-ETH valued at $5.98 million.

    The fast-rising crypto was trading at below 60 cent posting losses of about 10% for the day on the FTX exchange, after trading near 70 cents some hours ago.

    Consequently, market pundits argue that the crypto asset doesn’t have any real case use.

    READ: Crypto crash: 3 major risks involved in investing in Crypto

    I worry that, once the enthusiasm rolls out, there are no developers on it, there are no institutions coming in. But it’s got this moniker of the people’s coin right now,” Galaxy Digital’s Michael Novogratz said on Squawk Box.

    Dark clouds seem to be building upon recent reports that the Crypto market is about to face a wave of regulatory oversights when Janet Yellen the custodian of the world’s most powerful economy stated that the United States is yet to have the needed framework to deal with a host of money laundering, terrorist financing, and consumer risk protection that crypto raises.

    Also, the U.S. Securities and Exchange Commission Chair, Gary Gensler advised U.S lawmakers on providing more regulatory oversight to the cryptoverse.

    “Right now, the exchanges, trading in these crypto assets, do not have a regulatory framework either at the SEC or our sister agency, the Commodity Futures Trading Commission,” said Gensler, who further added, “there’s not a market regulator around these crypto exchanges, and thus, there’s really no protection against fraud or manipulation.”

    READ: Altcoins giving investors weekly returns of at least 100%

    That being said, the crypto’s stellar performance over the past few months can’t be ignored as Dogecoin maximalists try to convince the world that crypto is a serious asset class with powerful billionaires like Elon Musk and Mark Cuban giving the Crypto asset endless support.

    Crypto experts further anticipate that ongoing institutional interest will make it difficult to predict if the Doge bubble is ripe as they try to take advantage of its incredible bullish momentum, which could in turn, push the crypto value higher.

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