As the Nigerian capital market continues to wallow in the troubled waters of prolonged loss of value, investors and operators are railing accusations against the banking sector for their die-hard posture on recovering margin loans, an instrument that played a crucial role during the market boom period.
This is coming against the backdrop of the directive by the CBN instructing financial institutions to reschedule all loans used for investment in the capital to the end of the current year in order to provide recourse to the borrowers of funds and allow for more time to pay back their debts.  
Operators narrate their tale of woes in the hands of the banks who, they say, are the major cause of illiquidity in the stock market. According to them, the banks do not honour cheques they issue to their clients for selling their stocks if the stock broking firm owes the bank through the margin facility.  
Also, as clients make payments into their accounts for the purpose of share purchases, the banks divert it to the loan account to reduce the debt portfolio, thereby leaving the brokers trapped, not being able to meet their obligations to their clients. This scenario, brokers regret, has resulted in lowering further market activities as there is no fund at their disposal to buy the stocks that are now peanuts. 
Market watchers wonder why with all the good results coming from the banks, they are so much in a hurry to recover loans which were used to promote their stocks value when market was bullish.  
Industry players say this suggests why none of the banks have come out boldly to defend its stock value by buying up the statutorily approved 15 percent of their shares in the market. In the light of this air of suspicion, analysts call for a closer monitoring and supervision by the CBN on banks’ activities, especially their financial records.  
To some stakeholders, whether market will recover losses this year or not would depend on the Federal Government rolling out a robust bail out package for the market.
According to a source, “the unfortunate thing is that our leaders are clueless and have quickly run out of ideas. They seem not to be in touch with happenings around the world and the steps they have taken to restore investors’ confidence in other markets”.

The bearish state of the Nigerian stock market resulted in a negative return of 7.4 percent (-7.4%) on a dividend-adjusted basis, for quoted stocks in the month of January 2009 according to the monthly report of the Nigerian Stock Exchange (NSE). The figure is in contrast to 10.63 percent in December 2008. 
However, consequent on the 2 for 1 bonus declared by Longman Nigeria plc, the Publishing sub-sector only recorded a positive return of 18 percent. All the other sub-sectors recorded zero or negative returns, which was as high as 23.64 percent by the Information Communication and Telecommunication (ICT) sub-sector. 
On stock-by-stock basis, fourteen (14) stocks recorded positive returns of between 0.21 percent and 135.83 percent. Despite adjusting Skye Bank plc for the dividend of N0.60 per share, the stock recorded a negative return of 10.22 percent. 
For some analysts, emerging reports have placed the NSE at the bottom of global performance ladder of stock exchanges, this year. Others opined that while most of the stocks quoted on the NSE appear undervalued in terms of current and forecast earnings; based on historical performance, the one year forward attractiveness of these stocks will depend on the performance of the global economy. 
According to FSDH Securities, “If the economy improves, there will be more jobs, strong demand and more revenue for both the government and corporate bodies. And thus stocks will be more attractive with ability to invest. in the long run.” 
Although, trading activities on the NSE had suggested recovery between last Friday and Monday, February 2, 2009, analysts the analysts observed that it may be too early to determine if recovery in the market has actually set in, noting that coordinated fiscal and monetary policies directed at improving the financial and economic health of the nation will set the tone for a real recovery. 
Jude Uzowulu, an investment analyst averred that Friday’s recovery provides a faint hope about market recovery given that no source of support has come to the market. 
According to him, “It is difficult to see how significant market demand can suddenly be mustered. We are yet to get any strong signals that the licensing of market makers and their commencement of operation will happen anytime soon. With no other visible process in the pipeline to offer any rescue to the market, it all looks so bleak.” 
He said that the market could lose more value, if the pressure to sell continues to substantially outpace market demand. “In effect, the value of your portfolio could shrink even further. Does that justify trying to sell off, even at the floor prices of today? For many, pushing to sell so as to beat further decline is the pragmatic choice, which explains the stampede to sell. One obvious problem with selling now, however, is that it is the reverse of what would seem more logical. When the price of any commodity has fallen substantially, traders tend to stock up in expectation of the busy season, knowing that prices hardly stay permanently low. If you extend that to the stock market, selling wouldn’t make good business sense now,” he noted.

The Central Bank of Nigeria (CBN), has emphasised that foreign investors will not be exempted from complying with the Federal Government’s policy on N25 billion minimum capital for any bank operating in Nigeria.
Mr. Festus Odoko, head of corporate affairs, CBN, said yesterday that foreign investors are fully permitted to invest in existing Nigerian banks provided they meet the minimum capital requirement and other regulatory conditions for procuring a banking licence as stipulated by the apex bank.
According to the CBN, any foreign individuals or institutional investors could also invest in existing Nigerian banks.
However, Odoko noted that there is a condition that no single foreign individual or institutional investor should acquire more than the share of the single largest Nigerian individual/institutional investor in any bank. The condition remains, provided the aggregate shareholding of the foreign investors do not exceed 10 per cent of the total capital of the bank.
Mr. Alderman Lewis, the Lord Mayor of London, was quoted during his recent visit to Nigeria, as saying that the Nigerian government is not opening up its banking system to foreign competition.
The CBN said there is need to explain the position of government following the comments credited to the United Kingdom representative.  Under the present condition for operation in the country’s banking system, the apex bank states that foreign banks could acquire or merge with a local bank existing in Nigeria.
Such a foreign bank, according to CBN’s policy, however, must have operated in Nigeria for at least five years and established branches in at least 2/3 of states of Nigeria excluding the state capital.
The CBN equally stipulates that the foreign bank or investors’ shareholding arising from the merger or acquisition of a local bank does not exceed 40 percent of the total capital of the resultant entity.
The apex bank clarified that existing shareholding structure of Nigerian banks in which there are foreign interests in excess of 10 per cent might subsist but such foreign interest should not exceed the current level.

Mr. Wale Tinubu, group chief executive of Oando Plc, has said the company would realise about N30 billion from a planned offer for sale of 49 per cent of Oando Marketing, one of the major divisions of the company.
Tinubu disclosed this to journalists after the 31st yearly general meeting of the company held in Lagos yesterday.
He said the offer for sale would be concluded within 90 days after which Oando Marketing would be listed on the Nigerian Stock Exchange (NSE).
The Oando group is made up of five major divisions: Oando Marketing, Oando Trading, Oando Gas and Power, Oando Energy Services and Oando Refinery
Oando last year completed the corporate restructuring of the group by making Oando Marketing a wholly owned subsidiary.
The shareholders of the company at the meeting authorised to directors to sell a maximum of 49 per cent of the company’s shareholding in Oando Marketing on terms, conditions and dates to be determined by them (directors), agreed with the issuing house and approved by the regulatory authorities.
Major General Muhammed Magoro, chairman of the company said “Our restructuring was premised on the need to ensure our businesses can deliver maximum returns to all its shareholders and also derive from synergies from each other.”
Dr. Faruk Umar, a shareholder of the company while commenting on the 2007 results and accounts of the company had suggested to the board that existing shareholders should be given preferential treatment in the planned offer for sale.