MarketWatch

[hispy99]

who has info on what's going on in the market? Just curious if this news has any impact

[emmanuel ewumi]

Originally Posted by billions

I think the 6 banks are more likely to use a large part of the money to buy back their shares and then sell it when d market improves than to use it for general market making.

If d market improves,i will prefer to invest in one or two of d six banks than to buy anything else.

Lets wait and see what will happen.

Cheers.

when a company buys back shares,the share is automatically cancelled.so it is not possible to sell a share that was bought back.share back reduces the outstanding shares,thereby increasing the earning per shares.Share buy back is not secretive,it is an open.Before a share buy back,there must be an AGM or EGM.
The fact that this is made public,you start seeing fewer sellers and more buyers.Leading to increase in share price.

[hispy99]

Originally Posted by emmanuel ewumi

when a company buys back shares,the share is automatically cancelled.so it is not possible to sell a share that was bought back.share back reduces the outstanding shares,thereby increasing the earning per shares.Share buy back is not secretive,it is an open.Before a share buy back,there must be an AGM or EGM.
The fact that this is made public,you start seeing fewer sellers and more buyers.Leading to increase in share price.

The shares are not automatically cancelled, sometimes, comapnies use these shares to compensate employees. The same shares can even be reissued later on.

[waaan5]

Originally Posted by hispy99

same thing I was thinking...where will hey get N100B each from? FBN just raised N250B last year to finance projects, now they should use N100B of that to buy back the same shares they sold?

Good question. And have you guys realized that it really does not make much economic sense for a Nigerian bank to buy back her shares (except the board wants more control)? These banks are very loosely regulated in terms of how they treat the shareholders - they can reconstruct their shares at will, unilaterally allocated, or pay dismal or no dividend without any regulator batting an eyelid. So why would they tie up huge sums of money in a buy back program (with nothing to gain in terms of pricer POs or right issues - only the hope of the inceasingly elusive mrkt rebound), when there are other juicer investments options? Plus they can always pay the shareholders pittance/no dividends without consequencies unlike the european and US companies.

I submit that Nigerian banks would rather float more shares and then reconstruct instead of buy back already issued shares (they may make a gesture of buy back to keep the DG happy but it would not be upto her desired N0.6tn).

[emmanuel ewumi]

Originally Posted by hispy99

The shares are not automatically cancelled, sometimes, comapnies use these shares to compensate employees. The same shares can even be reissued later on.

When you have 10 million out standing,and 2 million were bought back.What you have left is 8 million.Future calculation of EPS, PE,and other forecast are done based on the new shares of 8 million.And when you want to sell back the 2 million shares earlier bought back you,still need the approval of the share holders at the annual general meetings or extra ordinary general meeting.You also need NSE and SEC approval.
What happens in some cases is that whenever a company plans a buy back,may be to buy 10% of there shares.They might end up buying less than the 10%,because stockholders will prefer to hold on to their shares.This can make the shares price to be higher than the price range the company is willing to buy her shares back.

[panej]

Originally Posted by emmanuel ewumi

when a company buys back shares,the share is automatically cancelled.so it is not possible to sell a share that was bought back.share back reduces the outstanding shares,thereby increasing the earning per shares.Share buy back is not secretive,it is an open.Before a share buy back,there must be an AGM or EGM.
The fact that this is made public,you start seeing fewer sellers and more buyers.Leading to increase in share price.

If "share back reduces the outstanding shares,thereby increasing the earning per shares", then what is the primary incentive for a company to buy back shares? It definitely keeps greater ownership percentage in-house and proportionate profit sharing with public share holders. They can use the same shares to apply to the securities commission to raise funds in the future.

[hispy99]

Originally Posted by emmanuel ewumi

When you have 10 million out standing,and 2 million were bought back.What you have left is 8 million.Future calculation of EPS, PE,and other forecast are done based on the new shares of 8 million.And when you want to sell back the 2 million shares earlier bought back you,still need the approval of the share holders at the annual general meetings or extra ordinary general meeting.You also need NSE and SEC approval.
What happens in some cases is that whenever a company plans a buy back,may be to buy 10% of there shares.They might end up buying less than the 10%,because stockholders will prefer to hold on to their shares.This can make the shares price to be higher than the price range the company is willing to buy her shares back.

I agree with your analysis, all I said was that the shares are not automatically cancelled.

[zainabusman]

Originally Posted by hispy99

who has info on what's going on in the market? Just curious if this news has any impact

Same story. Down by 0.6%. Value of transactions was N2.8 billion. Most stocks still on offer.

[billions]

Originally Posted by zainabusman

Same story. Down by 0.6%. Value of transactions was N2.8 billion. Most stocks still on offer.

0.6%...That shd be d lowest % change in ASI since d 1% rule was introduced.

[billions]

Britain Unveils Huge British Bank Bail-Out Plan
By Tom Rivers
London
08 October 2008



Britain announced Wednesday a huge, comprehensive government plan that will pump nearly $90 billion of taxypayers' money into the British banking system to shore it up. For VOA, Tom Rivers in London has details.

The British government has moved in to partially nationalize all of the major banks in Britain.

$87.5 billion of taxpayer funds will be invested by the Treasury department into the country's eight largest banks and mortgage-lending institutions.


British Prime Minister Gordon Brown

Prime Minister Gordon Brown says the plan had been worked on for weeks and given the current global turmoil, it was absolutely necessary to roll it out now.

"Our stability and restructuring program is comprehensive, it is specific and it breaks new ground," Mr. Brown said. "The program is designed to restore confidence and trust in the financial system and more than that, to put the British banking system on a sounder footing and to build strength for the future so that it can support jobs and prosperity right across our economy."

British Treasury Secretary Alistair Darling says the plan involves recapitalizing banks, boosting the amount of money lending institutions can borrow from the Bank of England in short-term loans and loan guarantees will be made available at commercial rates to encourage banks to lend to each other.

"It is a really a fundamental step that we are taking but it is part of a process, it is part of a whole range of things that we are doing to support the economy," Darling said. "Stabilizing the banking system is one important part of that and as I have said on many occasions, we will continue to do whatever it takes to ensure that we see this process through."

Prime Minister Brown says he has been talking to other leaders in Europe about the British program and about further actions that could be launched together.

"Because these are also global problems, global action is required," Mr. Brown said. "This is a long haul and we have invited other European countries to consider proposals we have put to them this morning on medium-term funding and are in active consultation about how we can adopt a European-wide funding plan."

Although some here say it is wrong for taxpayers to rescue the banks, Treasury Secretary Darling says to do nothing would have had untold consequences.

"If you did not do anything, there would be a very significant cost to all of us as taxpayers," Darling said. "I believe this is the right thing to do. People expect us to take decisive, firm action especially to ensure that we stabilize the banking system and help it get through this period."

The deal should for now stop the nervous talk about whether the financial institutions here are safe or not. The government intervention has come after days of intense pressure on British banks amid investor fears that they could collapse if they did not receive a large liquidity lifeline.

[zainabusman]

Originally Posted by billions

0.6%...That shd be d lowest % change in ASI since d 1% rule was introduced.

No.

Infact we have been having less than that some days back. It got worse actually in the last few days. For example it lost 0.47% on Sep 23 and 0.54% on Sep 26 while it was 0.37% on Sep 15.

[billions]

Originally Posted by zainabusman

No.

Infact we have been having less than that some days back. It got worse actually in the last few days. For example it lost 0.47% on Sep 23 and 0.54% on Sep 26 while it was 0.37% on Sep 15.

Thx...0.6% shd b one of d highest.

[ttoladele]

[quote=muranay@yahoo.com;31960]NSE okays six banks for N.6trn intervention fund


A source at the meeting disclosed that the NSE council agreed that Intercontinental Bank plc, First Bank of Nigeria plc, Union Bank plc, UBA plc and Zenith Bank plc and GT Bank plc all settlement banks to the Central Securities Clearing System (CSCS) should be allowed to play the roles of market makers. Each of the banks will in the interim provide N100 billion as intervention funds in the market even as the source disclosed that they could be allowed to buy back their own shares. [/b]Th

I00 billion of shareholders fund for speculative businesss/ gambling on the NSE in the interim? I hope Nigeria has deep enough pocket to bail out our banks when these stocks eventually become "toxic assests" on their books. If this goes through in the currrent form being peddled, i fear for our economic future. It will be more than a financial "tsunami or Pearl Harbour". Though there is no mortgage funding crisis in Nigeria as we have in Britain and the rest of Western economies, our stock market can potentially become our "waterloo" the way these people are now suggesting and carrying on. Today the British Govt has made available the sum of £500 billion of tax payers money to fix the mess in her financial sector. Banks like HBoS, Lloyds TSB and Barclays are being partially Nationalised in a capitalist economy, no one could have predicted this scenario 1-2years ago! A lot of investors including myself are waiting on the sidelines to dump and run with our money in NSE if opportunity calls; i will not look back at all oo. Why should these newly capitalised banks be encouraged to embark on a potentially self-destructive mission out of corporate greed? Are lessons being learnt from events around the world by our policy makers? I don't think so, as usual we are routing for quick short term fixes that in the past only moved us forward one step but took us 5 steps backward. I hope i am however wrong and stand to be corrected/ reassured.

[edunko]

if you scare this people away with this your post, i will track you to your village and collect my money from you directly.

[zainabusman]

[quote=ttoladele;32005]

Originally Posted by muranay@yahoo.com

NSE okays six banks for N.6trn intervention fund


A source at the meeting disclosed that the NSE council agreed that Intercontinental Bank plc, First Bank of Nigeria plc, Union Bank plc, UBA plc and Zenith Bank plc and GT Bank plc all settlement banks to the Central Securities Clearing System (CSCS) should be allowed to play the roles of market makers. Each of the banks will in the interim provide N100 billion as intervention funds in the market even as the source disclosed that they could be allowed to buy back their own shares. [/b]Th

I00 billion of shareholders fund for speculative businesss/ gambling on the NSE in the interim? I hope Nigeria has deep enough pocket to bail out our banks when these stocks eventually become "toxic assests" on their books. If this goes through in the currrent form being peddled, i fear for our economic future. It will be more than a financial "tsunami or Pearl Harbour". Though there is no mortgage funding crisis in Nigeria as we have in Britain and the rest of Western economies, our stock market can po