MarketWatch

[Michael]

Originally Posted by hispy99

CBN liberalises discount houses subsector
Written by Babajide Komolafe
Monday, 13 October 2008

The Central Bank (CBN) last week announced major reform measures for the discount house sub-sector, expanding the ownership of discount houses to include individuals and corporate organisations


CBNIn a circular to all banks and discount houses in the country, signed by the Director, Banking Supevision Department, CBN, Mr. Ignatius Imala, entitled: “Reform of Discount Houses in Nigeria,” the apex bank stated: “In view of the developments in the financial system and the need to deepen the money and capital markets, the Central Bank of Nigeria has approved the following changes with regard to operations of discount houses in Nigeria:

"Without prejudice to Section A3 of the existing guidelines for discount houses dated April 27, 2004, the ownership base of the discount houses has been expanded to include individuals and corporate bodies.

"Furthermore, discount houses are now allowed to undertake other financial services besides those specified in Section A4 of the existing guidelines, subject to meeting the risk based supervisory requirements and the statutory capital as may be specified by the relevant regulatory bodies.”

Discount houses were created in 1995 primarily to facilitate secondary market trading in government securities and other instrument issued by the CBN. They act as middlemen in the interbank money market, intermediating among banks, and between the banks and the CBN. Overtime, they became the conduit through which banks were able to channel excess liquidity and access same to and from the CBN and among themselves.

However, the ownership of discount houses was restricted to banks and financial institutions and initially their services were restricted to secondary trading in government securities and interbank intermediation. But overtime, their activities were expanded to include financial advisory services to individuals and wealth management services.

Commenting on the development, a senior management official in one of the discount houses said the measures were an extension of the reforms to the sub-sector, and would probably lead to increase in the number of discount houses in the country. He said the expansion in the scope of their business to include other financial activities might see them operating the capital market to underwrite capital market instrument and act as issuing houses.

Presently, most of the discount houses have asset management subsidiary which render wide range of services in the money and capital market. It is believed that the existing discount houses might merge the operations of their subsidiary with a view of offering a wide variety of services under one roof.

Can't CBN stay still for one weekend! What is this one about now!

[XXCASH]

Interesting, so people are still keeping in touch with this market

Even if they come out with 2tr naira to bail out this market there is really no hope for a recovery.

I leave the few millions locked up in there and hope that my son can make good use of it in say 15years to come.

On last thing, if the same bail-out going on in the western countries was done in Nigeria only. Some of us would have said that the move was stupid, well not that i believe in this goverment anyway.

HAPPY INVESTING

[lanreshittu]

CBN May Lose Control Of Banks to Super Regulator
( 11.10.08 )


* Senate Panel Tackles Banks Over Deposits, Portfolios

Another restructuring exercise looms in the banking and financial sector. In the forthcoming change, the Central Bank of Nigeria (CBN) may not be spared.

Going by feelers from the Senate Committee on Banking, Insurance and Other Financial Institutions, the CBN may cease to be a regulator of the industry.

A new umpire that will even oversee the activities of the apex bank is being considered by the Upper House. In fact, the Senate plans to strip the CBN of its regulatory powers to enable it concentrate on other key functions. The proposed regulatory body, The Guardian learned will be similar to the United Kingdom's Financial Standard Authority (FSA).

In an interview with The Guardian in London, the chairperson of the committee, Senator Nkechi Nwaogu, said the panel was unhappy with the apex bank's dual roles as an accuser and a judge. She quickly added that the CBN would not be weakened, but strengthened to provide "efficient services."

To prepare the ground for the take off of reforms, the committee will consult with the chief executive officers (CEOs) of the 24 banks to get their input into the amendment of the CBN Act.

The lawmaker stated that the apex bank as now constituted is "overburdened with functions," such that the payment of depositors of failed banks had dragged for too long.

Nwaogu said it was also becoming evident that the CBN was not providing efficient supervision to the industry operators because "it has too much on its plate. For instance, the apex bank is the one supervising the over 800 microfinance banks in the country. I mean, it is not feasible for the apex bank to discharge its duties well. We still have the Bureau de Change and you also have other investment banks being supervised and licensed by the same CBN. We just think this is not right," Nwaogu said.

On the amendment of the CBN Act (2007), she said there are other areas "where we need the legislature to exact control. In fact, the CBN itself needs to be supervised...(because) we do not want a judge and a jury in one place. At present, the CBN serves as judge and jury and we think it's not right. "

The senator decried some unethical practices in the banking sector, especially the setting of unrealistic targets for members of staff, which she described as a "nightmare."

"The existing banks have missed the mark. Instead of developing products that will bring in fresh deposits and other new business activities, they have made life miserable for their personnel. They give them unreasonable and unattainable targets and consequently, in our committee, we have more than 20 petitions from bankers who are frightened to their teeth because of these."

Some banks, she added, "have capitalised on the high unemployment rate in the country to abuse their workers. Some of these bank officials just roam the streets, looking for deposits. The situation is even worse for women bankers, who are subjected to unspeakable activities. And worst of all, these banks do not even want to care about what they did before the deposits came in. So, we in the committee are saying, it is wrong. It is wrong! "

The panel is also unimpressed with the high figures quoted by some banks on their balance sheets, capital and asset bases, and profits, which it described as unrealistic.

Nwaogu accused the banks of not being transparent. "We know they're not transparent and neither are the figures being quoted realistic. If they have such figures, why then is the interest rate on credits so high and where are the economies of large scale? If everybody claims to have hit the trillion base, who are they lending it to?"

According to her, what the banks are claiming to be in their balance sheets does not correspond with the level of activities in the productive sector. "Since we do know that the level of activities in these banks is not commensurate with activities in the manufacturing and productive sectors, they're supposed to be servicing... and if they're not, what are the banks doing with these deposits and why is our credit so high? Why are people paying much as 30 per cent interest rate and why are they dwelling only on short-term monies? These are the sort of things we want to table at the forum with the banks' chief executives and perhaps, they might have answers or know what we don't know."

On casualisation in the industry, she said it is "inhuman."

"Our banks are copying what they do in the developed world by 'outsourcing' most of their activities," she noted. "Nigeria is not at that level ...This should be done when the activities in Nigeria have reached saturation level...The percentage of labour employed is very small compared to the profits being declared by these banks and I think it's inhuman. We're an emerging market and I don't think the banks should engage in these practice."

Source: The Guardian

[olusolakemmy]

hmmmmmmmmmmm

so senate committee is planning to topple the goverment of soludo by bringing down it power and creating another regulatory or supervisig body!!!!!!!!

dont know what to think of it.

if this plan came shortly after the success of the 25b capital base in the banking industry, am sure it wil not have many fan but it is coming at a time that it is becoming evidence cbn might not be strong enough to oversee the complex financial institution.

really, just got the news now, will try to digest it and see what its implication.

[Babs_O]

Originally Posted by olusolakemmy

welcome to smn
thanks for your graham value investing reminder

the present situation provides an opportunity for us to enter the market, yeah coreect

but am loosing faith in the market, not because of the persisitent downward trend but because of the persistent poor regulatory policy.

take sterling bank matter as an example, if other banks do the same, what will happen to our market? this and many more are what make me lost confidence in our regulators

so to cut my long line short, if am in a more stable and well regulated country, this is my stock shopping time, but for nigeria, i have to hold my money in cash.

Please sorry to go personal, have you been acquiring shares in this period?

Bros. It is really time for value investing. Do not be discouraged by the chaff around. Its only the possible break up of the country or very poor governance from the politicians that should discourage. Pray for better.

Since not every Nigerian is a rogue, there will still be many good companies that are not like Cadbury or Sterling. One needs to sharpen focus on how to find the good companies. I think a measure for finding them is how steady is the PAT (and potential growth in coming years), how much of that is paid as Dividend. One also needs to flag companies that raise money too frequently from the market for close watch. Ensure they are not not messing things up with a cover up that they are pursuing an illusionary growth. If one applied value investing principles Sterling failed (no dividends, not prompt with results, or issued no results for long periods). It will only pass for speculative investment.

I have penciled down to do a simple research of the data of ENRON and Cardbury. To sharpen my focus on what to look out for to differentiate value investments from speculative ones (especially speculative investments hiding in value investment pack)

[olusolakemmy]

Originally Posted by Babs_O

Bros. It is really time for value investing. Do not be discouraged by the chaff around. Its only the possible break up of the country or very poor governance from the politicians that should discourage. Pray for better.

Since not every Nigerian is a rogue, there will still be many good companies that are not like Cadbury or Sterling. One needs to sharpen focus on how to find the good companies. I think a measure for finding them is how steady is the PAT (and potential growth in coming years), how much of that is paid as Dividend. One also needs to flag companies that raise money too frequently from the market for close watch. Ensure they are not not messing things up with a cover up that they are pursuing an illusionary growth. If one applied value investing principles Sterling failed (no dividends, not prompt with results, or issued no results for long periods). It will only pass for speculative investment.

I have penciled down to do a simple research of the data of ENRON and Cardbury. To sharpen my focus on what to look out for to differentiate value investments from speculative ones (especially speculative investments hiding in value investment pack)

i absolutely agree with you

sterling didnt fall in category of value investing but cadbury before the bunmi oni's saga did fall in that group!

thats just a joke, no doubt it is time to really look at the possible opportunities provided by this long lull, what i have said is that if this lull is happening under good governance, i have no issue, i will continue to invest.

let me tell you that it is only last four weeks that i stopped injecting money, i was putting in my hard earned money regularly even when the going was terrible, but now that i see that i am not protected when a company cheaton investors, bros i have to stop and think.

see, there is no way you can truely know value company, cadbury before the saga was a fantastic company, so most companies that will fall in your value investing group, you truely did not know their health status.

however, am exposed enough to the market, i will remain in the market with my capital already stuck in there anyway, but will not go in with more cash, no way.


happy investing and cheers

[donchisel]

Originally Posted by olusolakemmy

i also pray our banks are truely healthy, gtb has adopted dec as it year end, and they suddenly tripple their desperate measure to get deposit.
Now if you want to transfer money from current to savings acct, a usual practise for those that want to evade COT like me, you can only withdraw that money 24hrs later, it use to immediate.
Now they put their staffs under intense pressure to get in deposit.

UBA same thing, towards it year end, the drive for deposit was crazy, i have a guy that was toasting me that, i shld just bring my money, he doesnt care if i withdraw a day after they close book
this practise is common with all the banks, an indication that what they report to us is far from truth, i dnt know the rationale but it is really crazy

Now if some one suggested that we shld check on the health status of our banks, it make sense, but if lot of negative secret are uncover, it can suddenly tilt our economy into something we might not be able to manage

so are we to continue to leave with the banks knowing that they might ot be healthy enough?

the banks control the stockmarket, what happens to the market if such happens?

the banks are suppose to act as a backbone to the real sector, even though they are nt doing enough in that regards, they still help the big boys like otedola, dangote and co, even the guys smaller, what happen to all this?

it is a ripple effect, GOD shld guide us

Okayyyy!!!! Now i know why the Financial experts wanted a uniform year end.

[zainabusman]

Originally Posted by XXCASH

Interesting, so people are still keeping in touch with this market

Even if they come out with 2tr naira to bail out this market there is really no hope for a recovery.

I leave the few millions locked up in there and hope that my son can make good use of it in say 15years to come.

On last thing, if the same bail-out going on in the western countries was done in Nigeria only. Some of us would have said that the move was stupid, well not that i believe in this goverment anyway.

HAPPY INVESTING

In the US there were critics of the bail out. Which was why it failed to clear the houses the first time. However, you will agree with me that what is happenning in world markets today is extraordinary.

I believe most of the criticisms on the various intervention measures in Nigeria were spot on. Criticims by & large are a good thing because they encourage discuss and probably a better response in the future.

Despite the intervention, the NSE All share Index will likely drop below what it was before the intervention by the end of this week.

Some of us are sruck in the market and will remain stuck in there until God knows when.

I am not really worried. We Nigerians have seen worse. It can only get better in the long run!

[amoslord]

it's absurd to c au banks r hussling 4 deposits lately.atm frauds n unnecessary withdrawala bin made witout consent of customers....
i am prepared to fight it out dis week till every dime of mine is refunded.my xperince goes thus....
i made a standing order for direct debit(to buy stockss) quite alryt,but surprised to see debit bin made for more than a month.four straight months,can u beat dat!au r dey sure i wont be in nid of d kish any tym soon or the stipulated amount isnt enofu.
also,i did atm in 1 of d nu genext banks and like magic...10k went missing.

my simple question is "r our ever ready mega profit declaring banks healthy as the pix they paint?"

i was discussing wit a pal ova d weekend,he said he has made up his mind not 2 do any money in bank(ryt uder his pillow now).
things r just getting merrier each day.7 pt,V2020,etc seeems like our Teaders(not leaders) r running out of ideasssssssss.

realy speechless.

[donchisel]

Originally Posted by zainabusman

After the sell off last week, global markets will open in the next few hours and it surely will be interesting.

I just read an article in US businessweek which indicated that the Standard & Poor's 500 index suffered its biggest weekly decline since 1933. The week's decline for the S&P 500—18.2%—only just missed the all-time record 18.6% drop recorded amid the Great Depression, in 1933. (source business week).

The DOW is below 9,000 for the first time in 5 years. Shares of GM plunged 31% to a low since 1950! Breataking & frightening!

On NSE, the story was the same as the decline continued. At the rate we are going, the year low of August 26th will be breached on Friday.

Leadership is required at times like this. Unfortunately for Nigeria and the world at large, true great leaders are in short supply. Somebody needs to clam the investors and jolt them from their panic state. Investors need to slow down and stop selling for everybody's good. But it appears we dont have that sort of leadership around.

Our regulators have just been making silly statements and contradicting each other further eroding the fragile confidence. If they cant do anything, they should just shut up.

In our own market, one cannot even sell anything. However, the market might benefit from investors cancelling their sell orders. We all need to clam down.

The press can also do us all a favour by being more positive. Afterall the world is not coming to an end or is it? Watching CNN one would not be blamed if one thought the world was ending given the huge amount of noise and coverage of the financial melt down.

According to my religious believe, I guess this sound like the signs of endtime. The mostly likely way to resolve the crisis would be adoption of common currency. Rev 13 v 16-18

[donchisel]

Originally Posted by XXCASH

Interesting, so people are still keeping in touch with this market

Even if they come out with 2tr naira to bail out this market there is really no hope for a recovery.
I leave the few millions locked up in there and hope that my son can make good use of it in say 15years to come.

On last thing, if the same bail-out going on in the western countries was done in Nigeria only. Some of us would have said that the move was stupid, well not that i believe in this goverment anyway.

HAPPY INVESTING

Bros, Recall that CBN and other regulators ones said that Naija Economy is in Good health. Therefore what is the story about this Bailout thing. What are we bailing out?

Notice that western countries are bailing out cripling Coys (and banks) in their Economy and not the Stock market. Some nations simply have a different agenda to have Gov invest in their Stock market, (may be to encourage investors) and not to inject funds (N150m), like in our own case.

I think our banks are healthy for now, but if i hear Madam or Soludo mention 'Bailout', i will assume that they are not as healthy as their picture paints.

[waaan5]

Originally Posted by XXCASH

Interesting, so people are still keeping in touch with this market

Even if they come out with 2tr naira to bail out this market there is really no hope for a recovery.

I leave the few millions locked up in there and hope that my son can make good use of it in say 15years to come.

On last thing, if the same bail-out going on in the western countries was done in Nigeria only. Some of us would have said that the move was stupid, well not that i believe in this goverment anyway.

HAPPY INVESTING

And XXcash, I have it on record that you have been calling for govt. intervention in the NSE. I think it is the right way to go ... and it is still not too late ... if only reason would prevail.

[waaan5]

Originally Posted by donchisel

According to my religious believe, I guess this sound like the signs of endtime. The mostly likely way to resolve the crisis would be adoption of common currency. Rev 13 v 16-18

Lets wait and see if that would happen. If it does, I would remember this post.

[billions]

Originally Posted by waaan5

And XXcash, I have it on record that you have been calling for govt. intervention in the NSE. I think it is the right way to go ... and it is still not too late ... if only reason would prevail.

Only one stock gained and less than 1.3b was spent in d market today.

I do not only support govt. intervention....i also support the intervention by d banks(100b each).

The CBN has made many changes that will ensure that our banks hv more money available to them.

If they want to use part of this money for share buyback or market making....they shd be allowed.

The earlier a coordinated action is supported by all d regulatory bodies the better...the situation is getting worse.