MarketWatch

[billions]

Originally Posted by hispy99

If I understand billions post, he gets to keep 85% of the interest, while the bank keeps the remaining 15% if he terminayes the fixed deposit.

Yea,that is correct.

@monwowo: It is at 12%,i am not too worried about d interest.I know the people in charge so i can move d money to my broker in less than 3 hrs,if i need to.This is more important to me than putting it in a bank that will do it at 14% but i hv to wait for days if i want to move d money away.

[billions]

Russian Government To Invest In Stocks, Bonds: Report


Russian Prime Minister Vladimir Putin said Friday that his government will start investing in Russian equities and bonds next week in an attempt to stabilize the country's ailing financial markets, the Prime-Tass news agency reported. Putin said that the Russian government plans to invest up to 175 billion rubles in stock and bond markets in 2008, while state-owned Vnesheconombank, or VEB, will invest 75 billion rubles in securities, Prime-Tass reported.

The government also plans to invest another 250 billion rubles in stocks and bonds next year, the report said. Moscow's two main stock exchanges, the RTS and the Micex, stayed closed Friday, thus avoiding a global stock market rout. The RTS stock index has plunged 63% this year, making it the world's worst performer among major emerging markets

[knightofdelta]

Originally Posted by Michael

$80 a Barell for Oil. Its time for a drop in Fuel and Diesel Prices, Which should lead to a drop in Food prices and Transportation costs. This is the Kind of Intervention that will Create more disposable income for the masses to buy stocks with.

For where? Anytime there is an increase in oil price FG will tell us that oil is expensive therefore they need more money to purchase the refined oil for us. Anytime there is a drop in prices of oil, FG will announce another increase in fuel price because foreign revenue is dropping therefore fuel should be taxed. There is no way the masses can win. No way!

[knightofdelta]

Originally Posted by waaan5

Re-charge card and bottled/pure water broker sounds really interesting. people how can one pull that thru?

Yes. Dry season is around the corner and Nigerians will start guzzling bottled/pure water like no man's business and Christmas is almost here and Nigerians will like to communicate. Any ideas about recharge card and water brokerage?

[hispy99]

No Bank Has Been Registered as Market Maker – SEC
By Goddy Egene with Agency Reports, 10.11.2008

The Securities and Exchange Commission (SEC) yesterday said it has not received applications from any bank to act as market makers as part of efforts to lift the flagging fortunes of the capital market.

Making this known yesterday, spokesperson for SEC, Lanre Oloyi said: “No bank as of today (yesterday) has actually filed any application with us for registration as a market maker, but we have received some applications which are under consideration.”

The Nigerian Stock Exchange (NSE) entered into discussions early in the week with some banks to inject N100 billion by each of the institutions into the market by buying and selling shares in blocks.
Once the NSE and banks conclude the discussions, the banks are expected to apply to SEC for market making licences.

However, Reuters, yesterday, quoted Oloyi as saying that the banks were yet file their applications with the commission.

The council of the NSE, last Monday, gave approval for plans by six banks to provide N600 billion for the stock market bail-out. Another four banks joined the discussions on Thursday.

The first six banks linked with the talks included First Bank of Nigeria Plc, Union Bank of Nigeria Plc, GT Bank Plc, United Bank for Africa Plc, Zenith Bank Plc and Intercontinental Bank Plc.

First City Monument Bank Plc, Bank PHB Plc, Access Bank Plc and Oceanic Bank Plc were later to join the initial six bringing the total number to ten that have signified interest to be part of the rescue package.

Spokesman for NSE, Mr. Sola Oni on Thursday confirmed that the exchange was discussing with some banks on how to move the market forward.
According to him, the NSE has not appointed any bank as market maker, but said discussions were going well.

Trading on the stock exchange has traditionally been an order-driven market, meaning anybody wanting to buy or sell shares must call a broker who seeks to match the order with an investor looking to buy or sell at the same price.
Market makers are usually institutions with balance sheets large enough to guarantee to trade designated securities on a continuous basis. They could synchronise buy and sell transactions and promote constant liquidity in the market.

The Nigerian stock market, the second biggest in sub-Saharan Africa after South Africa, has been one of the best-performing frontier markets in recent years, attracting private equity and hedge fund investors from Asia, Europe and the United States.

It has lost about 30 percent of its value since early March, largely because banks have been scaling back their equities exposure by recalling margin loans to speculators, which become harder to repay in a falling market.
Foreign portfolio investors, who have become more risk averse as they struggled with tightening global credit lines, have also withdrawn money, although analysts said they account for just 8-10 percent of capital market
liquidity in Nigeria.

Certainly, far from being an immediate panacea, establishing market makers would mean a total overhaul of Nigeria's trading system and would take time to implement.

[chokit]

Making this known yesterday, spokesperson for SEC, Lanre Oloyi said: “No bank as of today (yesterday) has actually filed any application with us for registration as a market maker, but we have received some applications which are under consideration.”

From the report above.Does any one knows what this actually mean ?No bank has shown interest to partake but they have received some application which are under consideration.May i ask from where and who.It sound contradictory !

Also, a statement worthy of note was the one from madam last week saying the reason why nigerian government cannot rescure the market like it was done in US was that the percentage of nigerians that invested in the market are so insignificant in number unlike the US.In my oppinion this type of statment is discouraging because it will demoralise the present investors and also the intending ones.These is no group that is not worthy of help so far they are nigerian.

[hispy99]

Just read this article...
Source: http://www.sunnewsonline.com/webpage...0-2008-001.htm

Credit crunch hits Nigerian banks —Adeyemo
• No, financial system is buoyant - Bankers
By SEUN ADESIDA
Sunday, October 12, 2008


Photo: Sun News Publishing
More Stories on This Section

While the global financial meltdown persists, Nigerian banking industry players insist that there is need to double-check on the health status of the local banks.

This is sequel to series of big businesses looking for huge credit facilities and finding it ever more difficult to access such credit lines. A check on the system revealed that the Central Bank of Nigeria (CBN) and the other regulatory agencies need to look closely at what the banks claim they have.

A source within the banking system revealed to Sunday Sun that what the CBN has done would have worked if truly the banks have what they claim in their vaults.

Using cash reserve ratio, which was reduced from four per cent to two per cent, what that means is that if a banks says it has N5billion deposit, considering the CBN’s position, the bank could only lend 60 per cent of the money, but by lowering the amount to two per cent, the banks can now lend about 80 per cent, which is about N4billion of the total deposit in their vaults.

If the 24 banks have an average of N5billion in their respective vaults, totalling N120billion deposit, the banks can all lend at least N96 billion but that is not the case if the N1trillion expected to be released from the banks is not really available. And that is where the true position of things in the banks must be ascertained.

A certain source said: “But because some of the banks don’t all have what they claim, that is why the policy is not having the effect it was intended to have.”

According to the source, “you will recall that in reaction to the policy initiative, the Nigerian inter-bank lending rates fell to 10.58 per cent on average from 16.5 per cent, a day after the Central Bank announced a raft of measures to boost liquidity. The secured Open Buy Back rate (OBB) dipped to 9.75 per cent from 10.25 per cent, overnight placement fell to 10 per cent from 20 per cent and the call rate dropped to 12 per cent from 19 percent.”

The CBN had slashed its benchmark Monetary Policy Rate (MPR) to 9.75 per cent from 10.25 per cent, cut banks' cash reserves ratio by half to 2.0 per cent and liquidity ratio to 30 per cent from 40 per cent, helping to ease a persistent cash squeeze. "Interest rates dropped in reaction to the monetary policy committee (MPC's) measures to ease the acute cash crunch," one banker said.
Overnight rates hit 20 per cent just before the injection- the highest level this year - due to an acute shortage of the naira currency, which saw banks scrambling for the little that was available to meet their obligations.

The source said now that the CBN is not forthcoming with more direct injection, the rates are gradually spiking again. This is another signal that the banking system needs to checked to avoid the US type of tragedy. “It is a worrisome development, I just hope something would be done fast.”
If the above banker would not want to be quoted was mild, a forensic accountant who has dealt with a lot of the banks was more scatting in his analysis of the credit crunch in the system.

Mr. Ori Adeyemo said, “to be frank with you, these banks don’t have money, if anything at all they are just going to restructure the existing facilities. As I am talking to you these banks are broke. When you continue to cook your book, one day it will get done and I tell you the banks’ books are done and that is why they went against the uniform accounting year.”

He continued: “If CBN had allowed the policy to stay, it would have exposed a whole lot of them and their true financial status. The practice in the bank is such that they prepare an account for NDIC and another account for CBN. The account that goes to NDIC is leaner because it has been stripped of deposit, while the one that goes to CBN would be fatter because it has been beefed up with deposits for CBN’s approval and that would be published for the public.

“The third account that is presented to the Federal Inland Revenue would reflect losses. When you see a bank declaring N10billion profit, go and ask FIRS if they have received the tax of the N10billion profit. If I were the director of IRS I would not ask for any question, I will just ask the bank to pay the tax over that profit value straight. Then you will see counter-claims on capital allowances, claims of other incentives to reduce the value of tax payable to the tax agencies.

“The bank cannot counter-claim the tax value on capital allowances because there must be certificate. This was what I used to expose the banks when I got to the National Assembly, I asked the banks to produce the receipts for all the trillion naira assets they claim but none could produce the receipts, so the answer is ‘no’, they don’t really have trillion naira assets. What the banks do is that at their year-end, they get fund from each other to improve their deposit position, and that is when you start to see spurious charges on customers’ accounts, so that they can have good returns to declare at their AGM.

“It is only when you have income coming that is when you can properly manage your expenses, so without deposits banks cannot manage their balance sheets. This is why I am saying that as at now the status of the banks is very bad. Though not all of them have this bad financial position, the problem is that the ones with the problem, just like what is happening in the US now, the issue of financial engineering in the banking system may bring down our banks to their knees.

The global picture is just a reflection of what we will soon go through in Nigeria, if the banks are not forced to start playing the game straight. What is happening at the Nigerian Stock Exchange is the barometer of what is happening inside our banks. Remember that the banks drive the Nigeria Stock Exchange. Now if the fundamentals of the banks are right it should support the capital market fundamentals but just because a margin policy initiative was muted what do we noticed the capital market started nose-diving.

“Now, the way things are going, check out the approval just granted by the CBN that banks can now reschedule the margin facilities given to market operators, what you will see is that the market will still not pick up as being expected, but will further dip as against what is being experienced now. You will see that at the end of the whole one year, some banks will be willing to hands up and ask for bail out.

“The banks will to point to the fact that financial system credit crisis may be inevitable and what that means is that some of the banks will start asking for bail out from the CBN and Federal Government. The credit crisis would be tied around the issue of default in repayment of margin facilities. But as you can see most of the things you will start to see and hear is to soften the ground for eventual bail out arrangement for the banks.

“With what I know about the Nigerian banks and what is obtainable presently, I tell you the banks would soon come asking for bail out. At first they would not want to be identified as being cash crunched but once any of them ask for bail out and the bank gets it, that is it, others would queue up for the same treatment.”

On the contrary, Executive Secretary of the Money Market Association of the Nigeria, Mr. Wale Abe, he categorically denied the fact that the banking system is experiencing cash crunch. He said “if there was any form of credit or cash crisis in the system, then the rates would reflect it but as today (Friday), the secured Open Buy Back rate (OBB) stands at 0 per cent, and Call still hovers around 14 per cent.
“It has remained stable since after the CBN introduced the intervention policy to inject close to N1.2trillion into the system. I don’t think the banks really need any bail-out now. What the system needs is just more injections and this should not be confused with what is going on outside there in the developed economies.

“It is a normal thing in any financial system to have credit crunch. If the financial system is in dire situation by now the rates would have been back at the pre-intervention level but the rates have been stable over the past few weeks, after the MPC intervention in the financial market.”
It would be recalled that the CBN injected about N150billion directly into the economy while another N1trillion was made available immediately to the economy.

[hispy99]

Global Credit Crunch: We Cant Be Complacent, Says Peterside

CHAIRMAN of Stanbic IBTC Bank has warned about the implication of Nigeria being complacent in the face of the escalating global credit crunch.

He told The Guardian at the weekend that Nigeria was not an island unto itself and therefore susceptible to the volatility of the worsening credit difficulties.

Atedo said: "Nigeria, Nigerian banks and Nigerian institutions generally are fairly insulated from the Western markets but the contagion is spreading globally through... various mechanisms, including de-leveraging.

"There is no room for complacency and non-Executive Directors must try and ensure that we never have an Enron or Cadbury-Nigeria type situation again in a Nigerian quoted company. It is far better to report the truth and be fired than to report falsely and risk facing criminal charges in future."

He pointed the similarities between the Nigerian financial market and those of other countries, especially in the Western world.

According to him: "If you substitute margin lending to finance the purchase of stocks on The NSE by people who do not have enough income to service the loans for "dodgy" U.S. and U.K. mortgage lending, then the similarities are striking.

"If you also substitute falling NSE stock prices for falling U.S. house prices then the similarities are even more striking and that is why we cannot afford to be complacent.

"Besides, the world has become one big global village and so, if bank valuations have plummeted all over the world, it is hard to imagine that Nigerian bank valuations alone will buck the trend indefinitely.

"Even if all our banks are safe and secure, some Nigerian shareholders will naturally be tempted to sell some of their banks shares and "take the profit."

Hence, he advocated that Nigeria should act like the Governments of Germany, Ireland, Greece, Denmark, and others that have opted to guarantee even the largest private deposits.

"It is about instilling confidence and averting a systemic crisis," he said.

But he noted that this was not strictly an NDIC or CBN or Finance Ministry matter. "The Executive or the Legislature can take a lead on this," he said.

"I would recommend that the Federal Government should consider guaranteeing 100 per cent of small deposits and 95 per cent of all other deposits even if it is on a temporary basis i.e. until the global financial turbulence subsides.

"A law should be enacted speedily in this regard to instil confidence and assure everyone that no bank is collapsing in Nigeria," he added.

[zainabusman]

Originally Posted by hispy99

Just read this article...
Source: http://www.sunnewsonline.com/webpage...0-2008-001.htm

Credit crunch hits Nigerian banks —Adeyemo
• No, financial system is buoyant - Bankers
By SEUN ADESIDA
Sunday, October 12, 2008

------

The source said now that the CBN is not forthcoming with more direct injection, the rates are gradually spiking again. This is another signal that the banking system needs to checked to avoid the US type of tragedy. “It is a worrisome development, I just hope something would be done fast.”
If the above banker would not want to be quoted was mild, a forensic accountant who has dealt with a lot of the banks was more scatting in his analysis of the credit crunch in the system.

Mr. Ori Adeyemo said, “to be frank with you, these banks don’t have money, if anything at all they are just going to restructure the existing facilities. As I am talking to you these banks are broke. When you continue to cook your book, one day it will get done and I tell you the banks’ books are done and that is why they went against the uniform accounting year.”

He continued: “If CBN had allowed the policy to stay, it would have exposed a whole lot of them and their true financial status. The practice in the bank is such that they prepare an account for NDIC and another account for CBN. The account that goes to NDIC is leaner because it has been stripped of deposit, while the one that goes to CBN would be fatter because it has been beefed up with deposits for CBN’s approval and that would be published for the public.
---------
“It is a normal thing in any financial system to have credit crunch. If the financial system is in dire situation by now the rates would have been back at the pre-intervention level but the rates have been stable over the past few weeks, after the MPC intervention in the financial market.”
It would be recalled that the CBN injected about N150billion directly into the economy while another N1trillion was made available immediately to the economy.

I certainly hope our banks are to some extent healthy. Banks dominate our stock market and if they experiece serious difficulties, the market will all but collapse.

For those who have cash and are thinking of investing in banks, think twice. While i dont believe our banks are in trouble, caution should be the watch word especially since most of us have portfolios skewed towards banking stocks.

I have some cash but i am keeping it under my pillow and paying off a mortgage. I bought a few Access last week after over a month of no activity. But right now i am staying still until sanity returns. I am already invested in the market and if it rebounds i will profit. No need to take on new risk.

[olusolakemmy]

Originally Posted by zainabusman

I certainly hope our banks are to some extent healthy. Banks dominate our stock market and if they experiece serious difficulties, the market will all but collapse.

For those who have cash and are thinking of investing in banks, think twice. While i dont believe our banks are in trouble, caution should be the watch word especially since most of us have portfolios skewed towards banking stocks.

I have some cash but i am keeping it under my pillow and paying off a mortgage. I bought a few Access last week after over a month of no activity. But right now i am staying still until sanity returns. I am already invested in the market and if it rebounds i will profit. No need to take on new risk.

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

[Babs_O]

Originally Posted by hispy99

Just read this article...
Source: http://www.sunnewsonline.com/webpage...0-2008-001.htm

Credit crunch hits Nigerian banks —Adeyemo
• No, financial system is buoyant - Bankers
By SEUN ADESIDA
Sunday, October 12, 2008


Photo: Sun News Publishing
More Stories on This Section

While the global financial meltdown persists, Nigerian banking industry players insist that there is need to double-check on the health status of the local banks.

This is sequel to series of big businesses looking for huge credit facilities and finding it ever more difficult to access such credit lines. A check on the system revealed that the Central Bank of Nigeria (CBN) and the other regulatory agencies need to look closely at what the banks claim they have.

A source within the banking system revealed to Sunday Sun that what the CBN has done would have worked if truly the banks have what they claim in their vaults.

Using cash reserve ratio, which was reduced from four per cent to two per cent, what that means is that if a banks says it has N5billion deposit, considering the CBN’s position, the bank could only lend 60 per cent of the money, but by lowering the amount to two per cent, the banks can now lend about 80 per cent, which is about N4billion of the total deposit in their vaults.

If the 24 banks have an average of N5billion in their respective vaults, totalling N120billion deposit, the banks can all lend at least N96 billion but that is not the case if the N1trillion expected to be released from the banks is not really available. And that is where the true position of things in the banks must be ascertained.

A certain source said: “But because some of the banks don’t all have what they claim, that is why the policy is not having the effect it was intended to have.”

According to the source, “you will recall that in reaction to the policy initiative, the Nigerian inter-bank lending rates fell to 10.58 per cent on average from 16.5 per cent, a day after the Central Bank announced a raft of measures to boost liquidity. The secured Open Buy Back rate (OBB) dipped to 9.75 per cent from 10.25 per cent, overnight placement fell to 10 per cent from 20 per cent and the call rate dropped to 12 per cent from 19 percent.”

The CBN had slashed its benchmark Monetary Policy Rate (MPR) to 9.75 per cent from 10.25 per cent, cut banks' cash reserves ratio by half to 2.0 per cent and liquidity ratio to 30 per cent from 40 per cent, helping to ease a persistent cash squeeze. "Interest rates dropped in reaction to the monetary policy committee (MPC's) measures to ease the acute cash crunch," one banker said.
Overnight rates hit 20 per cent just before the injection- the highest level this year - due to an acute shortage of the naira currency, which saw banks scrambling for the little that was available to meet their obligations.

The source said now that the CBN is not forthcoming with more direct injection, the rates are gradually spiking again. This is another signal that the banking system needs to checked to avoid the US type of tragedy. “It is a worrisome development, I just hope something would be done fast.”
If the above banker would not want to be quoted was mild, a forensic accountant who has dealt with a lot of the banks was more scatting in his analysis of the credit crunch in the system.

Mr. Ori Adeyemo said, “to be frank with you, these banks don’t have money, if anything at all they are just going to restructure the existing facilities. As I am talking to you these banks are broke. When you continue to cook your book, one day it will get done and I tell you the banks’ books are done and that is why they went against the uniform accounting year.”

He continued: “If CBN had allowed the policy to stay, it would have exposed a whole lot of them and their true financial status. The practice in the bank is such that they prepare an account for NDIC and another account for CBN. The account that goes to NDIC is leaner because it has been stripped of deposit, while the one that goes to CBN would be fatter because it has been beefed up with deposits for CBN’s approval and that would be published for the public.

“The third account that is presented to the Federal Inland Revenue would reflect losses. When you see a bank declaring N10billion profit, go and ask FIRS if they have received the tax of the N10billion profit. If I were the director of IRS I would not ask for any question, I will just ask the bank to pay the tax over that profit value straight. Then you will see counter-claims on capital allowances, claims of other incentives to reduce the value of tax payable to the tax agencies.

“The bank cannot counter-claim the tax value on capital allowances because there must be certificate. This was what I used to expose the banks when I got to the National Assembly, I asked the banks to produce the receipts for all the trillion naira assets they claim but none could produce the receipts, so the answer is ‘no’, they don’t really have trillion naira assets. What the banks do is that at their year-end, they get fund from each other to improve their deposit position, and that is when you start to see spurious charges on customers’ accounts, so that they can have good returns to declare at their AGM.

“It is only when you have income coming that is when you can properly manage your expenses, so without deposits banks cannot manage their balance sheets. This is why I am saying that as at now the status of the banks is very bad. Though not all of them have this bad financial position, the problem is that the ones with the problem, just like what is happening in the US now, the issue of financial engineering in the banking system may bring down our banks to their knees.

The global picture is just a reflection of what we will soon go through in Nigeria, if the banks are not forced to start playing the game straight. What is happening at the Nigerian Stock Exchange is the barometer of what is happening inside our banks. Remember that the banks drive the Nigeria Stock Exchange. Now if the fundamentals of the banks are right it should support the capital market fundamentals but just because a margin policy initiative was muted what do we noticed the capital market started nose-diving.

“Now, the way things are going, check out the approval just granted by the CBN that banks can now reschedule the margin facilities given to market operators, what you will see is that the market will still not pick up as being expected, but will further dip as against what is being experienced now. You will see that at the end of the whole one year, some banks will be willing to hands up and ask for bail out.

“The banks will to point to the fact that financial system credit crisis may be inevitable and what that means is that some of the banks will start asking for bail out from the CBN and Federal Government. The credit crisis would be tied around the issue of default in repayment of margin facilities. But as you can see most of the things you will start to see and hear is to soften the ground for eventual bail out arrangement for the banks.

“With what I know about the Nigerian banks and what is obtainable presently, I tell you the banks would soon come asking for bail out. At first they would not want to be identified as being cash crunched but once any of them ask for bail out and the bank gets it, that is it, others would queue up for the same treatment.”

On the contrary, Executive Secretary of the Money Market Association of the Nigeria, Mr. Wale Abe, he categorically denied the fact that the banking system is experiencing cash crunch. He said “if there was any form of credit or cash crisis in the system, then the rates would reflect it but as today (Friday), the secured Open Buy Back rate (OBB) stands at 0 per cent, and Call still hovers around 14 per cent.
“It has remained stable since after the CBN introduced the intervention policy to inject close to N1.2trillion into the system. I don’t think the banks really need any bail-out now. What the system needs is just more injections and this should not be confused with what is going on outside there in the developed economies.

“It is a normal thing in any financial system to have credit crunch. If the financial system is in dire situation by now the rates would have been back at the pre-intervention level but the rates have been stable over the past few weeks, after the MPC intervention in the financial market.”
It would be recalled that the CBN injected about N150billion directly into the economy while another N1trillion was made available immediately to the economy.

Very scary story.
A long protracted lull may be imminent with all that is happening. Companies and people that have leveraged with loans too much to buy stocks may create serious problems. (like the sub-prime mortgages)

Recovery will be tied to a couple of things e.g.:
* Oil Price not dropping too much and or Nigerian oil production not dropping further.
* Electric Power Improvement leading to improved GDP. (Mr P 7 pt agenda materializing, if it doesn't things may get really worse)
* Banks and companies listed on the NSE paying healthy dividends steadily > 4% promptly

A deterioration of any will imply a longer down turn. While improvements will lead to stability and perhaps a rebound.