By KELECHI MGBOJI

Pursuant to its resolve to cut costs in line with current realities, the Nigerian Stock Exchange (NSE) may have concluded decision to further cut down on liabilities by cutting down on branch spread by more than half.

 

Daily Sun can authoritatively report that the next line of action on the card of Council of the Exchange after the sack of 95 of its staff a fortnight ago is to close down a couple of its unproductive branches.
Impeccable source at the Exchange disclosed that discussion about what to do with the unproductive branches had been on front burner at Council meetings even before the sudden sack of the former Director General, Prof. Ndi Okereke-Onyiuke.

 

It was gathered that at those meetings, the general consensus was to prune down the number of branches to about six reflecting the geo-political zones of the country. Given the grave impact of the meltdown, the option was to delay and buy time hoping that the market would bounce back.

 

“I will not tell lie that it has not been talked about in the past, and that we have not taking a serious look at that in the past. Don’t forget that some of those branches came into being because the Exchange went out to build them, but because some state government wanted their own branch and undertook to build them and then handed them over to the Exchange. Now the running of the branches is impacting on the Exchange’s funds. And that is what the Exchange has had to regret”, said our source.

 

According to our source, the calculation was that if the market recovery gathers momentum, there would be no need to dispense with the branches since the cost of running them might be affordable.

 

 

But with the growing decline of market fortunes coupled with the increasing difficulty in meeting with its obligations, the wisest thing to do to further reduce cost is to close down some branches.
Our source added “They have started downsizing, it might be that the rationalization of branches will be the next. I don’t believe that the global trend is towards having many branches. If I am the one in charge, I will probably rationalize those branches. But the management that maintains them had their reasons and now the new management is probably taking another look at them from purely economic point of view”.

 

The upsurge in branch network of the Exchange grew since 2008 when the market enjoyed tremendous boom. But it turned out to be a cheap political point in the hands of state governments which used it to score cheap political points by asking for a branch in their domains.

 

In most cases the state governments built the structures and handed them over to the Stock Exchange to manage with the Exchange bearing the cost of running those branches. Unfortunately, virtually all of the branches turned out to be devoid serious trading activities.

 

 
Apart from its trading floor in Lagos, there are about 11 branches of The Nigerian Stock Exchange with each branch having an automated trading floor. The branch in Lagos was opened in 1961 and by 1978 the Kaduna branch came on stream. Subsequently in 1980, the Port Harcourt branch was established followed by Kano in 1989.

 

Other branches of the Exchange which started operation since 1961 are located in Abeokuta, Abuja, Bauchi, Ibadan, Imo, Ilorin, Onitsha, Uyo, and Yola. Lagos is the Head Office of The Exchange. Before the market meltdown set in, there plans to open more branches.

 

 

Daily Sun