By Udeme Ekwere

Banking stocks on the Nigerian Stock Exchange for the second day running suffered huge decline on Tuesday following the nationalisation of three banks.

In the last two days, the stocks have declined by 7.7 per cent.

This followed the nationalisation of Spring Bank Plc, Afribank Plc and Bank PHB Plc by the Federal Government on Friday and their subsequent purchase by the Asset Management Corporation of Nigeria.

The development had led to massive decline in the sub-sector, with the NSE Banking Index, which stood at 329.38 points on Friday, falling by 7.7 per cent or 25.45 basis points to close on Tuesday, at 303.93 points.

On Monday, the market reacted negatively to the banks’ takeover with the banking index falling by 3.7 per cent. However, Tuesday’s reaction was much worse, as the index shed 4.2 per cent or 13.4 basis points.

The banking sector accounts for a significant percentage of daily activities on the NSE.

The major market indicators also lost significantly, with the market capitalisation of the listed equities falling by N142bn or 1.9 per cent from N7.345tn on Monday, to N7.203tn on Tuesday.

Similarly, the NSE All-Share Index lost 1.9 per cent or 443.79 basis points to close at 22,519.32, down from 22,963.11 recorded the preceding day.

The losses also spread to other sectors as the NSE-30 Index, which measures the performance of the top 30 stocks, fell by 22.33 basis points or 2.2 per cent from 1,022.09 to 999.76 points, while the NSE Insurance Index was down by 2.2 per cent to 149.81 points.

Investors, who spoke to our correspondent on Tuesday, said they saw no reason to make further investments in the market now.

Mr. John Ukaha, who has some shares in two of the nationalised banks, told our correspondent that there was no motivation for him to continue to trade in shares.

He said, “Why should I continue to invest in the market when I am not certain of some kind of protection? What is the guarantee that when the chips are down, I will get at least some of my money back? It does not make sense to me. So, if the government wakes up tomorrow and decides that it is not pleased with one company or the other, what becomes of my investment?”

Source: Punch