Abuja - Following complaints by subscribers who participated in the public offers  embarked upon by banks in the country and their inability to access their share certificates, months after the exercise had been concluded, the Central Bank of Nigeria [CBN] and Securities and Exchange Commission (SEC) will meet next week to sort out the problem.

This is coming just as the joint committee on Capital Market and Banking and Currency, expressed concern over the information given to the committee by the Central Bank Governor, Professor Chukwuma Soludo to the effect that he had sent out a circular to all banks stating that it is illegal for banks to advance loans to individuals to buy shares in banks. The Director General of SEC, Musa Al- faki, who testified  before the committee yesterday, explained to the panel that both organisations had concluded arrangements to meet next week over the matter.

Al-faki confirmed that both bodies discovered some challenges in the exercise and would want to ensure that whatever solution that would be worked should be able to address the problems already discovered. “We had a meeting yesterday and we agreed that CBN and SEC should meet next week to sort out the issues so that the banks could issue the share certificates. There are challenges over the issue of the Initial Public Offers (IPOs). We want to ensure that we come out with the solution to the issues involved, Alfaki said.

The DG had told the committee that due to the rapid growth of the capital market in the country, it had witnessed some infractions.

He further listed the infractions to include unauthorized sale of clients’ shares, non-execution of clients’ mandate, delay or non remittance of proceeds of sale of clients securities, falsification of accounts, illegal transfer of shares and forgery of certificates and dividend warrants. He advised the lawmakers to consider relevant laws that would address the identified lapses.

The Group Managing Director of First Bank, Mr Jacob Moyo Ajekigbe justified the IPO conducted by the bank stating that the bank did not involve in any illegal practice. He defended the preferential allotment done by the bank in the course of the exercise maintaining that it was allowed by SEC and stressed that it is a standard practice all over the world. Asked by the committee why over subscription was allowed, he said there was no way the bank could have detected it before the end of the exercise emphasizing that many investors were anxious to invest in the bank because of its credibility and more so the funds were collected by the receiving banks, therefore it was not possible for the bank to know the point of over-subscription. “I don’t think we broke any rule throughout the exercise. We carried out a valid exercise in accordance with the law and the results showed how acceptable we are by the investing public. We were not in a position to know at what point the shares were over subscribed because it was handled by the receiving banks. The outcome of the exercise showed how the investing public has accepted use”, he said.

He maintained that the bank did the right thing including the preferential allotment and urged the lawmakers to ensure a law showing how shareholders could claim dividends was put in place to address the problem of unclaimed dividends. Declaring that the bank had refunded the over subscribed funds with the required interest; Ajekigbe advised that SEC should some of the measures in place to meet the changing face of business environment in the country.

The Vice Chairman and Managing Director of Intercontinental Bank, Dr Erastus Akingbola, who is also the new President of Chartered Institute of Bankers (CIBN) yesterday explained to the members of the committee that banks never got any circular from the CBN that investors should not borrow money from banks to buy shares in any bank of their choice.

Representatives of other banks who appeared before the committee yesterday also re-echoed Akingbola statement.

Click here to read the rest of the story from ThisDay 

Subscribe To Site:

Full Post Feed | Summary Feed | Comments Feed