BY NGOZI ONYEAKUSI

Shareholders under the aegis of the Independent Shareholders Association of Nigeria (ISAN) have expressed fear over possibility of share reconstruction by some banks after successful capital raising exercise on the Nigerian Exchange Limited (NGX).

Mr Moses Igbrude, the National Coordinator of ISAN, said this at the 2024 Capital Market Correspondent Association of Nigeria (CAMCAN) annual workshop in Lagos.

The workshop had the theme: ‘Banks’ Recapitalisation: Bridging the Gap Between Investors and Issuers in the Nigerian Capital Market.’

Igbrude stated that banks during the banking sector consolidation of 2004-2005 raised fresh capital from shareholders and thereafter opted for share reconstruction.
In his words “After the reconciliation the other time, banks raised capital from shareholders and they started reconstructing shares instead of doing share-buyback.
“These companies have ways of manipulating shareholders and reconstructing shares after completing capital raising exercises.
“The performance of these companies should drive their stocks and not share reconstruction. Shareholders that are partaking in the capital exercise of these banks should be mindful of the volume of shares they are using to raise the N500 billion requirement of the Central Bank of Nigeria (CBN).

“Also, shareholders must be mindful that after, these banks listed on NGX at a very high price, and because of poor performance, the price depreciates,” he said.
He said that without shareholders, the Exchanges would never exist as individual /corporate shareholders play a critical role in capital formation when a company is raising fresh capital among other factors.
He explained further, “When you are creating a law, try to get all the key stakeholders involved. Great things have happened when shareholders wanted to buy shares in the ongoing banking sector recapitalisation. I can use my gadgets in buying bank stock anyway.
“However, we must be mindful of human beings that operate these things. If these people do not have godliness, those technologies are deployed in a negative way. When SEC or NGX are making rules, they must always consider human factors.”
He also highlighted that the adoption of technology amid the capital raising exercise has set aside some shareholders participation, most especially the elders.

“The elders are excluded from the banking recapitalisation. How do you expect them to have access to this information? Many of our members were unable to access some of these banks’ rights issue/ public offers on the Exchange.

He, however, called on regulating bodies to protect shareholders in a move to protect their investment after the completion of the exercise.