Banking Stocks Heading For 11-Month Low

Nigerian bank stocks headed for an 11-month low after the central bank nationalized three lenders it deemed unlikely to meet a Sept. 30 deadline to recapitalize.

The Bloomberg Banking Index, which tracks performance of the 10 most capitalized banks in the industry, lost 4.5 percent to 314.17 by 12:16 p.m. in Lagos. A close at the level will be its lowest since Sept. 27.

The Asset Management Corp. of Nigeria, or Amcon, took over Afribank Plc, Bank PHB Plc and Spring Bank Plc on Aug. 6 after the central bank revoked their licenses saying they were unlikely to meet the Sept. 30 deadline. Amcon, which assured depositors they won’t lose their money, yesterday appointed a new board for the lenders that were renamed Mainstreet Bank Ltd., Keystone Bank Ltd. and Enterprise Bank Ltd. respectively.

“Given the surprising nature of the announcement, we expect market sentiments to remain tilted towards the negative in the near term for the banking sector, and a short-lived run on the nationalized banks,” Adesoji Solanke, a Lagos-based banking analyst with Renaissance Capital, wrote in an e-mailed note to clients today.

Zenith Bank Plc (ZENITHBA), the country’s biggest lender by market value, headed for its lowest close since Sept. 30. The stock fell 67 kobo, or 4.9 percent, to 12.92 naira by 12:53 p.m.Guaranty Trust Bank Plc (GUARANTY), the second-biggest lender, declined 66 kobo, or 5 percent, to 12.59 naira. First Bank of Nigeria Plc (FIRSTBAN), the third- biggest lender, lost 4.9 percent to 10.63 naira.

The action of the Nigerian regulators has “exacerbated a downward slide in the local stocks” that was caused by the debt crisis in Europe and the U.S., David Adonri, chief executive officer of Lambeth Trust & Investment Co., a Lagos-based brokerage, said by phone today.

Bloomberg