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Banking stocks lead Laggards as NSE Index sheds value

By on September 17, 2015

The Nigerian Stock Exchange (NSE) Banking Index declined 0.85 per cent at the stock market on Tuesday as the   implementation of the Treasury Single Account (TSA) began.

Although the NSE All-Share Index shed 0.19 per cent, the banking sector declined by 0.85 per cent as investors responded to the implementation of the TSA over fears of the likely negative impact of the policy of the fortunes of banks.

A TSA is a unified structure of government bank accounts or a set of linked bank accounts through which the government transacts all its receipts and payments and gets a consolidated view of its cash position at all times.

With the implementation of the TSA,  funds in banks that run into trillion of naira are expected to be moved from banks to the Central Bank of Nigeria(CBN).

Apparently reacting to the implementation of the policy, the market closed in the negative territory falling by 0.19 per cent. However, the banking sector dipped by 0.85 per cent.

The decline in  the Banking index was caused by losses in Skye Bank Plc (4.68 per cent); Wema Bank Plc (4.04 per cent ); Stanbic IBTC Banking Plc (3.45 per cent); Guaranty Trust Bank Plc(2.49 per cent).

The Chief Executive, Economic Associates, Dr. Ayo Teriba, has said the TSA was absolutely necessary for government to determine what comes to its coffers at every given time.

Teriba had  dismissed the fears that the new arrangement would affect banks negatively, explaining that money deposit banks would still be relevant in the emerging scenario.

“I do not believe this will affect banks negatively. You are talking of not really a single account. You are talking of a family of accounts, consolidated into one, controlled centrally from the treasury. I presumed, much of the funds will still remain with the banks but will be monitored centrally and if the treasury decides to place funds with the banks, it will be centrally co-ordinated. Banks should not panic about this. It does not mean all federal government money will go to the CBN. Banks will still subscribe to government’s treasury bills. It will make sense that government’s funds still be kept in Nigerian banks, ” he said.

 

[ThisDay]